Trump’s stablecoin: Does the market need USD1?

​Donald Trump has built a lucrative cryptocurrency business around his name, but getting people to use his digital dollar may be another matter. His USD1 stablecoin is losing ground in a market already dominated by established competitors. Why would anyone choose a Trump-branded dollar when they can already use USDT or USDC?

A $400 million exit raises questions about USD1 demand

Some of USD1's biggest holders have been pulling their money out. Over just two weeks, redemptions reduced the stablecoin's market capitalization by approximately $400 million, raising questions about how much of its demand comes from a small group of wealthy investors rather than a broad user base.

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The withdrawals wiped out roughly 9% of USD1's circulating supply. Blockchain research firm Onchain Benchmark traced nearly $200 million in redemptions on BNB Chain to a single unidentified wallet. The researchers could not determine who controlled the funds or why they were withdrawn.

Importantly, USD1 maintained its dollar peg throughout the withdrawals, trading close to $1. Its shrinking market capitalization therefore reflected tokens being redeemed and removed from circulation, not a collapse in their value. Still, USD1's supply contracted much faster than that of established competitors. On Ethereum, USD1's supply fell by more than 11% over nine days, compared with declines of just 0.76% for USDT and 2.18% for USDC.

What can USD1 do that other stablecoins can't?

World Liberty Financial launched USD1 in March 2025 as a digital token designed to maintain a value of $1. Like other dollar-backed stablecoins, it allows users to move money across blockchain networks without the price swings associated with Bitcoin and other cryptocurrencies.

But USD1 is hardly the first to offer these services. USDT and USDC already support trading, transfers, and payments across numerous platforms. For someone sending money overseas or moving funds between exchanges, USD1 has yet to demonstrate a clear advantage over its more established competitors.

Its strongest selling point may instead be its business connections. USD1 was used in MGX's $2 billion investment in Binance, giving it a role in one of the industry's major transactions. World Liberty has also announced plans to bring the token to the Canton Network, where financial institutions could use it to settle transactions involving tokenized assets.

Trump's crypto empire: Who actually makes money?

To understand who stands to benefit from USD1, it's worth looking at how Trump's other cryptocurrency ventures have performed. His crypto projects have produced an unusual contrast between business success and investor returns. The TRUMP memecoin attracted enormous attention after its launch in January 2025, but its price subsequently collapsed from its early highs. World Liberty Financial's WLFI token has also faced selling pressure, even as the businesses behind these projects generated substantial revenue.

The financial divide is striking. Trump's family has reportedly made more than $2 billion from its cryptocurrency ventures, while many outside investors have suffered substantial losses, including losses on holdings they have yet to sell. The difference lies partly in how these projects make money. Token sales, trading fees, and other commercial arrangements can reward the businesses involved regardless of whether their tokens appreciate.

The two tokens also serve different purposes. TRUMP trades largely on speculation and the president's popularity, while WLFI is tied to governance and participation in the World Liberty Financial ecosystem. Neither guarantees holders a share of the revenue generated by the businesses behind them.

Why issuing another digital dollar can be profitable

For a stablecoin issuer, success does not necessarily depend on attracting millions of users. A relatively small number of large holders can bring in billions of dollars, creating a potentially lucrative business even if the token offers little that competitors do not already provide.

The money comes from the reserves backing the stablecoin. When users acquire dollar-backed tokens, the issuer holds corresponding assets, which may include short-term U.S. Treasury securities. These investments earn interest, while stablecoin holders generally receive no share of that income simply for owning the tokens.

USD1's institutional relationships are particularly valuable in this business model. A major transaction can bring substantial funds into circulation, increasing the reserves that may generate income. World Liberty Financial and BitGo are entitled to income from USD1's reserves under their agreements, although the precise division is not publicly specified.

Which stablecoins actually solve problems?

Stablecoins have become useful because they address practical financial needs. They allow people to transfer digital dollars across borders, provide traders with liquidity, and offer access to dollar-denominated assets in places where traditional banking services may be expensive or difficult to obtain.

USDT has developed extensive liquidity across cryptocurrency exchanges, making it a common choice for trading. USDC has gained ground in payments and institutional finance, supported by integrations with financial technology companies and blockchain networks. Circle CEO Jeremy Allaire emphasized the importance of liquidity during the company's second-quarter earnings discussion, saying, "This liquidity is what makes digital dollars work in markets, in payments, and across business applications."

Neither is risk-free. Stablecoin users must still consider reserve transparency, issuer reliability, transaction fees, and redemption conditions. A token's usefulness depends not only on maintaining its dollar peg but also on how easily it can be transferred, exchanged, and converted into traditional currency.

USD1 can perform many of the same functions, and its institutional partnerships give it a place in the market. But attracting billions of dollars through a handful of major relationships is not the same as building a stablecoin people regularly choose to use. For USD1, that distinction may matter more than the famous name behind it.