From memes to political influence: Thoughts on Trump's issue coin

On January 18, Donald Trump announced the launch of the exclusive cryptocurrency meme coin $TRUMP through social media. This news quickly ignited the cryptocurrency market. The market capitalization of $TRUMP surpassed $24 billion on its first day of issuance, becoming the focus of the market. From ordinary investors to seasoned traders, almost everyone has shown great enthusiasm for this meme coin that is heavily influenced by Trump's personal style.

Memes is a cryptocurrency designed based on internet culture, characterized by high entertainment value and viral dissemination. Memes typically draw on popular figures or events to attract investor attention, emphasizing market sentiment rather than actual economic functions. From the early Dogecoin to the recent $Pepe, the rise of these memes has always been linked to the public's "speculative frenzy." This time, Trump is issuing $TRUMP, leveraging his strong personal brand effect and unique combination with political factors to elevate the entire meme market to new heights.

Trump personally enters the scene: releasing positive signals for the crypto market

According to a statement from Trump's team, the issuance of $TRUMP is intended to "celebrate a leader who does not back down in the face of adversity." This meme coin not only centers around Trump's political image but also incorporates the narrative of his assassination attempt during the 2024 campaign, further stirring emotional resonance in the market. Coupled with Trump's commitment to supporting the cryptocurrency market, investors are full of expectations for the future of $TRUMP.

Previously, meme coins related to celebrities were not uncommon, and a certain well-known cryptocurrency even entered the top ten by market capitalization in this bull market due to its close ties with a tech entrepreneur. The most special aspect of $TRUMP is that it is a meme coin directly issued by Trump in his capacity as the president-elect, marking a groundbreaking move both in the cryptocurrency market and in the political realm. From repeatedly promising to implement a series of cryptocurrency-friendly policies during his term, to investing in various mainstream cryptocurrencies, and issuing related NFTs and VC coins, Trump and his family have been increasingly involved in the crypto market. The issuance of $TRUMP signifies that Trump chooses to ride the wave of meme coins, personally engaging in the game in the most down-to-earth way as the president-elect. As the first president to issue a meme coin, Trump injects his political influence directly into the meme coin market through this unconventional action, not only demonstrating his high recognition of cryptocurrencies but also helping cryptocurrencies further 'go mainstream', attracting more attention and funds, and releasing positive signals for the crypto market in terms of policy prospects and liquidity.

From On-Chain Revelry to Rational Reflection

However, behind this meme coin frenzy, there are not only wealth effects and political signals but also complex compliance risks hidden. As cryptocurrencies are increasingly gaining the attention of governments around the world, Trump's move undoubtedly brings cryptocurrencies directly into the spotlight for scrutiny.

In terms of securities regulatory risks, a key question is: does this meme coin belong to securities? This is an important factor affecting its legality. In the United States, cryptocurrencies issued through ICOs are considered securities and are subject to strict regulation by the SEC. In the U.S., the Securities and Exchange Commission typically uses the Howey test to determine whether an asset constitutes a security. This test includes four elements: investment of money, expectation of profits, common enterprise, and efforts solely from others. The core feature of an ICO is to publicly raise funds by issuing cryptocurrencies and promising some form of future returns. From the current situation, although the Trump team has publicly issued $TRUMP and received purchases from investors, it has stated on the $TRUMP official website that this cryptocurrency does not belong to securities, nor has it promised any future profit potential. Therefore, it is difficult to classify $TRUMP as a security. However, the SEC's stance on meme coins has not yet been clarified. If $TRUMP's actual performance exhibits characteristics of a security, it may still be subject to investigation and regulation by the SEC.

Secondly, there is the issue of tax compliance. According to the regulations of the IRS, capital gains from investing in cryptocurrencies are considered taxable income. The Trump team holds 80% of $TRUMP, which will be unlocked in batches over the next three years, posing a significant challenge to its tax compliance. First, whether the unlocking of $TRUMP constitutes a taxable event is worth noting. U.S. tax law stipulates that capital gains tax obligations are triggered only when an asset is disposed of. Therefore, the unlocking of cryptocurrency itself is generally not considered a taxable event unless the cryptocurrency is sold or used in a transaction. Once the cryptocurrency is traded on the market or converted into other assets, capital gains must be calculated based on the market price at the time of the transaction, and taxes must be paid. After the unlocking of $TRUMP, determining its cost basis is another tricky issue. In U.S. tax law, the calculation of capital gains tax is based on the cost basis of the asset, which is the price at the time of purchase. However, due to the volatility of $TRUMP's price, determining the cost basis of the cryptocurrency can be quite complex. Particularly if the Trump team chooses to sell these cryptocurrencies in batches, the timing of each transaction and market price will affect the calculation of capital gains. Without proper documentation of the details of each transaction, this will create significant trouble for tax reporting.

In addition, the issuance of memes may also provoke controversy regarding political donations. In the United States, the Federal Election Commission has strict transparency requirements and limits on political contributions. If $TRUMP is used as a tool for raising political funds, it is likely to evade the existing regulatory framework and touch legal red lines. Currently, although there is no conclusive evidence that any company or individual will purchase $TRUMP as a means of political donation, the behavior of such politicians issuing memes and obtaining high profits may still severely impact the existing political donation order in the United States, and Trump may also face suspicions of disguised corruption. It is worth noting that Trump's choice to issue coins before officially taking office may be to evade external accusations of using public power for personal gain and monetizing power. However, even so, this issuance may bring many negative effects, especially if the coin price drops significantly, Trump's political credibility may suffer a heavy blow.

Summary

Trump's launch of $TRUMP is undoubtedly a bold experiment with both political significance and market impact, which perfectly aligns with his self-crafted political image. From the market performance perspective, $TRUMP has successfully ignited investment enthusiasm in a short period, attracting countless attention to memes, and has unprecedented influence. However, in the face of FOMO and FUD, people should remain rational, paying attention to both the economic risks of investment behavior and its legal and compliance risks. After all, the premise of "going all in on memes in the palace" is to stay in the game.