Author: Jae, PANews

Not long ago, Eric Trump, the second son of US President Donald Trump and co-founder of WLFI, tweeted that USD1's market capitalization has surpassed that of PayPal's stablecoin PYUSD. In just over six months, USD1's market capitalization has reached $4.9 billion, propelling it into the top five of the stablecoin sector with an astonishing growth rate.

The rapid rise of USD1 is not simply a commercial victory. The issuer of USD1 is not a traditional bank or fintech giant, but World Liberty Financial (WLFI), which is closely associated with the family of current US President Donald Trump. Leveraging Trump's political aura and favorable policies, a well-intentioned but ultimately deliberate strategy in the crypto-financial arena is emerging.

In the history of the crypto industry, no project has ever intertwined family interests, political power, and digital finance as deeply as WLFI and its issued stablecoin USD1.

From aggressive subsidies to full-scenario penetration, launching a liquidity blitzkrieg via Binance

In the competition for stablecoins, liquidity is the lifeline. The rapid growth of USD1's market capitalization and its overtaking of PYUSD is no accident.

On one hand, WLFI, in conjunction with leading exchange Binance, launched a "liquidity blitzkrieg" by injecting liquidity into USD1 through the latter's "USD1 Booster" program.

This is a typical combination of "high-yield subsidies + full-scenario penetration". Through high-yield subsidies and platform-wide account incentives, Binance provides ample liquidity depth for USD1.

USD1's cold start strategy adopted the classic "liquidity mining" model in the DeFi market, but with Binance's support, its scale and coverage have been expanded exponentially.

The first phase of Binance's "USD1 Booster" program offered an annualized return of up to 20%, which was seen by the market as a form of "artificial subsidy" for customer acquisition. Against the backdrop of fluctuating macroeconomic interest rates, this return level, far exceeding that of traditional finance, quickly attracted a large number of retail investors.

However, this extremely high return does not stem from the sustainable profitability of the protocol itself, but is borne by a fixed prize pool provided by WLFI, which aims to attract massive amounts of funds in a short period of time.

As the first phase was nearing its end, Binance launched the second phase of the "USD1 Booster" program, but the yield was reduced to a tiered 8% and 4%. This adjustment also reflects USD1's strategic shift from "expansion" to "retention".

The USD1 Booster program has designed a tiered interest rate structure to target different user profiles, aiming to maximize USD1's user reach and achieve its retention goals.

To further enhance the practical utility of USD1, Binance also launched a $40 million WLFI token incentive program.

The innovation of this campaign lies in its "full account coverage" feature. Users only need to hold USD1 in their spot account, cash account, leveraged account, or even futures account to share in the weekly $10 million token airdrop, embedding USD1 into every aspect of the user's journey.

Binance has also introduced a "reward multiplier" mechanism to encourage users to use USD1 in leveraged trading scenarios.

However, according to calculations, the annualized return of this activity is expected to be between 10% and 15%. The current activity period is only one month, so its actual return is less than 2%. Investors need to take into account the exchange wear and tear and the price fluctuation of WLFI tokens.

With Binance's strong support, the market capitalization of USD1 increased by approximately $2 billion, representing a month-on-month increase of over 40%. As a "benchmark product" of the Trump family's projects, USD1 also provides Binance with a high-quality asset with strong political backing.

Business based on connections, from partnerships with the Central Bank of Pakistan to applications for US banking licenses.

Compared to USD1's progress in the crypto industry, its expansion in the sovereign credit market is more noteworthy.

On January 14, the Central Bank of Pakistan signed a memorandum of understanding with SC Financial Technologies, an affiliate of WLFI, to explore the use of USD1 for cross-border payments and remittances.

Pakistan, a major global labor exporter, receives over $36 billion in overseas remittances annually and boasts approximately 40 million cryptocurrency users. However, traditional remittance channels such as SWIFT are not only inefficient but also incurred high intermediary costs.

USD1 offers a near-instantaneous, low-cost alternative. The Virtual Assets Authority of Pakistan and the central bank plan to integrate USD1 into a regulated digital payments framework, allowing it to operate in parallel with Pakistan's own central bank digital currency pilot project.

By partnering with sovereign nations, USD1 is attempting to upgrade itself from "just another stablecoin" to a "national-level payment infrastructure," its ambitions are self-evident.

For the Pakistani government, embracing USD1 not only optimizes financial infrastructure but also serves as a geopolitical diplomatic calling card to the new US administration. For the Trump family, this is a crucial step for USD1 towards becoming a "sovereign-level credit instrument," but it is no longer about companies expanding into markets; rather, it is about the penetration of political influence and state capital.

