Memecoins launched by President Donald Trump and his wife days before his inauguration are damaging the industry’s reputation and risk provoking backlash from investors, crypto executives have warned.
$ASSET was launched by the president on Friday evening in the United States and was followed on Sunday by $MELANIA. The total face value of both tokens initially increased over the weekend, with the president’s reaching $14.5 billion and Melania’s nearly $3 billion.
But they have since lost more than half their value, giving rise to accusations of conflicts of interest and concerns that thousands of retail investors were drawn into even more volatile token trading than bitcoin.
“Call me old-fashioned, but I think presidents should focus on running the country,” said Nic Carter, founding partner of crypto venture capital firm Castle Island Ventures and a Trump supporter.
“Not to mention the obvious (conflict of interest) given that Trump can set crypto policy,” he added.
At the World Economic Forum in Davos, a major Silicon Valley investor called Tesla boss Elon Musk and Trump the “new Crassus and Caesar,” referring to Roman political figures who have formed an alliance to promote their own interests.
“We are seeing a true ‘end of empire’ in the United States,” the person added, noting the creation of trillions of dollars in wealth overnight. “Human nature never changes.”
According to data from CoinMarketCap, much of the trading activity for the 200 million available Trump coins is not centered in the United States, but on little-known Asian exchanges such as BiKing, Gate.io and Megabit.
Memecoins have no cash flow, business model, or practical utility to support their valuations. Their value derives from their popularity, which is often as fleeting as the memes they represent.
“Trump Memes are intended to function as an expression of support and commitment to the ideals and beliefs embodied in the symbol ‘$TRUMP,'” the piece’s website states.
The launch of Trump’s coins comes after the president gave his enthusiastic support for crypto during his election campaign. He promised a more industry-friendly regime for businesses, after executives faced a regulatory crackdown under the Biden administration.
But many in the crypto The industry fears the launches threaten further reputational damage to a sector that is trying to rebuild trust after a series of high-profile frauds and collapses.
Some lawmakers, meanwhile, worry that retail traders will lose large sums of money.
“This memecoin represents the worst of cryptocurrencies,” said Maxine Waters, a Democratic congresswoman and member of the U.S. House of Representatives Financial Services Committee. “Trump created a way to circumvent national security and anti-corruption laws by allowing interested parties to anonymously transfer money to him and his inner circle.”
“His economic interests are for sale,” said Oskar Åslund, chief strategy officer at AKJ, a crypto hedge fund brokerage. “There are no checks and balances here.”
Gettrumpmemes.com did not respond to a request for comment.
“I think it hurts the industry,” Anthony Scaramucci, founder of SkyBridge Capital and former White House communications director, said during a panel in Davos on Tuesday. “I think it’s going to slow down some people in the regulatory process,” added Scaramucci, whose company runs a digital assets fund.
The world’s most popular memecoins are tokens that reference viral moments and characters on the Internet, such as Dogecoin, depicting a Shibu Inu dog; Pepe, representing a comical green frog; and Fartcoin.
About 80% of Trump tokens are held by CIC Digital, an affiliate of the Trump Organization, and a company co-owned by CIC called Fight Fight Fight LLC, according to the token’s website — a reference to the Trump assassination attempt last summer. . The companies will also receive a share of trading revenue related to the Trump token.
Tokens held by insiders will begin to go on sale over the next three to 12 months.
Following Trump’s lead, Lorenzo Sewell, a Detroit pastor who spoke at the president’s inauguration, announced the launch of his own memecoin later today.
“I need you to do me a favor and go get this piece so we can fulfill the vision that God has called us to do on earth,” he said in an online video.
Although Trump’s promises of pro-cryptocurrency regulations have been welcomed by the industry, executives are doubtful that the president’s enthusiasm for memecoins will benefit them in the long run.
“The immediate effect was to divert cash and attention away from legitimate projects working on real use cases that the industry desperately needs to prove to the world in 2025,” said Serge-Raymond Nzabandora, director of business development and finance at Yield Guild Games, a blockchain company.
“(Memecoins) will ultimately cost retail investors given its zero-sum nature. “It’s unfortunately ironic because that’s what Gary Gensler (former chairman of the Securities and Exchange Commission) was trying to avoid,” he added.
Trump vowed to “end the persecution” of the crypto industry and named crypto advocate Paul Atkins to head the regulator, leading many to believe that increased scrutiny of the coins’ own Trump’s currency is unlikely.
In an apparent attempt to avoid possible legal action, terms listed on the Trump memecoin website state that users “agree not to file, join, or participate in any class action regarding any claim, dispute, or controversy you may to have “.
Haliey Welch, who created a memecoin called “Hawk Tuah” based on a viral internet moment, was sued late last year after investors lost money on her token. Last month, she said the trial was ongoing and that she was “fully cooperating” with lawyers.
“There is no protection for retail investors in this area,” Åslund added. “He’s sort of above the law, which is obviously also a scary thing.”