World Liberty Financial, a cryptocurrency venture associated with former U.S. President Donald Trump, recently launched its native token and is reportedly working on developing a stablecoin, according to Decrypt. Stablecoins are a kind of cryptocurrency that are pegged to the value of a fiat currency like the U.S. dollar or euro, which have gained significant popularity over the past few years. If the report by Decrypt is accurate, World Liberty Financial would join other companies such as PayPal, Coinbase, and Robinhood in creating their stablecoins.
The development of World Liberty Financial’s stablecoin is reportedly still in progress, with the team focused on ensuring the financial product’s safety before introducing it to the market, according to an anonymous source from Decrypt. Earlier in the month, the company announced the addition of Rich Teo, co-founder of Paxos, as its leader for the stablecoin and payments division.
However, creating a stablecoin poses challenges beyond hiring experienced personnel. It requires significant capital investment, navigating complex regulatory environments, and the ability to compete with established entities like Tether and USDC. Stablecoins must be collateralized to maintain their value relative to a fiat currency. Attempts to avoid this requirement through alternative methods have largely been unsuccessful, as evidenced by the collapse of Terra in 2022, resulting in substantial financial losses.
Despite uncertainty surrounding the development of a solid stablecoin by World Liberty Financial, the potential for financial gain exists if the project is successful. Tether, for example, reported a record $5.2 billion profit in the first half of 2024.
Initially announced in early September, World Liberty Financial has been described as a decentralized finance (DeFi) money market. Its governance token, WLFI, allows holders to participate in decision-making and voting on project proposals without the possibility of transfer or yield.
Prior to launching, World Liberty Financial reportedly whitelisted over 100,000 accredited investors with the aim of raising $300 million during its initial sale. However, the company has raised $14 million, selling only 4.7% of its tokens.