The stablecoin market is experiencing explosive growth, with its market capitalization rapidly increasing and a growing number of new players entering the field. Recently, the Trump family's crypto project, WLFI, announced plans to launch USD1, a dollar-denominated stablecoin designed for institutional use. This move not only highlights the Trump family's ambitions in the crypto space but is also seen as a strategic step to align with regulatory trends and leverage brand influence to capture market share.
USD1: Key Features and Target Audience
WLFI's intention to venture into the stablecoin market has been evident for some time. As early as last October, former Paxos CEO Rich Teo joined WLFI to lead its stablecoin and payments business. Paxos has issued several stablecoins, including BUSD, which was developed in collaboration with Binance. However, due to regulatory issues, BUSD's market capitalization has plummeted from a peak of $24 billion to just $50 million today.
Shortly after Teo's appointment, reports emerged that WLFI was planning to issue its own stablecoin. Recently, the company officially confirmed that USD1 is set to launch. According to official sources, USD1 will be a stablecoin redeemable 1:1 for U.S. dollars, fully backed by short-term U.S. government Treasury bonds, dollar deposits, and other cash equivalents. Initially, USD1 will be minted on the Ethereum and BNB Chain blockchains, with plans to expand to other protocols in the future. The reserve assets will be custodied by BitGo, one of the largest digital asset custody companies in the U.S., and regularly audited by third-party accounting firms.
Unlike algorithmic stablecoins or anonymous DeFi projects, USD1 combines the flexibility of DeFi with the credibility and security of traditional finance, avoiding high-risk yield promises. While most dollar-backed stablecoins target retail users, USD1 is primarily aimed at institutional clients, positioning itself as a safe and efficient tool for cross-border payments and transactions, while also supporting broader applications within the DeFi ecosystem.
As WLFI co-founder Zach Witkoff emphasized, "USD1 is a digital dollar stablecoin tailored for sovereign investors and large institutions, enabling seamless and secure cross-border transactions."
Blockchain explorers show that USD1's smart contract was deployed three weeks ago, with a total supply of approximately 3.5 million tokens. Currently, there are only six token holders, including market maker Wintermute, which has conducted several test transfers.
Binance founder CZ has also welcomed the deployment of USD1, stating that it doesn't need to replace USDT or USDC and that more stablecoins are beneficial. He also warned that many scammers have created tokens with the same name, but trading has not yet opened, urging users not to fall for these scams.
Competitive Landscape and Advantages of USD1
The stablecoin market is expanding at a remarkable pace, playing an increasingly significant role in the global financial system. According to DeFillama data, as of March 26, the total market capitalization of stablecoins exceeded $234.6 billion, hitting a new all-time high and representing a 65.3% year-over-year increase. Among these, USDT and USDC dominate the market, accounting for nearly 87.3% of the total share.
ARK Invest has even predicted that the stablecoin market could eventually surpass $1 trillion in the long term. Matt Hougan, Chief Investment Officer at Bitwise, further noted that once stablecoins reach this scale, the overall landscape of the crypto market will be reshaped.
Meanwhile, a stablecoin report released by Dune and Artemis noted that as of February 2025, the stablecoin supply had reached $214 billion, with 30 million active addresses. Annual transfer volume amounted to $35 trillion, double Visa's annual throughput. Notably, the report also highlighted that while centralized exchanges remain the primary venues for stablecoin liquidity, DeFi drives most of the transfer volume.
The rapid development of stablecoins is closely tied to the increasingly refined global regulatory framework. Countries like the U.S., EU, Japan, and Singapore have made significant progress in regulating stablecoins, providing more room for innovation and promotion of compliant stablecoins. For instance, USDC recently became the first officially approved stablecoin in Japan, and Thai regulators have recognized USDT as a legal cryptocurrency.
At the same time, competition in the market is intensifying, with new players accelerating their entry. For example, Fidelity is reportedly planning to launch a stablecoin, OpenAI CEO Sam Altman's World Network is in talks with Visa about a stablecoin payment wallet, and crypto payment giant MoonPay has acquired stablecoin company Iron at a high price.
Despite this fierce competition, USD1 possesses significant advantages. On one hand, new regulatory developments in the U.S. may pave the way for compliant dollar-backed stablecoins. Not long ago, former U.S. President Trump emphasized that as the dollar returns to stablecoins, it will help expand the dollar's dominance. He also called on Congress to pass landmark legislation to establish simple, commonsense rules for stablecoins and market structure.
Currently, several stablecoin bills are advancing in the U.S., including the STABLE Act, GENIUS Act, and Waters proposal. These aim to provide a clear regulatory framework for dollar-linked payment stablecoins, promoting innovation while protecting consumers, thereby enhancing the global competitiveness of the digital dollar. Among these, the GENIUS Act is particularly noteworthy. Proposed on a bipartisan basis in February 2025, it explicitly establishes a federal regulatory framework that excludes payment stablecoins from being classified as securities, thus removing them from SEC oversight. Issuers would be regulated at the federal or state level based on their size, and the bill explicitly prohibits algorithmic stablecoins to reduce systemic risk.
The GENIUS Act has garnered bipartisan support and White House backing. It recently passed the Senate with 18 votes in favor and 6 against, making it the most likely proposal to be signed into law by mid-2025. According to Bo Hines, Executive Director of the U.S. Presidential Digital Asset Working Group, the stablecoin regulatory bill could be presented to President Trump for signing within two months.
On the other hand, the Trump brand effect will also provide WLFI with strong financial and resource support. Financially, WLFI has raised $550 million through a community public offering, with $390 million in net proceeds. In terms of resources, stablecoins play a crucial role in the DeFi ecosystem, and WLFI has established deep connections with leading DeFi projects through diversified investments, including Aave, Uniswap, Ethena, Chainlink, and Ondo Finance.
Overall, as the global stablecoin market rapidly expands and regulatory frameworks mature, the launch of USD1 represents a strategically significant move for WLFI. By leveraging policy tailwinds, targeting institutional clients, and capitalizing on the Trump brand's influence, USD1 is well-positioned to compete effectively.
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Frequently Asked Questions
What is USD1?
USD1 is an institutional-grade, dollar-denominated stablecoin launched by WLFI. It is fully backed by short-term U.S. government Treasury bonds, dollar deposits, and other cash equivalents, ensuring 1:1 redeemability for U.S. dollars.
Which blockchains will support USD1?
Initially, USD1 will be available on Ethereum and BNB Chain. WLFI plans to expand to other blockchain protocols in the future to enhance accessibility and interoperability.
Who is the target audience for USD1?
USD1 is primarily designed for institutional clients, including sovereign investors and large organizations. It aims to facilitate secure and efficient cross-border transactions while supporting DeFi applications.
How is USD1 different from other stablecoins?
Unlike algorithmic stablecoins or those targeting retail users, USD1 combines DeFi flexibility with traditional financial security. It avoids high-risk yield mechanisms and focuses on institutional use cases.
What regulatory advantages does USD1 have?
USD1 benefits from evolving U.S. stablecoin regulations, such as the GENIUS Act, which aims to create a clear framework for payment stablecoins. This regulatory clarity enhances its credibility and adoption potential.
How does WLFI ensure the security of USD1?
The reserve assets backing USD1 are custodied by BitGo, a leading digital asset custody provider. Regular third-party audits ensure transparency and compliance with regulatory standards.