How Donald Trump’s Crypto Token Could Fit into Regulations? | Currency News

Former US president launches cryptocurrency product while also referencing the cryptocurrency industry in his current election campaign. Donald Trump will be the “chief cryptocurrency spokesman” for World Liberty Financial, a venture that has so far given little indication of what it will actually do.

You’re reading State of Crypto, a CoinDesk newsletter covering the nexus between cryptocurrency and government. Click here to sign up for future editions.

Narration

Crypto is trying to make an impact this election cycle. Now, one of the major US presidential candidates is linked to an upcoming crypto venture.

Why is it important?

There is one rather interesting question: What should the former president, and current Republican candidate, think about securities regulations and anti-money laundering if he intends to lend his name to a cryptocurrency project?

Breaking this down

According to reports this week from my colleagues Danny Nelson, Cheyenne Ligon, and Sam Kessler, former President Donald Trump will be the “chief cryptocurrency spokesman” for World Liberty Financial, an apparently Dough Finance-based project in which his three sons and a number of other people will play key roles.

The draft white paper, seen by CoinDesk, suggests that World Liberty Financial will sell 30% of the WLFI tokens generated, with the remaining 70% going to founders, service providers, and other team members.

I want to focus on this part because it raises some interesting regulatory issues. Trump, of course, has spent the last few months campaigning on crypto voters, making promises to install industry-friendly regulators and make the US the “crypto capital of the planet” in various public appearances.

This friendly stance, which stands in stark contrast to his opposition to cryptocurrencies while in office, could ultimately prove to be beneficial to him personally given the upcoming launch of World Liberty Financial.

The most important caveat is that CoinDesk has reviewed working documents; the final design may differ from what CoinDesk reported.

However, one thing kept repeating in the document seen by CoinDesk: 70% of funds going to existing project developers is a relatively large amount compared to other crypto projects.

The white paper also includes a clause about the non-transferability of the tokens, which is most likely intended to prevent their resale or to suggest that investors can profit from the tokens, at least at launch.

That alone isn’t enough to avoid securities laws, according to Dave Rodman, founder and managing partner of Rodman Law Group.

“If all that happens is that people are buying tokens that are ‘locked,’ nothing will be done to reduce the risk of violating U.S. securities laws if Americans buy the token,” he said.

According to Alexandra Damsker, a lawyer and consultant, it is not yet clear who exactly controls the wallets.

It is also unclear how the retained 70% of funds will be distributed – whether each developer and project leader will receive an equal share or not.

WLFI is a governance token. Holders of a certain, yet unspecified, minimum number of tokens can propose protocol changes or other suggestions, and all holders can vote, using up to 5% of the total token supply. While the article suggests that this will “ensure fairness and distributed participation,” any affiliated group that holds a majority of tokens can influence these proposals.

The document also includes a provision on the need to monitor buyers for compliance with sanctions regulations.

The project will be a key target for attackers. We saw this before when X (formerly Twitter) accounts associated with Lara (Eric Trump’s wife) and Tiffany Trump (one of Donald Trump’s daughters) were hijacked this week to impersonate random addresses. Eric Trump tweeted that the addresses were a scam, which caused further confusion for people who couldn’t tell if this meant World Liberty Financial wasn’t real or if the addresses were just real (to be clear: World Liberty Financial is a real project; these addresses were not part of it).

Wednesday

15:30 UTC (11:30 a.m. EST) A status conference was held in the criminal case against Keonne Rodriguez of Samourai Wallet.

Thursday

There is no report of this in the court file, but Friday’s order suggests there was a conference call in SEC v. Coinbase regarding Coinbase’s efforts to obtain communications from the SEC.

(San Francisco Chronicle) Oakland police will occasionally tow or summon Teslas because they may have captured footage of crimes committed on their dashcams. The 21st century is weird.
(Ian Carroll) A pair of security researchers discovered what appears to be a bug that could theoretically help people bypass Transportation Security Agency checks. The bug has since been fixed. H/t to my friend Matt for reporting it.

If you have any thoughts or questions about what I should cover next week, or would like to share your feedback, please email me at [email protected] or find me on Twitter @nikhileshde.

You can also join a group conversation on Telegram.

See you next week!

This story originally appeared on Coindesk