During a hearing with the House Financial Services Committee, US Treasury Secretary Scott Bessent faced tough questioning regarding World Liberty Financial (WLFI), a company associated with former President Trump, and its newly launched USD1 stablecoin. Democrats in Congress raised concerns about the possibility of no-interest stablecoins tied to Trump's cryptocurrency endeavors being used to conceal hidden subsidies.

World Liberty Financial, established in 2024 with strong connections to the Trump family, generated around $550 million in late 2024 through the sale of its governance token, with the Trump family set to receive approximately 75% of the net revenues. In March, WLFI introduced USD1, a stablecoin pegged to the US dollar and backed by US Treasuries and cash equivalents. Following this launch, Abu Dhabi's state-backed MGX agreed to invest $2 billion in USD1 on Binance, propelling USD1 to a prominent position among stablecoins by market capitalization.

Congressman Brad Sherman highlighted that, based on a 4% market rate, the deal effectively provides WLFI and its Trump-affiliated owners with an annual subsidy of $80 million. He questioned whether this "interest-free loan" should be considered covert support. Bessent, when asked, stated that he had not examined the token's expense ratio and emphasized that stablecoins do not pay interest. He also mentioned that no regulatory body has officially classified such transactions as hidden subsidies.

Lawmakers expressed concerns that this arrangement could disguise political favors and urged the Treasury to clarify the threshold at which stablecoin transactions become inappropriate support. The committee's discussion was influenced by a New York Times investigation that uncovered undisclosed multimillion-dollar endorsements under the Trump brand, sales to foreign entities, and policy modifications benefiting WLFI, blurring the line between private business and government policy.

While a spokeswoman for President Trump mentioned that his assets are managed by his children without conflicts of interest, as disclosed in the New York Times report, committee Democrats have indicated plans to introduce legislation mandating full disclosure of expense ratios for stablecoins and banning interest-free structures that function as implicit subsidies. They argue that such regulations are essential to promote transparency and prevent conflicts of interest when politically connected entities enter the cryptocurrency market. BeInCrypto has contacted World Liberty Financial for their response to these allegations and scrutiny.