Trump Meme Coins Face Scrutiny After Rapid Launch Before Inauguration

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24 hours after Donald Trump’s personally branded TRUMP token hit a remarkable $15 billion market capitalization, Melania Trump unveiled her own meme coin, named MELANIA.

The swift deployment of these recently introduced resources has garnered significant interest and ignited discussions, particularly regarding their timing and broader impacts. Notably, Zack Guzmán from Coinage emphasized the deliberate sense of urgency underlying these launches.

Strategic Launch of Trump Meme Coins

Guzmán implied that the Trumps might be rushing to launch TRUMP and MELANIA before the inauguration due to possible constitutional concerns related to the Emoluments Clause.

“Waiting another day could’ve opened him up to Constitutional violations & impeachment (again).”

For several years, Donald and Melania Trump have delved into the realm of digital assets, each using individual companies and teams to produce Non-Fungible Tokens (NFTs). As per Trump’s publicly disclosed tax records, he garnered approximately $7.2 million through an NFT deal with CIC Digital. Similarly, Melania gained over $330,000 from a similar agreement. By introducing their tokens before a potential Trump re-election as president, it seems they are circumventing direct allegations of exploiting the presidency for profit.

Critics contend that the Constitution was designed to keep Presidents from exploiting power for self-benefit, but novel inventions such as meme currencies introduce unexpected hurdles. In his remarks, Guzmán added…

Although our country’s founders aimed to ensure Presidents wouldn’t unjustly benefit from their position, it is unlikely that they discussed or considered the concept of meme coins during their debates.

From SEC Oversight to IRS Taxes

Although the planned launch of the Trump-themed cryptocurrency involves large sums being liquidated, it’s being hailed as an audacious endeavor consistent with his public image. Nevertheless, FinTAX’s recent report suggests that this venture could potentially carry substantial legal, fiscal, and political challenges.

One key point is understanding the legal categorization of TRUMP. In America, digital currencies born from Initial Coin Offerings (ICOs) are usually labeled as securities, making them subject to rigorous oversight by the Securities and Exchange Commission (SEC). This agency decides if an asset falls under this category using the Howey Test, which examines aspects such as investment intent, anticipated profit, and reliance on external assistance.

Despite Trump’s team not making promises of future profits and clarifying on their website that TRUMP is not a security, the Securities and Exchange Commission (SEC) has yet to define its stance on meme coins like TRUMP. If TRUMP starts behaving like a security in its operations, it may face regulatory scrutiny according to FinTAX.

Complying with taxes adds another layer of intricacy, particularly in the realm of cryptocurrencies where profits are subject to taxation by the IRS. As Trump’s team possesses 80% of TRUMP, which will be gradually released over a three-year period, concerns arise about whether this release process qualifies as a taxable event. It’s essential to understand that capital gains taxes would become applicable when these assets are sold or exchanged, making precise timing, cost basis calculations, and meticulous record-keeping vital for compliance. Moreover, the unpredictable volatility in cryptocurrency prices adds another layer of complexity to the already challenging tax filing process.

Concerns about politics are running high. The Federal Election Commission (FEC) sets strict guidelines for political donations, so there’s worry that using the brand ‘TRUMP’ could bypass transparency or contribution limits, causing trouble. Although no clear instances of such misuse have been found yet, this action may still challenge American political finance standards and invite accusations of corruption. Moreover, a decline in TRUMP’s value might negatively impact Trump’s political image.

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2025-01-20 13:28