World Liberty Financial Could Intensify Political Divides on Crypto If Trump Wins, Says TD Cowen

Former US president Donald Trump has unveiled his new crypto venture, World Liberty Financial, in atwo-hour livestream on X.While Trump tags this venture as embracing the future of crypto, some fear it could trigger significant constitutional conflicts.

In a Monday note to investors, Jaret Seiberg, an analyst at TD Cowen Washington Research Group, warned against the launch of World Liberty Financial.

Seiberg believes the project could introduce significant political problems for the crypto industry by deepening the political divides on regulatory decisions.

World Liberty Financial Could Be a Problem for Crypto

The US Republican flagbearer, Donald Trump, introduced his new crypto project during an X Spaces livestream on Monday night. The project, dubbed World Liberty Financial, is described as a DeFi money market where people can lend, borrow, and earn interest on cryptocurrencies.

While teasing the announcement in a Q&A session before the livestream, Donald Trump claimed he is embracing the future of crypto."

Join me live from Mar-A-Lago at 8:00PM Eastern, tonight on X Spaces. Set a reminder and be sure to tune in! https://t.co/MXTu3hxVFP

- Donald J. Trump (@realDonaldTrump) September 16, 2024

However, some have voiced concerns about Trump leveraging the increased traction from his political campaign to promote a seemingly obscure venture.

To others like TD Cowen's Jaret Seiberg, launching World Liberty Financial poses threats to the future of cryptocurrency. Seiberg believes the project will reduce the prospects of enacting crypto market-friendly legislation if Trump wins.

According to the analyst, for political reasons, democrats will oppose any crypto bills because they view it as enriching the Trump family.

Additionally, Maxine Waters, an influential Democrat and member of the House Financial Service Committee, recently criticized the new project.

Waters acknowledged that decentralized finance aims to bolster efficiency and transparency. However, it also poses increased risks of scams, hacks, conflicts of interest, and information asymmetry that could harm investors and consumers.

According to Waters, the outlined risks are already in the Trump family's new DeFi venture, World Liberty Financial.

The project encountered challenges before its official unveiling. Last week, Tiffany and Lara Trump's X accounts were hacked and used to promote a token supposedly linked with World Liberty Financial.

However, Eric Trump and Donald Trump Jr. have warned people to stay alert against scammers pretending to work for World Liberty Financial.

Trump's New Venture Could Push Back Efforts on Crypto Regulation

Seiberg expressed concerns about World Liberty Financial thwarting ongoing efforts to introduce a crypto regulatory framework in his note.

Our concern is that the Trump Family's launch of a crypto venture will derail the emerging bipartisan view of how crypto should be regulated, which may stymie efforts to establish a crypto regulatory regime," Seiberg wrote.

The analyst fears the project could make crypto policy decision-making partisan instead of bipartisan, as it should be. He further noted that Democrats may accuse Trump of introducing a conflict of interest whenever he nominates a regulator to oversee the crypto industry, including appointing an SEC chair.

Meanwhile, lawmakers have introduced bills to regulate the crypto industry. In April, Senator Cynthia Lummis and Kirsten Gillibrand introduced a bill to block algorithmic stablecoins and establish a framework for stablecoins.

Also, Debbie Stabenow, the chairperson of the Senate Agriculture Committee, reportedly plans to hold a new hearing for her crypto bill.If approved, this bill willexpand the CFTC's role in overseeing cryptocurrencies.Several other crypto bills are also in progress and awaiting endorsement.

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