Stablecoin Rookie: USD1's Rise and Controversy

Reported by Bijie Network:

1. A Sudden Rise: The Rapid Expansion of USD1  

At the beginning of this year, WLF announced its plan for the first time to launch USD1, a stablecoin targeting institutional clients. USD1 is pegged to the U.S. dollar at a 1:1 ratio, with reserves consisting of cash, U.S. Treasury bonds, and equivalents. The assets are custodied by BitGo, and Crowe LLP, an accounting firm, issues monthly reserve verification reports. The industry generally considers it highly transparent and credible. USD1 was officially launched in early March this year with an initial supply of $3.5 million. As of now, its market capitalization has exceeded $2.7 billion, ranking seventh among stablecoins.  

(Fig. 1: Ranking of stablecoin market capitalization. Source: CoinGecko)  

USD1 has attracted much attention since its inception and has risen rapidly in recent months, leveraging its background advantages. USD1 is almost entirely issued on the BNB Chain. According to BscScan data, the supply of USD1 issued on the BNB Chain reaches $2.1 billion, accounting for over 99% of its total circulation, while data from Etherscan shows that the Ethereum version is only $14.5 million. Subsequently, major public chains with high transaction volumes, such as Tron, have launched USD1 to meet on-chain capital demand. Within just a few months, USD1 has been listed on mainstream exchanges like Binance, Bitget, and Bybit, quickly entering multiple on-chain ecosystems.  

(Fig. 2: Comparison of USD1 on BNB Chain (BEP-20) and Ethereum (ERC-20). Source: BscScan, Etherscan)  

The rapid expansion of USD1 is inseparable from the support of major exchanges. Binance took the lead in listing USD1 in April, followed by PancakeSwap, which increased its exposure through promotional activities. Related memecoins quickly swept the market; for example, $B, which surpassed $400 million in ten days, triggered another small upsurge on the BNB Chain. Bitget and Bybit listed USD1 in June and July respectively, launching airdrop and reward programs to further expand liquidity and user access.  

2. Political Elements: Off-Field Controversies Surrounding USD1  

While focusing on USD1's product design, users have also shown strong interest in its political background. It is well-known that USD1 originates from WIF, which is backed by the rising Trump family. Therefore, one of USD1's most distinctive features is its deep ties to the Trump family, which may partially explain its strong market mobilization capability—even convincing the Abu Dhabi Investment Fund MGX to invest approximately $2 billion in USD1 to acquire shares in Binance. The Trump family's resources, coupled with the endorsement of international capital, have given USD1 a growth environment different from most stablecoins from the start.  

However, as USD1's circulation surges, more and more people, even politicians, have begun to question whether the Trump family is using their political position to seek commercial gains. For instance, several senators from the U.S. Senate Banking Committee have sent open letters to regulatory agencies, calling for a review of USD1's compliance and potential conflicts of interest. They argue that if the presidential family directly profits from stablecoin operations, the independence of regulatory agencies could be severely undermined.  

In fact, such concerns are not unfounded. The high-profile memecoin $TRUMP in January this year triggered similar doubts. At the time, the token was suspected of bypassing campaign finance regulations, potentially becoming a channel for the Trump family to obtain opaque income or even political bribes. Although USD1 and Trump Coin differ significantly in positioning and nature, they share a core issue: whether the Trump presidential family is gaining additional political or economic advantages through the cryptocurrency market. Some media have also pointed out that the cooperation between USD1 and Binance may involve more利益 exchanges, especially since Binance has long faced scrutiny from U.S. regulators yet has been exceptionally active in promoting USD1. The public widely worries that such practices could turn stablecoins into tools for politicians to engage in rent-seeking, further increasing regulatory difficulties and undermining social fairness.  

Currently, the U.S. Congress is promoting the implementation of new stablecoin laws and additional cryptocurrency regulatory rules. Whether USD1 can successfully obtain and maintain compliance status will directly affect its long-term development. Especially against the backdrop of bipartisan rivalry, some lawmakers may propose special restrictions on the Trump presidential family's cryptocurrency operations. As a "front-runner," USD1 faces certain political uncertainties and compliance risks.  

Despite several controversies, USD1 still provides more optional trading mediums for cryptocurrency investors, creates a more convenient market environment, and is increasingly favored by investors.  

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