The collaboration was facilitated by WLFI CEO and co-founder Zach Witkoff, son of U.S. Special Envoy to the Middle East Steve Witkoff, who has previously visited Pakistan. Notably, Steve Witkoff also serves on the executive committee of the current President Trump's Peace Council, of which Pakistan is a member.

This "political spillover" effect is evident. The USD1 is no longer just a simple commercial product, but also an extension tool of US foreign policy.

USD1 is becoming a core component of the dollar's hegemony in the digital finance sector. By first establishing a payment standard in Pakistan as a strategic outpost, and then deeply binding USD1 with the payment infrastructure of various emerging market countries, WLFI is essentially implementing a "digital dollar hegemony" strategy, attempting to ensure that the dollar can still maintain its global reserve status through digital finance when facing the challenges of de-dollarization.

The outline of this "open conspiracy" is gradually becoming clear. WLFI's affiliated entities have applied to the Office of the Comptroller of the Currency (OCC) for a license to establish a national trust bank. While the OCC has stated it will conduct a rigorous review, the current OCC commissioner, a Republican, was nominated by Trump and is a long-time subordinate of the Trump administration.

If successful, USD1 will leap from a controversial private project to a formally regulated federal banking institution. This would completely blur the lines between private finance, political power, and national will, setting an unprecedented precedent.

Regulatory amnesty faces accusations of being a pledge of loyalty; Trump family to receive 75% of net profits.

The rapid rise of USD1 is inseparable from a complex and secretive network of alliances, whose core participants are mostly crypto giants that have been at the center of regulatory storms.

Since Trump's return to the political arena, the regulatory strategy of the U.S. Securities and Exchange Commission (SEC) has undergone a dramatic transformation. Since 2025, the SEC has dropped numerous lawsuits against industry giants such as Binance, Coinbase, and Kraken.

Binance: In March 2025, Abu Dhabi-based investment firm MGX injected $2 billion into Binance via USD1. Two months later, the SEC announced that it had exercised its discretion to drop some of the charges against Binance.
Justin Sun: Justin Sun spent at least $75 million to acquire WLFI tokens and served as an advisor. Subsequently, the SEC's fraud investigation into his company stalled as the SEC sought a settlement.

A series of coincidences on the timeline have sparked widespread skepticism in the market regarding "paid participation." Crypto giants are reportedly trading regulatory leniency for support of the Trump family's projects. According to official SEC filings, the Trump family profits approximately $80 million annually from USD1 reserve management fees and various commissions alone.

WLFI's terms of service reveal that entities affiliated with the Trump family receive up to 75% of the net proceeds from token sales and stablecoin profits. This means that the higher USD1's market share and the stronger its liquidity, the faster the Trump family's wealth grows.

The complex web of interests behind USD1 has placed it in a unique "regulatory vacuum." It enjoys the compliance benefits brought by the Genius Act, but its special political endorsement renders conventional auditing and transparency requirements ineffective.

Insufficient transparency in reserve management may pose a risk of political retribution.

Despite the significant success USD1 has achieved on paper, its underlying vulnerabilities and potential political risks should not be ignored.

USD1 claims to be custodied by BitGo Trust, with underlying reserves consisting of 100% US dollar cash, US short-term Treasury bonds, and money market funds, and is managed by Fidelity Investments.

However, compared to Circle's (USDC) punctual monthly audit reports, USD1's reports are often delayed and lack the endorsement of the Big Four accounting firms.

Furthermore, USD1 liquidity is excessively concentrated. Binance alone accounts for nearly 80% of the liquidity in terms of address distribution. This highly centralized liquidity structure casts doubt on USD1's survivability under stress tests. For example, when Binance's subsidies end and USD1 incentives drop to the real interest rate, if it cannot provide additional on-chain utility, it could lead to a large-scale capital flight.

The "behind-the-scenes operation" by DWF Labs, which injected approximately $300 million in secret funds into USD1 through anonymous wallets, has further fueled market doubts about the authenticity of USD1's peg.

Compared to the financial challenges, the political risks are more worrying.

While most stablecoins are pegged to market confidence, the confidence in USD1 largely depends on Trump's political influence. A dramatic shift in the political environment, or a collapse in the WLFI token price, could trigger a run on USD1.

Moreover, if the White House changes hands, USD1 may face severe audits and compliance challenges due to its connection with the families of former presidents.

The Trump family's stablecoin strategy is essentially a way to monetize a franchise in the crypto industry by leveraging the massive reach and power associated with their political status.

The USD1 narrative is also shaping a new logic: in the digital finance era, code is not only law, but politics can also become part of the code.

While USDT maintains its dominant liquidity in the global stablecoin landscape and USDC continues to uphold compliance, USD1 has pioneered a new "power-driven" track.

Source: Trump family in talks to buy stake in cryptocurrency exchange Binance

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