Jessy, Golden Finance
With less than three days before taking office as the US President, Trump issued a coin.
This coin, called Trump coin, was issued by Trump X's official account and was issued at a price of $0.18. In just two days, the highest price reached $82. The overall market value reached a maximum of $82 billion, and the circulating market value reached $16.4 billion.
When the circulating market value of the token was at its highest, it exceeded the sum of the market values of Trump Media Technology Group and Digital World Acquisition Corporation, two listed companies under Trump.
Not only Trump himself issued the coin, but also Trump's wife, who saw the huge benefits behind the Trump coin, issued related Meme coins. The project WLF, which was previously launched by his family, also raised funds slowly for three months. Due to the popularity of the Trump coin, it quickly completed the fundraising on the morning of January 20, selling 20% of its total tokens to raise $300 million. After the fundraising ended, the project opened up 5% of the total number of tokens for sale, and the public offering price was three times the original price.
After leaving office as the first president, Trump had issued NFTs, but the response was mediocre. This time, the choice of issuing coins three days before taking office is undoubtedly a time when his political traffic is high and it seems to be able to avoid legal risks.
The Trump family made a lot of money through this round of coin issuance. However, after the short-lived emotional climax of Trump coins getting rich, the coin circle ushered in a sharp drop. On January 20, Bitcoin once fell below 100,000 US dollars.
Hidden worries emerged. First of all, whether Trump's behavior itself involves illegality and whether he is at risk of impeachment?
The direct impact of issuing coins to raise money three days before going online seems to be very bad for the crypto industry. First of all, for outsiders, the stereotype of crypto = casino is more confirmed.
Secondly, Trump's extraordinary behavior has increased the uncertainty of the introduction of a series of policies and regulations that he had promised to benefit the development of the crypto industry.
An even more fatal impact is that the cryptocurrency community has used votes and capital to support Trump as president, hoping that he can guide the crypto industry to further develop in compliance. Trump's behavior of issuing Meme coins before taking office also made people in the industry suspicious and lost confidence.
However, there are also views that Trump's extraordinary behavior will broaden the boundaries of US Web3-related laws.
The legal risks of Trump's currency issuance have been basically avoided
Choosing to issue tokens before officially taking office as president, the Trump family's behavior is undoubtedly to avoid legal risks while converting the political capital of "president" into economic value to the greatest extent.
In fact, the Trump family has basically avoided legal risks.
First of all, it seems that the currency issuance behavior does not involve official corruption, bribery, etc. Lawyer Xiao Sa, senior partner of Beijing Dacheng Law Firm told Golden Finance that the US president has the legitimate right to obtain "bribes", which is the political donation system of the US president. However, political donations are subject to various conditions. According to the provisions of the US Federal Election Campaign Act, US presidential candidates may not accept donations from foreigners, people with contractual relations with the government, national banks, companies, trade unions, etc.That is to say, first, presidential candidates may not accept donations from foreigners. Second, this regulation only regulates "donations". The so-called donations are donations in the form of legal currency such as cash.
If Trump issues virtual currency, it will inevitably cause foreigners to make profits for Trump by purchasing virtual currency on a large scale. Moreover, Trump is still considered a "presidential candidate" before he officially takes office. Then, if he issues his own virtual currency before he officially takes office, there is a great risk of violating the Federal Election Campaign Act. If this logic is followed, then Trump will definitely break the law.
However, Trump will not bear the above-mentioned legal risks, because of the Federal Election Commission (FEC)'s determination of the nature of virtual currency. In fact, as early as the beginning of Trump's first term, the Federal Election Commission (FEC) ruled that virtual currency can be regarded as non-cash donations similar to stocks and bonds. Non-cash donations are not subject to the Federal Election Campaign Act's provisions that foreigners cannot make political donations to US presidential candidates. In other words, virtual currency is not cash, and if it is not cash, it is not subject to the cumbersome regulations of the US political donation system.
Liu Honglin, founder of Shanghai Mankiw Law Firm, told Golden Finance that current US law does not prohibit the president from being involved in private business during his term of office. The tacit understanding established by successive US presidents is generally to entrust the company to relatives for custody and report the company's operating conditions to the national tax department for review. For Trump, his family business will be handed over to his family during his term of office. During the election, the financial disclosure statement he submitted as required by law showed that his financial interests were reflected in more than 500 companies, and he owned a large number of commercial buildings, hotels, golf courses and other properties around the world, as well as other businesses.
However, in my opinion, even if there are no strict legal restrictions, the business activities of the US president will be closely watched and supervised by political opponents, the media and the public. If the president's business behavior is considered inappropriate or not in the public interest, he may face tremendous political and public pressure, and may even affect his political reputation and support rate.
