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World Liberty Financial, the crypto venture launched by former president Donald Trump, recently unveiled its native token and is now reportedly planning to create its own stablecoin, which can act as a substitute for the U.S. dollar, as reported by Decrypt.
Stablecoins, a type of cryptocurrency pegged 1:1 to the value of a fiat-currency like the dollar or euro, have gained significant popularity in recent years. If the report about World Liberty, published by Decrypt, is accurate, the World Liberty team would be joining the ranks of companies like PayPal, Coinbase, and Robinhood, all of which have either launched or are in the process of developing their own stablecoins.
The development of the World Liberty stablecoin is still ongoing and will require some time before it is launched as the team focuses on ensuring the financial product’s safety before its release, according to an anonymous source cited by Decrypt.
Observers following the platform closely may have anticipated this move. Earlier this month, the World Liberty team announced that Rich Teo, co-founder of Paxos— a stablecoin issuer managing the U.S. dollar-backed Paxos Standard Token, or PAX—would be joining the platform to lead its stablecoin and payments operations.
However, creating a stablecoin is a complex process that involves a significant amount of capital and navigating unclear regulatory and legal boundaries, in addition to competing with established players like Tether and USDC.
In order to maintain a stablecoin’s value at a fixed price, it must be collateralized or backed by a fiat currency. While some projects have attempted to avoid this requirement with crypto strategies, many have failed dramatically, such as in 2022 when stablecoin issuer Terra collapsed, resulting in significant losses.
Despite uncertainties regarding how the World Liberty team plans to develop a reliable stablecoin, the Trump family stands to gain significant profits if the project is successful. Tether, the largest stablecoin globally, reported a record profit of $5.2 billion in the first half of 2024.
World Liberty Financial, introduced in early September shortly before the election, has been described as a “decentralized finance money market.” WLFI is a governance token that enables holders to make decisions, vote on proposals, and govern a crypto project on-chain. The token is non-transferable and does not generate yield.
Prior to its launch, the company pre-approved over 100,000 accredited investors and aimed to raise $300 million in the initial sale. However, the company fell short of this target, only raising $14 million and selling 4.7% of tokens.
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