What bankers need to know about Trump's World Liberty Financial

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In a video posted on X on Thursday, former President Donald Trump said he will be announcing a new crypto company he's launching with his sons, Eric Trump and Donald Trump Jr., on Monday night. Eighteen-year-old Barron Trump is reportedly the project's "DeFi visionary."

"We're embracing the future with crypto and leaving the slow and outdated big banks behind," Trump said in the short video about the company, World Liberty Financial.

Trump has pledged during his presidential campaign to turn the U.S. into the "crypto capital of the planet," as he put it in an August video about World Liberty Financial. In combination with the imminent launch of his own crypto venture, the comments raise concerns that, if elected, he might use the federal government to help support a business tied to himself and his family.

Trump has often faced similar accusations in the past. Over the course of his presidency, Trump made more than $200 million from foreign business interests, according to campaign finance and lobbying data nonprofit OpenSecrets — a result primarily of personally maintaining control over his real estate companies while president. He has also faced allegations by Democrats of steering government spending to his resorts.

Trump and his sons have publicly disclosed few details on what the company will offer beyond saying that it is a decentralized finance platform, which could mean storing monetary value in a digital wallet, lending money in a peer-to-peer manner with cryptocurrency or a number of other applications.

One part of the company's offering seems clear — that it will create or use a stablecoin tied to the U.S. dollar. A stablecoin is a type of cryptocurrency that attempts to peg the value of a unit of the cryptocurrency to an exact, unchanging amount of fiat currency.

On its Telegram channel this month, the company posted a message about "spreading U.S.-pegged stablecoins around the world" as a means of ensuring "the U.S. dollar's dominance continues."

The marketing for the yet-to-launch decentralized finance company leans heavily on depicting "banks and financial institutions" as "crooked" and claims they "rig the system against everyday Americans," as Trump Jr. put it in a message last month in the official Telegram channel for the project.

"They shut people out, deny them loans, drown them in paperwork and kill them with legal and processing fees," Trump Jr. said. "These banks and the elites who run them want absolute control but that ends now."

World Liberty Financial has partnered with Aave, a collateralized crypto lending platform, though the company has been careful to say it is not creating a fork of Aave — i.e., the company is not simply copying the open source code behind Aave.

"History shows those don't work," reads a message from the World Liberty Financial Telegram channel, possibly in reference to the accidental liquidation of $26 million earlier this year on an Aave fork.

Aave allows people to deposit cryptocurrencies into the platform's lending pools and borrowers to borrow from these pools, as long as they provide collateral cryptocurrency worth more than the amount they want to borrow. The partnership suggests World Liberty Financial may be built on the ethereum blockchain, as Aave is.