House Democrats Question Treasury Over Trump‑Linked Crypto Bank Charter Request
Washington, D.C. – A coalition of 41 Democrats on the House Committee on Financial Services sent a formal inquiry to Treasury Secretary Scott Bessent on Thursday, seeking clarification on the regulatory review of World Liberty Financial Inc.’s application for a national trust bank charter. The group, led by Representative Gregory Meeks of New York, raised concerns that the proposed charter – which would enable the firm to issue a dollar‑backed digital token – could expose the U.S. financial system to systemic risk, foreign influence and political pressure.
Background to the Letter
World Liberty Financial, a fintech company with ties to former President Donald Trump, has been pursuing a national trust bank charter from the Office of the Comptroller of the Currency (OCC). A national trust bank would be allowed to hold and manage assets—including a stablecoin that the firm plans to launch – under a regulatory framework that has, until recently, been reserved for traditional banks.
The House Democrats highlighted recent reporting indicating that a United Arab Emirates (UAE) royal family member, acting through a UAE‑backed investment vehicle, quietly purchased roughly half of World Liberty for an estimated $500 million. Part of that investment – about $187 million – is alleged to have been directed to Trump‑affiliated entities. The lawmakers argue that this foreign ownership structure, combined with the firm’s political connections, raises “significant questions that regulators cannot afford to sidestep.”
Issues Raised in the Inquiry
The letter outlines several focal points for Bessent’s response:
- Safeguards against foreign interference. Lawmakers ask what mechanisms are in place to prevent foreign government officials or politically connected investors from leveraging the charter process to gain influence over U.S. financial markets.
- Systemic risk from digital‑asset trust structures. The Democrats contend that the novel nature of a crypto‑backed stablecoin, paired with yet‑to‑be‑tested liquidity and resolution frameworks, could create vulnerabilities not covered by existing banking regulations.
- Impact of Executive Order 14215. Enacted in 2023, the order expands White House oversight over traditionally independent financial regulators. The letter queries whether this could undermine the OCC’s independence when evaluating World Liberty’s application.
- Roles of the White House, OMB and Treasury. The inquiry seeks a detailed description of how these bodies interact with the OCC in charter decisions, and whether any direct political pressure has been applied.
The committee has asked for a written response by the following Thursday.
Political and Market Context
World Liberty’s bid coincides with a surge in visibility for Trump‑aligned crypto initiatives. Last week the firm co‑hosted a high‑profile event at the former president’s Mar‑A‑Lago club, attracting executives from both the crypto sector and traditional finance, including Coinbase CEO Brian Armstrong, Binance co‑founder Changpeng Zhao, and Goldman Sachs CEO David Solomon. In the days surrounding the gathering, the WLFI token – the digital asset tied to World Liberty’s platform – posted a 23 percent price increase, suggesting heightened investor interest.
The scrutiny from the House panel arrives amidst broader congressional debate about the role of government in stabilizing the digital‑asset market. Senate Banking Committee member Senator Elizabeth Warren, a longstanding critic of crypto‑related bailouts, recently wrote to Secretary Bessent and Federal Reserve Chair Jerome Powell urging them to refrain from using taxpayer resources to prop up “cryptocurrency billionaires.” Warren warned that such a backstop could create a moral hazard, shifting private losses onto the public.
Regulatory Landscape
The OCC’s willingness to entertain charter applications for crypto‑focused firms marks a shift from its historically conservative stance. However, the agency’s guidance on stablecoins and digital‑asset trust structures remains limited, prompting calls for clearer rules. Executive Order 14215, signed by President Joe Biden, mandates greater inter‑agency coordination on emerging financial technologies, but critics argue it may blur the lines of accountability among the Treasury, the Office of Management and Budget (OMB) and the OCC.
Analysis
The House Democrats’ letter underscores a growing tension between innovation in the digital‑asset space and traditional financial oversight. Several factors enhance the political sensitivity of World Liberty’s application:
- Foreign Capital with Political Ties. The involvement of a UAE royal investor introduces a layer of geopolitical complexity. While foreign investment in U.S. banks is not unprecedented, the opaque nature of the transaction and its proximity to a former president’s network heighten concerns about potential leverage.
- Stablecoin Risks. Dollar‑backed tokens have attracted regulatory focus after past episodes where issuers faced liquidity shortfalls. A national trust bank charter could give World Liberty a regulatory veneer that may not fully address underlying stablecoin vulnerabilities.
- Precedent for Future Charters. If the OCC grants the charter, it could set a benchmark for other crypto‑centric firms seeking banking privileges, potentially accelerating the integration of digital assets into the mainstream banking system.
Should Treasury or the OCC find that the safeguards are insufficient, the application could be delayed or denied, signaling a more cautious regulatory approach. Conversely, approval—especially if accompanied by stringent conditions—might encourage other crypto enterprises to pursue similar pathways, reshaping the competitive landscape between traditional banks and crypto‑native institutions.
Key Takeaways
- House Democrats, led by Rep. Gregory Meeks, have formally asked Treasury Secretary Scott Bessent to detail how regulators are handling World Liberty Financial’s national trust bank charter request.
- The inquiry focuses on foreign ownership (notably a UAE royal’s $500 million stake) and the flow of $187 million to Trump‑linked entities, raising concerns about political influence and systemic risk.
- Lawmakers question whether Executive Order 14215 and increased White House involvement compromise the OCC’s independence in charter decisions.
- The request arrives amid heightened visibility for Trump‑aligned crypto projects and a broader congressional push, led by Sen. Elizabeth Warren, to avoid taxpayer‑funded crypto bailouts.
- Regulatory outcomes will have implications for the future of crypto‑linked banking charters, the stability of stablecoins, and the extent of foreign participation in U.S. financial institutions.
The Treasury’s response is expected later this week and will likely shape the next phase of dialogue between Congress and regulators over the integration of digital assets into the nation’s banking framework.
Source: https://cointelegraph.com/news/democrats-press-treasury-on-trump-world-liberty-financial?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
