Trump unveils new crypto venture World Liberty Financial

The former president, who had teased the announcement of World Liberty Financial to his over 90 million followers on X, spoke during a hosted Q&A to start the stream. He spoke broadly about the blockchain industry, the success of his NFT collections and crypto's generational learning curve.

• He didn't personally speak about the project he is launching before turning the stream over to his sons and partners.

The platform is reportedly being described as a decentralized finance (DeFi) money market, or a platform where people can borrow, lend and earn interest on crypto.

• DeFi differs from traditional finance in that it doesn't include anyone in the middle to facilitate transactions. Everything is done on a blockchain, governed by smart contracts created by the project.
• Today, there is already roughly $44 billion in crypto posted to back DeFi loans globally.

How it works: The only thing the project team spoke to specifically Monday night was the fact that the project will launch a new cryptocurrency — sort of.

• It will create a so-called governance token, called WLFI, which will not be transferable and will not earn yield. It can only be used to vote on changes for the project.
• 63% of the supply will be sold to accredited public investors, with no pre-sales or VC allocation, project partner Chase Herro said. Another 17% will be set aside for rewards, while the remaining 20% will be help by the project team for compensation.

💭 My thought bubble: It's unclear why anyone would buy a token if it's non-transferrable. What's the point of it? That's the question everyone in crypto is likely to be asking.

Zoom in: Herro and Zachary Folkman, who is also reportedly listed on World Liberty Financial's white paper, were reportedly behind a similar sounding effort that only lasted a few months, Dough Finance.

• Dough was brought down by a hack that took basically all the funds deposited into it.

The big picture: Trump is billing World Liberty Financial as a chance to "Make Finance Great Again."

• Banking "has become politicized," Donald Trump, Jr. said Monday night after his father signed off. Decentralized finance (DeFi) "takes that political component out of it."

• But for the Trumps, according to Bloomberg, it's nothing more than an endorsement deal.

Either way, one burning question is whether a sitting president could even be associated with such a business.

• DeFi, by its nature, is permissionless. There's no identity checks at the doors for users. As one DeFi advocate said at a congressional hearing recently, "That is the epitome of financial inclusion."
• But that also means there's nothing to prevent foreign governments from using it heavily in hopes of currying favor with a Trump administration, which raises questions about the Constitution's Emoluments Clause.

"The constitutional problem is the President cannot take an emolument (money or things of value) from a foreign government without permission from Congress," Stetson Law Professor Ciara Torres-Spelliscy tells Axios.

• So if profits from the project came from constitutionally prohibited sources, she says, it raises the same issue. If they ever reach Trump.
• However, she also noted that the courts punted on these issues in his first term.

The intrigue: Trump's embrace of crypto has been extremely well received by the blockchain industry. But this DeFi side hustle has not been.

• Celebrities who become enamored with cryptocurrency and try to become entrepreneurs tend to end up losing money for their unsophisticated fans.

What we're watching: The optics of a presidential candidate launching a new company could make cryptocurrency policy an election issue after all.