Trump’s Memecoin Sparks Legal Debate but Stays Within U.S. Law
Donald Trump’s entry into cryptocurrency with the launch of his memecoin, TRUMP, has sparked discussions around its legality.
Crypto lawyer Anonwassielawyer analyzed the project, arguing that despite its unconventional nature, the token operates within the boundaries of U.S. securities law due to its speculative design.
Why TRUMP Isn’t a Security
Memecoins like TRUMP don’t meet the criteria of the Howey Test, which determines whether an asset qualifies as a security. To be classified as a security, a token must involve an investment of money in a common enterprise, with profits generated by someone else’s efforts. TRUMP lacks these features, functioning purely as a speculative asset with no inherent utility or economic project tied to its sales. According to Anonwassielawyer, this shields TRUMP from securities classification.
Comparing TRUMP to WLFI
While TRUMP is a straightforward memecoin, Trump’s other crypto project, World Liberty Finance (WLFI), operates under strict compliance measures. WLFI tokens are non-transferable for 12 months and structured to meet U.S. securities regulations, such as Regulation D and Regulation S. This stark difference highlights how regulatory frameworks vary between speculative and utility-driven projects.
Offshore Entities and Regulatory Perception
The use of offshore structures in crypto projects, often criticized as evasive, is primarily for governance and tax optimization, according to Anonwassielawyer. Even when operating offshore, tokens sold to U.S. investors remain under U.S. jurisdiction, though offshore structures can delay taxable events until assets are onshored.
The Broader Implications
Trump’s TRUMP token exemplifies how memecoins, despite their lack of intrinsic value, face less regulatory scrutiny compared to projects aiming to provide real utility. For the crypto industry, it highlights the need for caution and strict compliance, especially for tokens with financial or governance features. As Anonwassielawyer noted, “Speculation is one thing, but tokens with security-like elements must adhere to established rules.”
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
