The business of stablecoins is large yet invisible.

Written by: LEO SCHWARTZ / BEN WEISS

Compiled and organized by: BitpushNews

The relationship between President Trump and his family with cryptocurrency is becoming increasingly close. The latest example occurred last week when Trump’s son, Eric Trump, announced that the UAE venture capital firm MGX would use the stablecoin issued by World Liberty Financial (a blockchain company owned by the Trump family) to pay for its $2 billion investment in the cryptocurrency exchange Binance.

The Trump family and its business partners are expected to profit from this deal, but the exact amount is difficult to determine due to a lack of transparency regarding the details. Binance did not respond to requests for comment, and a spokesperson for World Liberty Financial also declined to provide more details beyond what is publicly available.

Despite the limited disclosure, Fortune has provided an upper estimate of the potential profits for the Trump family by interviewing experts in the stablecoin field and analyzing the current crypto ecosystem.

The Business of Stablecoins: Large Yet Invisible

Stablecoins are the latest component in Trump’s expanding crypto empire, but they have long been an important part of the cryptocurrency industry. Tether, Circle, and later PayPal and Ripple have all made substantial profits from issuing stablecoins. Tether's revenue reached $5.6 billion in the most recent quarter, while Circle's total revenue for 2024 also reached $1.7 billion.

For this reason, World Liberty Financial issued its own dollar stablecoin, USD1, in late March this year. Like most dollar-pegged stablecoins, USD1 is backed by short-term government bonds and other dollar-like assets, typically generating about 4% annualized returns—most of which usually goes to the issuing entity.

If Binance holds USD1, then World Liberty Financial will earn interest on the reserve assets backing it, which, at 4%, could yield up to $80 million in a year.

However, this figure is subject to significant variability. For instance, if World Liberty retains all interest earnings, Binance would have no incentive to hold USD1 long-term and might exchange it for BNB or other income-generating assets.

Additionally, according to a spokesperson, the reserve assets for USD1 include various "cash equivalents" in addition to government bonds. However, World Liberty has not disclosed the specific asset composition, so there may be cash components that do not generate returns.

Omid Malekan, a cryptocurrency scholar at Columbia Business School, pointed out that MGX may not have actually sent funds to Binance yet. If Binance receives the funds and immediately liquidates USD1, World Liberty would earn no interest. Furthermore, Binance might use these USD1 for transaction settlements on the platform or for employee salary payments.

Edward Woodford, co-founder and CEO of Zero Hash (a stablecoin infrastructure provider), also stated, "Vendors and employees need to be paid, so these tokens may be quickly destroyed." ("Destroyed" refers to exchanging stablecoins back to cash with the issuer.)

Could Binance Get a Cut?

Todd Phillips, a law professor at Georgia State University, noted that Binance may have entered into some sort of profit-sharing agreement with World Liberty Financial. He cited that Binance previously reached a similar agreement with Circle, where Circle not only paid a one-time fee of $60 million but also paid Binance monthly fees to promote USDC, committing to keep some funds in that stablecoin.

If Binance has a similar arrangement with World Liberty, then the latter's earnings could be significantly reduced, but the liquidity and market visibility of its stablecoin would be greatly enhanced.

Binance had previously partnered with stablecoin issuer Paxos to launch BUSD, but that coin was halted by regulators in early 2023. Currently, most of USD1 is issued on Binance's own blockchain.

"Why USD1?" Malekan said, "Perhaps they just offered Binance the best partnership terms."

In summary, while theoretically, the Trump family could profit $80 million from USD1, this depends on whether the tokens will be destroyed or if profits need to be shared.

Democrats Strike Back: "Blatant Conflict of Interest"

Regardless of the specific agreement between Binance and World Liberty, Democratic lawmakers have viewed this transaction as new evidence of a conflict of interest between the Trump family and the cryptocurrency industry.

Maxine Waters, a senior Democrat on the House Financial Services Committee and a California congresswoman, stormed out of a blockchain hearing on Tuesday in protest of the Trump family profiting while participating in regulatory legislation.

In a statement to Fortune, she said, "I am extremely concerned that Republicans not only ignore Trump's corruption but are even helping him and his family legitimize their self-enrichment through cryptocurrency."

This controversy has also impacted the previously bipartisan Stablecoin Regulatory Act in Congress. A group of Democratic senators who had previously supported the bill collectively opposed the latest version over concerns regarding Trump's association with USD1.

Massachusetts Senator Elizabeth Warren bluntly stated, "This is blatant corruption, and no senator should support it."

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