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WLFI’s USD1 stablecoin will be used as a collateral asset on Falcon Finance, fueling regulatory concerns about potential conflicts of interest related to the Trump family-backed platform.
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A blockchain platform affiliated with US President Donald Trump has invested $10 million in Falcon Finance to support the development of stablecoin infrastructure, the companies said Wednesday.
The investment aims to improve liquidity and interoperability between two stablecoins: Falcon USD (USDf) and World Liberty Financial USD (USD1), a token launched by the Trump-linked World Liberty Financial (WLFI) platform in March.
Falcon Finance will use the $10 million investment to build shared liquidity, multichain compatibility and quick conversion infrastructure between USDf and USD1, the company said.
The USD1 token, associated with Trump’s son Eric, will also be used as collateral on Falcon Finance.
In May, USD1 was used to settle MGX’s $2 billion investment into Binance Exchange, according to an announcement by Eric Trump during a panel discussion at Token2049 in Dubai.
Related: Trump’s WLFI tripled Ether holdings in a week amid market downturn
The partnership seeks to create a “more robust and flexible digital dollar infrastructure” for both retail and institutional participants, said Zak Folkman, co-founder of World Liberty Financial.
Folkman added that Falcon’s overcollateralized model, combined with USD1’s reserve-backed framework, will help deliver a reliable synthetic dollar alternative for global retail and institutional use.
Falcoon Finance’s synthetic dollar protocols accept a range of collateral assets under its overcollateralized model. USD1’s one-to-one redeemability and reserve backing aims to complement Falcon’s synthetic dollar offering as an additional collateral asset.
Cointelegraph was unable to independently verify the $10 million investment.
The announcement comes three weeks after Falcon’s USDf dropped below its intended $1 peg to as low as $0.9783 on July 8, creating investor concerns over the synthetic overcollateralized stablecoin’s collateral quality. USDf regained its dollar parity by July 14.
The WLFI platform’s USD1 also lost its dollar peg, falling to $0.9954 on Tuesday. The stablecoin has so far been unable to regain dollar parity and traded at $0.9993 at the time of writing, CoinMarketCap data shows.
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Could the Trump family-linked crypto ventures complicate crypto legislation?
The Trump-family-linked stablecoin is seeing growing utility in the crypto space. Yet, some industry watchers are concerned that the Trump family-linked blockchain platform’s growing involvement in the crypto space may complicate the passage of emerging US blockchain legislation.
According to a Bloomberg report, crypto-related ventures have added at least $620 million to President Trump’s over $6 billion net worth.
Meanwhile, political division is deepening over crypto legislation in the US Congress after some leading Democratic Party members in the House of Representatives announced a collective effort to oppose Republican efforts to pass what they called “dangerous” legislation.
“[Republicans are] doubling down by fast-tracking a dangerous package of crypto legislation through Congress,” said House Financial Services Committee ranking member Maxine Waters.
Waters specifically criticized the Anti-CBDC Surveillance State Act — a Republican-backed bill that would prohibit the launch of a US central bank digital currency — and the CLARITY Act, which seeks to define the structure of digital asset markets.
“Aside from lacking urgently needed consumer protections and national security guardrails, these bills would make Congress complicit in Trump’s unprecedented crypto scam,” she added.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
This article first appeared at Cointelegraph.com News
