Regulators appointed by President Donald Trump are allowing the Trump family’s flagship cryptocurrency venture to become a bank, a move that is alarming ethics watchdogs and some lawmakers.

World Liberty Financial, a crypto firm Trump and his sons launched in 2024, announced late Friday that it received a preliminary conditional approval from banking officials to become a trust bank. Final approval hinges on a series of conditions being met.

The green light from regulators is a big win for World Liberty.

The firm won’t be able to take deposits or make loans. But the bank charter will allow World Liberty to cut out the middlemen it relies on to safeguard and issue USD1, a dollar-backed stable coin that has more than $4 billion in circulation.

World Liberty is celebrating the major milestone, while critics worry this is a new wrinkle on the classic case of the fox guarding the henhouse that will give corporations and foreign actors a new way to stealthily curry favor with the White House.

Trump, his sons and other investors started World Liberty weeks before winning the 2024 election. After taking office, Trump appointed crypto-friendly regulators — some of whom have now blessed the firm’s plan to become a bank.

“Bank failures can be catastrophic, as we found out in 1929 and again in 2008,” Richard Painter, the top ethics lawyer under President George W. Bush, told CNN. “It is quite precarious to have the president and his family invested heavily in one of our most important regulated industries at the same time as he has the power to hire and fire the regulators.”

Major crypto profits for Trump

Those investments have already paid off handsomely.

Trump earned more than $526 million from the sale of cryptocurrency tokens tied to World Liberty Financial last year alone, according to disclosure forms. And he earned approximately $263 million from the sale of equity in World Liberty to a group of investors led by a royal from the United Arab Emirates, The Wall Street Journal reported.

World Liberty is run by Zach Witkoff, the son of Trump friend and Middle East envoy Steve Witkoff.

“President Trump is now the first President in history to approve, operate and supervise his own bank,” Democratic Sen. Elizabeth Warren, ranking member on the Senate Banking Committee, said in a statement. “This is the most brazen act of self-dealing our financial system has ever seen.”

Warren and fellow Senate Democrats announced plans on Friday to introduce a bill that would ban federal regulators from approving bank applications for banks owned or controlled by the president, vice president, family members, members of Congress or other US officials.

‘There are no conflicts of interest’

The White House rejected the criticism.

“All of President Trump’s investment holdings are held in fully discretionary accounts managed by independent third-party financial institutions,” Anna Kelly, a White House spokeswoman, said in a statement. “This is the same, tired narrative that Democrats have pushed against President Trump, his family and his administration for a decade … There are no conflicts of interest.”

David Wachsman, a spokesman for World Liberty Financial, defended the bank charter preliminary approval, noting it will ensure “robust and permanent” regulatory supervision “that will outlast the Trump administration.”

“Critics are missing the point: World Liberty Financial is running towards regulation and continuous oversight, not away from it,” Wachsman said.

World Liberty also noted that the banking charter approval from the Office of the Comptroller of the Currency includes a promise from DT Marks SC LLC, a Trump family entity, to be a passive investor in the new bank.

That agreement, signed by Eric Trump, states that DT Marks will not directly or indirectly try to influence the bank’s operations, have an officer at the bank or take a series of other steps.

In other words, the Trump entity is promising to be a silent partner in the bank.

Still, the Trump family stands to gain from the business and its new role as a trust bank.

Critics worry this regulatory decision will backfire.

“Granting a bank charter to the First Family’s crypto firm poses unprecedented risks because it creates insurmountable conflicts of interest,” Patrick Woodall, managing director at Americans for Financial Reform Education Fund, said in a statement. “The Trump OCC cannot credibly or impartially supervise or examine the Trump family crypto bank, make sure it operates safely and soundly, maintain adequate reserves for the Trump stablecoin or protect customers from unfair or deceptive practices.”

Stalled crypto legislation

Ironically, the bank charter decision on World Liberty could further delay White House efforts to pass the Clarity Act.

That legislation, stalled in Congress, would establish a clear regulatory framework for crypto and help validate the relatively new industry’s place in the broader financial landscape.

The bill had been stalled in part by concerns from Democrats who were pushing to force President Trump to ditch his crypto investments.

“The continued fight over the ethics language may derail crypto industry efforts to get Congress to enact the Clarity Act this year,” Jaret Seiberg, managing director at TD Washington Research Group, wrote in a note to clients on Monday. (CNN)

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