Crypto fans hoped Trump would make them legit before meme coins came
Nic Carter was biting into a cookie at the Crypto Ball, the digital asset industry’s star-studded celebration of a president who had assured them he would support the nascent sector, when he learned that Donald Trump was launching a cryptocurrency named after himself. Suddenly, the party atmosphere took on a sour note.
“I was pretty dismayed by it,” Carter, a Trump voter and general partner at Castle Island Ventures, a venture capital firm that invests in crypto start-ups, said in a phone interview Friday. “It cheapens his embrace of the crypto industry.”
Trump’s new coin, $TRUMP, is an example of what insiders call a meme coin – a digital token traded largely to capitalize on jokes or online enthusiasm rather than as a practical financial asset. It had a market capitalization of $5.8 billion late Friday, a sizable worth for a week-old project.
But Carter fears the presidential crypto coin makes Trump’s promises to ease regulation on the sector appear self-serving and creates conflicts of interest. “It makes it look like quid pro quo,” he said.
The crypto community, which broadly backed Trump’s campaign, is roiled by mixed emotions now that he has taken office.
There’s elation, fueled by the executive order Trump signed Thursday promising to ease regulation on the industry and commanding government officials to consider how to establish a national stockpile of cryptocurrency. There’s also disappointment from some who, like Carter, think his launch of the $TRUMP meme coin – followed days later by $MELANIA, named for his wife – amplifies one of the sillier and sometimes scammier aspects of the scandal-associated industry.
Meme coins are generally much more volatile than widely held crypto tokens such as bitcoin, and more vulnerable to hacks and fraud. Many are based on online jokes, like $PNUT, named for Peanut the Squirrel, an Instagram-famous pet euthanized by the New York State Department of Environmental Conservation last year.
Crypto tokens minted from memes can also create significant wealth, especially if the creators hold on to sizable stakes of a token that takes off. A digital firm affiliated with the Trump Organization controls 80% of the supply of $TRUMP tokens and appears to collect a fee on sales, igniting concerns that the president could be commingling personal business with his duties to the nation.
Trump has promoted the coins, with a logo portraying the president with his fist raised, to his following of more than 99 million on the social media site X.
Coins tied to politics are “a perfect bribery vehicle” and “risky to democracy,” Vitalik Buterin, creator of ethereum, the second-largest crypto system with a value of nearly $400 billion, warned in a post on the social media network Bluesky on Thursday.
A Wall Street Journal editorial Wednesday said Trump’s and his wife’s coins create “flashing-red political risks and ethical conflicts,” because entities with interests before the federal government might try to influence the president by saying they intend to buy, or have bought, $TRUMP tokens.
The White House press office did not respond to a request for comment. When Fox News this week asked David Sacks, a tech investor and Trump’s “artificial intelligence and crypto czar,” if the Trump coin creates a conflict of interest, he said no. Sacks instead described it as a “collectible,” like a baseball card or a stamp. “I’m not a regulator,” he said, “but my personal opinion is that it’s totally fine.”
Tom Schmidt, a general partner at Dragonfly Capital Partners, a venture capital firm that invests in crypto start-ups, says he is coming to terms with Trump’s multifaceted crypto strategy. The coins made in the image of the president and first lady made him wonder if Trump “actually understands the industry and the things we want,” he said. But the president’s crypto executive order and pardon of Ross Ulbricht, the founder of illicit online marketplace Silk Road who was sentenced to life in prison in 2015 for conspiracy and money laundering, have softened the blow.
Despite the negative reaction from some industry insiders, Trump’s tokens appear to have persuaded some people to make their first investments in digital assets – similar to how his election win saw a cryptocurrency surge due in part to newbies piling into the markets.
About 40 whales, or accounts with large holdings, control the vast majority of Trump and Melania tokens, according to Chainalysis, a blockchain analytics firm.
But about half of users holding Trump or Melania tokens have never before bought an alternative token on the Solana crypto platform where these tokens are offered, Chainalysis calculates, and 80% have less than $1,000 worth of assets via Solana.
Eric Jardine, cybercrimes research lead at Chainalysis, takes that as a sign that many who have bought into the tokens are probably retail investors, he said in an interview Friday.
Aasim Rasheed, a 33-year-old based in the Bay Area who works for Hotcoin, a Chinese cryptocurrency exchange, has seen firsthand evidence $TRUMP is enticing crypto converts.
He bought into $TRUMP and then sold his coins before the inauguration, Rasheed said in a phone interview Thursday. Though he wishes he’d held on longer, he thinks the coin is “exciting” for the industry because it’s an asset for the masses.
Rasheed has heard “grandmas” talking about the coin on the New York City subway and has been fielding questions from crypto newbies asking him what apps to download to manage their holdings.
Rasheed compared the Trump coins to McDonald’s hamburgers – not the healthiest or tastiest meal, but cheap, readily available and popular. “Everybody knows McDonald’s doesn’t make the best hamburgers,” Rasheed said, “but it’s everybody’s first hamburger.”
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https://washingtonpost.com/documents/0fc5de8f-3670-4e7f-ac3a-debc8ea2b762.pdf