EddieJayonCrypto
7 May 25
US Treasury Secretary Scott Bessent was questioned by the House Financial Services Committee regarding World Liberty Financial (WLFI), a Trump-affiliated firm that launched a USD1 stablecoin backed by US Treasuries. WLFI, founded in 2024 with close Trump family ties, raised $550 million through a go...
US Treasury Secretary Scott Bessent faced tough questioning from the House Financial Services Committee about Trump-affiliated World Liberty Financial’s (WLFI) USD1 stablecoin, which is backed by US Treasuries and cash equivalents.WLFI, founded in 2024 with close ties to the Trump family, raised $550 million through governance token sales, granting the Trump family rights to approximately 75% of net revenues.Abu Dhabi’s state-backed MGX agreed to deploy $2 billion of the USD1 token on Binance. This deal effectively provides WLFI and its Trump owners an $80 million annual interest-free subsidy, assuming a 4% market rate.Lawmakers expressed concerns that these no-interest stablecoin arrangements could conceal hidden subsidies and political favors. Representative Brad Sherman highlighted the $80 million interest-free loan and questioned whether this constitutes improper support.Treasury Secretary Bessent stated he had not reviewed the token’s expense ratio and noted that stablecoins do not pay interest, adding that no regulators have officially labeled such deals as hidden subsidies.The hearing was prompted by a New York Times investigation that uncovered secret endorsement pitches, foreign sales, and policy changes benefiting WLFI, raising alarms about blurred lines between private business interests and government policy.Democrats on the committee announced plans to pursue legislation demanding full expense-ratio disclosures for stablecoins and banning no-interest structures that act as de facto subsidies.These measures aim to ensure transparency and prevent conflicts of interest when politically connected entities enter crypto markets.