At present, the issuance of coins by him and other members of his family has caused a lot of criticism and dissatisfaction in public opinion. For example, the New York Times criticized that the essence of "Trump Coin" is that Trump is "using his presidency for personal gain." Adav Noti, executive director of the nonprofit Campaign Legal Center, said that Trump holds 80% of "Official Trump" through his NFT company CIC Digital, which means he may gain huge economic benefits from it. "This is actually using the presidency for profit - creating a financial tool that enables people to transfer funds related to their position to the presidential family, which is unprecedented."
Does Trump and his family's coin issuance violate the relevant provisions of the securities law? Disassembling the various specific sales details of the token sale, we will find that in the sales terms, it is mentioned many times that the Trump token is not a security, and users buy the token not as an investment, but to express support and participation in the ideals and beliefs embodied in the symbol "$TRUMP" and related artworks.
Although the token wants to explicitly avoid the various legal risks faced after being listed as a "security" in the sales document. But Xiao Sa believes that, in theory, it may still face legal sanctions (although the president has the right to pardon himself, the negative impact of doing so may be greater). In detail, the regulation of virtual currencies in the United States is mainly handled by multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Office of Foreign Assets Control (OFAC) under the Treasury Department. These agencies have set strict rules for the issuance, trading and use of virtual currencies.
According to the U.S. Securities Act of 1933 and the Securities Exchange Act of 1934, if Trump and his issuance are identified as "securities", then their issuance must be registered with the SEC or meet exemption conditions. If the president issues virtual currency without complying with these regulations, it may constitute an illegal securities issuance.
However, Xiao Sa said that the legal team behind the Trump family should have avoided various possible legal risks before issuing tokens.
Cryptocurrency is not gambling, but the boundaries of the law seem to need gaming to expand
The huge public pressure faced by Trump's currency issuance behavior also makes people wonder what the impact of his behavior is on the future development of the encryption industry?
Most directly, Trump's currency issuance behavior is a consumption of his presidential credit. In particular, after the public sale of WLF project ended, it immediately released 5% of the total token issuance for sale. And Trump's wife also took advantage of the heat to issue Meme coins. This has further deepened the stereotype of the outside world about the crypto industry: cryptocurrency = gambling. Indeed, hyping Meme tokens is itself a kind of gambling behavior, a very typical zero-sum game.
And Trump's crazy move can't help but make people worry whether the crypto-related decrees and regulations he promised can still be smoothly issued and implemented.
After the decrees issued by the US President will be supervised by relevant departments, if it is found that there are problems or unsatisfactory effects in the implementation of the decrees, the decrees may be adjusted or modified. The US courts have the right to conduct judicial review of the decrees issued by the president. If someone believes that the decree violates the constitution or law, they can file a lawsuit in court, and the court will make a ruling based on relevant laws and constitutional principles.
However, in the opinion of lawyer Liu Honglin, Trump's behavior has the meaning of performance art. Trump's style of doing things is "exaggerated", and he pays attention to "winning with big things". He will not do small things under the existing framework, but will do big things. This is consistent with what Mr. Lu Xun said, "If you want to break a window, then you open your mouth to say that you want to take off the roof."
Liu Honglin speculates that in the future, in the regulatory policy game between the US regulatory authorities and the president on Web3, Trump should continue to throw more bombs to government officials to deal with, which will be a process of continuous game and gradual expansion for the boundaries of industry compliance development and the limits of government regulatory scale. On the contrary, this incident will be beneficial to the future regulation and development of web3 in the United States.
The author partially agrees with lawyer Liu Honglin's view, because the laws of the United States themselves are largely the result of the game between the parties. From the legislative process, there is fierce competition between political parties in the US Congress. The Democratic Party and the Republican Party are in dispute over many policy legislations due to different political ideas and interest group demands. Members of Congress also represent different interest groups, and there is also a game of checks and balances between the executive and legislative branches. The president's legislative initiatives need to be passed by Congress. The president's veto power and the congressional overturn mechanism prompt both sides to find a compromise point, especially when the president and the majority party in Congress are different, the game is more intense. In addition, there is also a game between the judiciary and the legislative and executive branches. The judicial review of the Supreme Court affects legislative and administrative decisions, and the appointment of judges has also become the focus of competition among all parties. These fully reflect that American law is the product of the game between all parties.
From one point of view, Trump's bold and "criticized by everyone" behavior will indeed broaden the boundaries of American law on crypto regulation. Moreover, Trump's Trump coin has really made the crypto industry really out of the circle. In the past two days, major mainstream media and social media have been discussing "Trump" coins, and a large amount of outside funds have also entered the market.
After Bitcoin fell below $100,000 on January 20, it broke a new high this afternoon. According to the OKX exchange market, Bitcoin reached a high of $109,800.
But I still have concerns. This is a project without any technological innovation. Its significance may just be to complete the transfer of wealth. Trump and his family are undoubtedly the biggest beneficiaries of this wealth transfer. The company under his name owns 80% of the token. Is such a project really beneficial to the development of the industry?
Kikyo
Weatherly
Catherine
Anais