Those tendencies make it all the more striking that Trump has embraced some of Silicon Valley’s least consumer-friendly creations. The president announced last week that he had endorsed the release of “Trump Memes,” a personal cryptocurrency project. It quickly ballooned to a whopping $30 billion valuation. The following day his wife, Melania, released a similar coin that saw a similar meteoric rise in price.
OK, you might ask at this point, but what is it, really? Why did Trump and his wife create these things? Why would anyone buy them? What’s the point?
The $TRUMP and $MELANIA coins are a venture of the Trump Organization, the president’s family business, as well as two LLCs of unclear ownership. The official website says that 80 percent of the coins are held by CIC Digital LLC, while 10 percent are distributed to the general public and 10 percent are held as liquidity. Up to a billion coins will be gradually “created” over the next three years before an artificial cap is set on the total number in existence.
This approach to investing can lead to disastrous effects for consumers. Last fall, for example, a young woman who went viral on the internet for a fellatio joke created a memecoin based on her signature phrase. It reached nearly $500 million in market capitalization before losing nearly all of its value. She has denied accusations of a “rug pull,” meaning that she and other early adopters would have sold at the peak and essentially “pulled the rug” out from under others who poured thousands into it. But it’s telling that such schemes are so common that the crypto community has lingo to describe them. The Trump coins’ website has a three-month window where initial adopters can’t sell them, apparently in hopes of defraying these concerns.
The fine print on the official website emphasizes the symbolic nature of the coin—and claims it is not an investment opportunity at all. “Trump Memes are intended to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol ‘$TRUMP’ and the associated artwork, and are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type,” it stated. “GetTrumpMemes.com is not political and has nothing to do with any political campaign or any political office or governmental agency.”
Naturally, disclaimers that an investment may lose value are standard across the financial industry. But the assertion that these are simply a fun community-building tool instead of a financial product are unconvincing. At least one investment firm has already filed paperwork to create an ETF, or exchange-traded fund, that would hold some amount of the $TRUMP coins. That would allow more conventional investors to get a slice of the action without holding the coins themselves. The Securities and Exchange Commission had long resisted ETFs for cryptocurrency products but has since relented: In January it loosened the rules for bitcoin-related products, and again in October for other cryptocurrencies.
For that reason, the crypto industry went all in on the 2024 election. Top Silicon Valley venture capitalists, many of whom have backed crypto-related projects, backed Trump publicly after the assassination attempt last July. Crypto-related PACs spent an estimated $135 million on dozens of congressional races in hopes of tilting the legislative landscape in their favor. Trump has rewarded their support by promising to aggressively pursue pro-crypto policies, by nominating pro-crypto officials to lead the nation’s financial regulators, and by appointing venture capitalist David Sacks as his administration’s “crypto and AI czar.”
And while Trump’s supporters are the market (or, potentially, the marks) for this latest venture, these arrangements should raise red flags for others as well. Cryptocurrencies are famously used as a means to bypass traditional financial institutions. A presidential memecoin raises the possibility that foreign countries could have secret, off-the-books financial relationships with Trump, potentially violating the foreign emoluments clause. It potentially allows wealthy backers to boost the president’s net worth and curry his favor, evading traditional financial disclosures. And it creates an inherent conflict of interest as his administration sets out to create a favorable regulatory environment for cryptocurrencies in general.
In the short term, however, it will have the sharpest negative effects on his own supporters. The $TRUMP coin peaked at just over $74 on January 19; it has since tapered down to around $39 as of Friday. As a digital token with no inherent value or function, it is unlikely to reach those highs again. The president wasn’t lying when he described the coin as an “expression of support for, and engagement with, the ideals and beliefs embodied by the symbol ‘$TRUMP.’” Those who supported him enough to buy the coin will likely find out what that means the hard way.
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