Trump's launch of the TRUMP cryptocurrency is undoubtedly a bold experiment with both political significance and market impact, perfectly aligning with his self-crafted political image.
Written by: TaxDAO
On January 18, the U.S. President-elect Donald Trump announced the launch of his exclusive meme coin $TRUMP via social media. This news instantly ignited the cryptocurrency market. The market capitalization of $TRUMP surpassed $24 billion on its first day of issuance, becoming the undeniable market focus. From ordinary investors to seasoned traders, almost everyone has shown immense enthusiasm for this meme coin, which is heavily infused with Trump's personal flair.
Meme coins are cryptocurrencies designed based on internet culture, characterized by high entertainment value and viral spread. They typically draw attention from investors based on trending figures or events, emphasizing market sentiment rather than actual economic function. From the early Dogecoin ($Doge) to the recent $Pepe, the rise of these meme coins has always been closely tied to the public's "speculative frenzy." This time, Trump's issuance of $TRUMP, leveraging his powerful personal brand effect and unique combination with political factors, has further elevated the heat in the entire meme coin market.
Trump's Personal Involvement: Once Again Sending Positive Signals to the Crypto Market
According to a statement from Trump's team, the issuance of $TRUMP aims to "celebrate a leader who does not back down in adversity." This meme coin not only centers around Trump's political image but also incorporates narratives of his assassination attempt during the 2024 campaign, further stimulating emotional resonance in the market. Coupled with Trump's commitment to supporting the cryptocurrency market, investors are filled with expectations for $TRUMP's future.
Previously, meme coins related to celebrities were not uncommon, with $Doge even breaking into the top ten by market capitalization due to its close ties with Elon Musk during this bull market. The most unique aspect of $TRUMP is that it is a meme coin directly issued by Trump in his capacity as President-elect, marking a groundbreaking move in both the cryptocurrency market and the political arena. From repeatedly promising to implement a series of favorable policies for cryptocurrencies during his term, to investing in various mainstream cryptocurrencies, and issuing related NFTs and the VC coin $WLFI (World Liberty Financial Coin), Trump's and his family's involvement in the crypto market has deepened. The issuance of $TRUMP signifies that Trump has chosen to ride the wave of meme coins, personally entering the game in the most relatable way as President-elect. As the first president to issue a meme coin, Trump's unconventional behavior injects his political influence directly into the meme coin market, not only demonstrating his high recognition of cryptocurrencies but also helping cryptocurrencies further "break out," 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 lies not only wealth effects and political signals but also complex compliance risks. As cryptocurrencies gain increasing attention from governments worldwide, Trump's actions undoubtedly thrust cryptocurrencies into the spotlight for scrutiny.
In terms of securities regulatory risk, a key question is: Does this meme coin qualify as a security? This is an important factor affecting its legality. In the U.S., cryptocurrencies issued through ICOs are considered securities and are subject to strict SEC regulation. The U.S. Securities and Exchange Commission (SEC) 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 derived from the efforts of others. The core feature of an ICO is to publicly raise funds by issuing cryptocurrencies with a promise of some future return. From the current situation, although Trump's team has publicly issued $TRUMP and received purchases from investors, they have stated on the $TRUMP official website that this cryptocurrency does not qualify as a security and has not promised future profit potential, making it difficult to classify $TRUMP as a security. However, the SEC's stance on meme coins remains unclear, and if $TRUMP's actual performance exhibits characteristics of a security, it may still be subject to SEC investigation and regulation.
Next is the issue of tax compliance. According to the IRS, capital gains from investing in cryptocurrencies are considered taxable income. The 80% of $TRUMP held by Trump's team will be unlocked in batches over the next three years, posing significant challenges for tax compliance. First, whether the unlocking of $TRUMP constitutes a taxable event is worth noting. U.S. tax law states that capital gains tax obligations are triggered only when an asset is disposed of. Therefore, the unlocking of cryptocurrencies is generally not viewed as a taxable event unless the cryptocurrency is sold or used for transactions. Once cryptocurrencies are traded in 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. Determining the cost basis of $TRUMP after unlocking is another tricky issue. In U.S. tax law, the calculation of capital gains tax is based on the asset's cost basis, i.e., the purchase price. However, due to the extreme price volatility of $TRUMP, determining the cost basis of the cryptocurrency can be very complex. Particularly if Trump's 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 records of the details of each transaction, this could lead to significant complications in tax reporting.
Additionally, the issuance of meme coins may also trigger controversies regarding political donations. In the U.S., the Federal Election Commission (FEC) has strict transparency requirements and limits on political contributions. If $TRUMP is used as a tool for raising political funds, it could likely circumvent existing regulatory frameworks and cross legal boundaries. Currently, although there is no conclusive evidence proving that any businesses or individuals are purchasing $TRUMP as a form of political donation, the behavior of politicians issuing meme coins and profiting significantly could severely impact the existing political donation order in the U.S., and Trump may also face allegations of indirect corruption. Notably, Trump's choice to issue the coin before officially taking office may be an attempt to evade accusations of using public power for personal gain or monetizing his power. However, even so, this issuance could bring numerous negative effects, especially if the coin's price plummets, Trump's political credibility may suffer a significant blow.
Conclusion
Trump's launch of $TRUMP is undoubtedly a bold experiment with both political significance and market impact, perfectly aligning with his self-crafted political image. From a market performance perspective, $TRUMP has successfully ignited investment enthusiasm in a short time, attracting countless attention to meme coins and wielding 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 meme coins" is to stay in the game.
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