Trump-backed World Liberty Financial unveils plans for new stablecoin

World Liberty Financial, a crypto project backed by President Trump and his family, said it would launch a new stablecoin backed by U.S. government debt.

Named USD1, the token will backed by short-term U.S. government Treasurys, U.S. dollar deposits and other cash equivalents, the company said Tuesday. The token will be issued on blockchains created by both Ethereum and Binance, the crypto exchange that has sought to forge closer ties to the president’s family.

Representatives of President Trump’s family have held talks to take a financial stake in Binance’s U.S. arm, The Wall Street Journal has reported.

World Liberty Financial’s stablecoin plan furthers the Trump family’s push into the crypto world. His new administration has pledged to make the U.S. the “undisputed bitcoin superpower and the crypto capital of the world,” Trump has said.

Launched last October, World Liberty said recently it had raised $550 million from more than 85,000 U.S. and non-U.S. investors—including its largest investor Justin Sun, the founder of Tron—by selling a token called WLFI. Earlier this year, President Trump and first lady Melania also launched a pair of meme coins, a type of cryptocurrency with no intrinsic value.

USD1’s reserves will be safeguarded by crypto custodian BitGo and audited regularly by an unspecified third-party accounting firm, World Liberty said. BitGo’s prime brokerage business also agreed to facilitate clients’ USD1 trades.

Stablecoins are a type of cryptocurrency that aims to maintain a 1:1 exchange ratio with government-issued currencies such as the U.S. dollar. The most popular stablecoin is Tether, which traders have widely used to stash their cash, invest in other tokens and swap for traditional currencies. It has also been heavily used for illicit activities, including terrorism financing and drug trafficking.

News about the USD1 stablecoin spread on social media on Monday when Changpeng Zhao, the founder of Binance, welcomed the token to the Binance Smart Chain in a post on X. Zhao later said in another post that scammers created coins with the same name since his initial post, warning that “the official USD1 is not tradable yet.”

World Liberty Financial said it would avoid “complex yield-generating mechanisms” and adopt a conservative approach to maintaining its stability. TerraUSD, a so-called algorithmic stablecoin, used financial engineering to maintain price stability. The token, which generated yields as high as 20%, crashed in May 2022, wiping out $40 billion and causing financial ruin for investors worldwide.

“USD1 provides what algorithmic and anonymous crypto projects cannot—access to the power of DeFi underpinned by the credibility and safeguards of the most respected names in traditional finance,” Zach Witkoff, a co-founder of World Liberty Financial, said in a statement.

Zach, the son of Trump’s special envoy to the Middle East Steven Witkoff, was among two dozen crypto executives who attended the first-ever White House Crypto Summit earlier this month.

Write to Vicky Ge Huang at vicky.huang@wsj.com