Can existing laws and guidelines around crypto, insider trading
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Can existing laws and guidelines around crypto, insider trading and conflicts of interest keep up when the most powerful person in the world is dropping memecoins and promoting DeFi projects?
President Donald Trump’s memecoin launches before his Jan. 20 inauguration and his ties to crypto firm World Liberty Financial are so outside of the bounds of normal presidential behavior as to be completely unprecedented.
Since taking office on Jan. 20, Trump has signed a flurry of executive orders, reshaping global policy within days. Some have direct implications for crypto, including his decision to set up a crypto working group to examine a strategic digital assets reserve and his pardon of Silk Road founder Ross Ulbricht.
Magazine spoke with legal experts Yuriy Brisov of Digital & Analogue Partners in Europe, Joshua Chu of the Hong Kong Web3 Association and Charlyn Ho of Rikka in the US to unpack their professional reactions to how Trump’s first days in office have impacted the cryptocurrency world. This discussion has been edited for clarity and length.
What conflict of interest issues arise when a prominent political figure launches a cryptocurrency token?
Ho (US): I think there are significant conflict of interest issues, which is sometimes a legal issue, or more of an ethics issue. Regardless, it is an issue because Trump has the power to direct crypto policy. Within just a couple of days of him taking office, he’s signed a number of executive orders that are significantly going to affect the way that our crypto and digital assets industry works. So if he has a personal pecuniary benefit arising from his own policies, that’s a conflict of interest.
Is something like a president launching their own memecoin something that’s fathomable in Hong Kong?
Chu (HK): No. It takes an over-the-top character to do something like this. In Hong Kong, or even in Asia-Pacific, we don’t have any particular leaders who are that flamboyant yet. So I do not see it happening. Even if the government were to ever launch their own tokens, I don’t see them going into meme tokens, because memecoins easily attract the criticisms of there being no substance in nature. There’s nothing behind it.
One of the things that is a pride of Hong Kong is the anti-corruption policies. We have seen a number of politicians prosecuted once they’re out of office for the most minute of trespasses — nothing even remotely close to what Trump is doing right now.
How well do existing campaign finance laws address the risks of political figures issuing crypto assets?
Brisov (EU): There are laws in every member state of the EU that regulate political donations. I won’t discuss each of the 24 countries, but in general, there are very strict Anti-Money Laundering and Know Your Customer rules. You have to provide all the information, including source of funds. When political campaigns raise funds, they have to work through all these hurdles. But it seems that through memecoins, you can just forget about it and get money from anywhere, whether it be from terrorists, from North Korea — there are no limits.
In the US, laws like the Foreign Agents Registration Act say that if you’re a foreign person and wish to provide foreign interest on American soil, you need to register. There is also the Federal Election Campaign Act that bans all direct foreign contributions to presidential campaigns. Through memecoins, you can possibly avoid this.
The Trump family’s WLFI bought $2 million worth of MOVE recently around the time that rumors were reported that Elon Musk’s Department of Government Efficiency had been talking to Movement Labs about the plan to run the government on blockchain. Though that’s just a rumor at this stage and likely just a coincidence, would there be specific laws that such a token purchase may violate?
Ho (US): I know that WLFI has been very careful to state that no Trump family member or himself are part of the WLFI board, or are employees. However, if you essentially utilize means to circumvent rules and regulations that implicate, for example, this conflict of interest situation, [that may raise concerns] even though you yourself are not necessarily part of the organization.
Whether or not the actual purchasing MOVE tokens is a violation of law, I’m not positive that there’s a rock solid case on that, but I think it goes to the larger question of, what is the role of a president or what is the role of any political figure? In general, it’s to promote the interests of the people that elected him, not his personal interests.
Chu (HK): Hong Kong is still a city,…
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