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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

Just three days ahead of his inauguration, US President Donald Trump announced his first venture into cryptocurrency, launching the $TRUMP coin.

And within hours of going on sale, the price of the coin surged.

Trump has been known to cash in on his popularity, selling an array of merchandise including Trump-branded sneakers, fragrances, and even trading cards.

But this newest venture raises fresh ethical concerns about profiting from an industry with deep ties to the incoming administration and one that Trump himself has a hand in regulating.

Today, cryptocurrency and tech researcher Molly White, on the billions Trump could potentially make off his meme coin, and the ascendancy of cryptocurrency in the Trump administration.

It’s Wednesday, January 21.

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Audio excerpt — News Reporter:

“But that $TRUMP this weekend caught many, many attention. It hit a $15 billion market cap over the weekend, which puts it at the top 20 coins out there.”

RUBY:

So, Molly, if I had, when it was first created, invested in Donald Trump's cryptocurrency, how much money could I have made by this point?

MOLLY:

Well, I mean, it all depends on when you buy and when you sell. You know, in sort of a perfect world, you buy as low as possible and you sell as high as possible with the benefit of hindsight. And if you get in so early that it is almost impossible to buy the token that early, then you can make 10 x, 100 x returns on something like this.

The majority of people were not getting in that early. And so most people were buying in at $10, $20 and it went up from there and then it went down from there. And so some people have cashed out. Some people are still holding, I'm sure.

RUBY:

Okay. Well, let's back up a bit and talk a bit more about the coin itself. Can you tell me about what happened when it was launched and what Trump said?

MOLLY:

Yeah. So Trump announced the meme coin on his social media accounts on Twitter through social, basically inviting people to celebrate his election win by purchasing a meme coin and basically said, have fun and shared the website and the token address for people to pile in.

RUBY:

And when we talk about meme coins, can we unpack a bit what we're talking about here? So it's a currency or a token that's taken that's attached to a particular Internet trend. But tell me a bit more about how that works and as a result, how volatile something like that is.

MOLLY:

Yeah. So meme coins can be created about anything. And pretty much any time anything happens, someone creates a meme coin about it.

But there is no business behind it. There is no product that you're buying. You are not really buying any sort of service. It is basically just speculating on other people buying that token because of some shared interest or marketing success. And they tend to be enormously volatile, partly because of this sort of fleeting attention span of people who are buying and selling these things, but also because there is a lot of manipulation in those markets and outright scams and frauds.

And so it's actually very common for people to all buy a meme coin. And then the creator of the token does what's called a rug pull, which is basically sells off massive quantities of the token, causing everyone else to basically lose all their money, but they take the profits.

That happens multiple times a day in the meme coin world.

RUBY:

And this is obviously a cryptocurrency that anyone can buy and trade. But ultimately, who is in charge of $TRUMP coin?

MOLLY:

Well, it's Trump and the business entity that has launched this token called CIC. And he's got Fight, Fight, Fight LLC. So there's sort of these like shell companies around it, but it's Trump and his team who are behind the token and they control the terms of the token distribution and they ultimately make some profits off of the token as well.

RUBY:

Right, do we know how much profit Trump and his team are making?

MOLLY:

Well, it's a challenging thing to capture in the crypto world. People will, they really like to say, it's got, you know, a $10 billion market cap or it could go to $50 billion once all the tokens are released. But that's a very naive way of calculating it. It's just taking the current token price and multiplying it by the total number of tokens either in circulation currently or the total number that may ever exist. And assuming that there is that amount of liquidity in the market, if Trump were to sell all of his holdings right this second.

It's a very flawed way of estimating the price of the token. And I usually take a sort of conservative approach to it where I only consider it money made if you've actually cashed out. It looks like Trump has cashed out maybe $500 million, far below the tens of billions of dollars that some headlines have been describing it as. There is really no feasible way that he could extract that much money from the token at this point in time.

RUBY:

And I mean, they've said that they're going to keep making these tokens for the next three years. So is there potentially a lot more money to be made here?

MOLLY:

Potentially, if the interest remains in the token. And that is the big if, the traditional trajectory of a meme coin is that there is early interest and the price is high early on and then it crashes and sort of peters out after that point.

While there are some that have had some enduring success. You know, there's Dogecoin and Shiba Inu and some of those early meme coins. They tend to have more of a project around them. This one is really just all vibes. But because Donald Trump has such an enthusiastic fan base, you know, it's really hard to predict what will happen with this token.

RUBY:

After the break – Trump’s political ties to cryptocurrency and how less regulation could barrel us into another financial crisis.

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RUBY:

Molly, can we talk a bit about the the ethics of an incoming president making money like this off the crypto market? Because as president, he has a say in the regulation of financial markets, including crypto, doesn't he?

MOLLY:

Yes, And that was a very major topic during his presidential campaign.

Audio excerpt — Donald Trump:

“This afternoon, I'm laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world, and we'll get it done.”

MOLLY:

He was very actively courting the cryptocurrency industry and promising that he would install regulators who loved the cryptocurrency industry and axe the regulators who had taken a more aggressive approach towards enforcing securities laws, for example.

Audio excerpt — Donald Trump:

“On day one, I will fire Gary Gensler and appoint a new SEC chairman.”

MOLLY:

And so there is a huge conflict of interest there. I mean, I would argue there was a conflict of interest before he launched the meme coin, given his previous crypto entanglements. But the more he directly financially benefits from these types of projects, the more he stands to gain from installing regulatory authorities that are either friendly towards crypto or basically just calling them off and causing crypto to be sort of a Wild West or to be regulated in a way that could be very profitable for him.

Audio excerpt — News Reporter:

“We got to talk about President elect Donald Trump has announced via Truth Social that he plans to nominate Paul Atkins as the chair of the Securities and Exchange Commission in a crypto friendly move.”

MOLLY:

It is feasible that Trump and people in his administration could cause the securities regulator to back off from crypto entirely because there is the possibility that Congress or even the Securities and Exchange Commission will decide that cryptocurrency is just aren't securities and therefore the SEC has no remit over them, which I think is I mean, that's very much what the cryptocurrency industry would like to see. And so I would not be terribly surprised to see that outcome happen, that it sort of remains to be seen. Okay. What are they if they're not securities and who has the regulatory authority?

RUBY:

Right, and that’s sort of the debate we’re seeing play out at the moment. For instance, the website promoting the $TRUMP coin states that the tokens are not, quote “an investment opportunity, investment contract or security of any type.”

MOLLY:

So it's very common in the crypto world to do this type of manoeuvring that we're seeing with the $TRUMP coin here, where they make all of these disclaimers and statements about how it's a collectable, it's not a security, it's not an investment vehicle. Those types of disclaimers are somewhat legally dubious. There is no way to sort of disclaim yourself out of the securities regulations.

RUBY:

And I mean the $TRUMP coin, it's not out of character or unusual in the context of Trump, but it is in the context of American presidents. And I think it's a little hard to see what's going on as, as anything other than, I guess, a way for Trump to make money, a bit of a grift.

MOLLY:

Right. And it's like you said, it's very in character for Trump. He has done an NFTs. He has done Bitcoin branded sneakers, Bibles. I mean, anything that he can put his name on and sell to people. So this is very much of a kind with his other grifts, basically. But like you said, it is enormously unusual for not just a president, but really anyone in the political arena to do something of this kind. But, you know, Trump has in many ways shown a willingness to flout not only the norms, but the law.

RUBY:

In terms of the legalities of all of this, what are the conflict of interest laws for US presidents in a scenario like this? Is Trump actually breaking the law?

MOLLY:

Quite possibly. There are clauses in the Constitution saying that the president cannot accept money from foreign agents without approval from Congress. It's called the Emoluments Clause. Trump has historically flouted those laws anyway, and there was not much action taken during his previous presidency where people from foreign countries were staying at his hotels, for example, and there were portions of his business interests that were basically avenues through which people could funnel money to Trump.

And legal cases that were brought to deal with those incidents were ultimately dropped because he left office. There was sort of no willingness out of the Supreme Court to enforce that against him. And given the changes in the Supreme Court since then and some decisions they've made to do with him, I would be very surprised if they took a strong stance against any further activities that he may take.

RUBY:

And so when you look ahead for the next three years, I mean, how do you see this playing out in terms of the disruption of of the financial system and this new intersection of political power, in Trump's case, and cryptocurrency markets?

MOLLY:

I'm very concerned about the next couple of years and the likely breaking down of the firewalls between traditional finance and the banking industry, as well as the cryptocurrency industry. You know, for example, during that previous boom and bust cycle in the crypto world, we saw this massive collapse that was devastating to people who held cryptocurrency but was almost unnoticeable to people who had no involvement in that world.

And I very much worry that that could change the next time around if the crypto industry gets what it wants, which is to allow banks to get into crypto, allow more integration with the traditional financial world, such that if there is another collapse and crypto tends to go through these cycles of boom and bust.

If that were to happen again. I would worry that we would see something almost like the 2008 crisis where it didn't really matter if you were involved in trading mortgage backed securities or if you even owned a home. You still saw the effects of that collapse in your financial portfolio. You might have lost your job. And I think there is definitely a possibility that something like that could happen if these types of firewalls break down.

And the way we're seeing Trump signalling his plans for the industry, it seems like those regulations such as they are, will only be reduced or enforced less when they have been somewhat enshrining this lawlessness into the cryptocurrency world.

RUBY:

Molly, thank you for your time.

MOLLY:

Thank you for having me.

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RUBY:

Also in the news today,

Pardons for Jan 6 rioters, withdrawing from the Paris agreement, leaving the World Health Organisation, and renaming the Gulf of Mexico the 'Gulf of America’.

That’s just four of the approximately 200 executive orders signed by now-President Trump on his first day in office.

President Trump referred to the orders in his inauguration speech as a quote “complete restoration of America”.

And, psychiatrists in New South Wales have begun resigning en masse, with at least one acute mental health ward already closing at Cumberland hospital, in Sydney’s west.

At least 200 psychiatrists in the public system are set to resign after 16 months of discussions with the state government failed to address pay disputes and critical staffing shortages.

I am Ruby Jones. This is 7am. See you tomorrow.

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