Trump coin: “You let yourself be ripped off and think it’s cool”

Already during the election campaign, Donald Trump put himself in the limelight as a “crypto president” and held out the prospect of regulatory relief for the industry. It was not only the Bitcoin price that rose to a record high at times before Trump’s inauguration on Monday. Trump himself also benefited greatly from the crypto boom.

Three days before his inauguration, companies affiliated with him issued their own memecoin called “$Trump”, followed by “$Melania”, a memecoin for his wife Melania. The market capitalization of the two crypto tokens was recently almost $10 billion. So the Trumps’ coins are a billion-dollar business. But what are memecoins? What financial or capital market law requirements are you subject to? And: Could Austrian politicians also create such a memecoin?

What are memecoins?

Memcoins usually have neither a classic use nor do they grant securitized rights, such as payment claims, voting rights or profit sharing. Usually, they are based on a “hype”, on a viral phenomenon or on a person’s popularity. Crypt economist Alfred Taudes compares the Trump coins to a digital commemorative coin. It is intended to celebrate Trump’s victory in the US presidential election, he says: “Trump coins have an ideal value. You let Trump rip you off and think it’s cool.” Accordingly, the accompanying text states that the Trump coins are not intended as an investment object or security, but “as an expression of support”. Trading such memecoins is highly speculative and highly volatile. Anyone who puts money into such memecoins should be aware that a total failure is possible at any time.

Technically, they are not a cryptocurrency either. To do this, they would have to have their own blockchain, i.e. a distributed database on which the transactions are recorded. Like other memecoins (e.g. Dogecoin), they use the blockchain of another cryptocurrency, in this specific case they use Solana’s infrastructure. According to the Austrian Financial Market Authority (FMA), such memecoins are usually legally classified as “other crypto assets”.

What financial market regulations are they subject to?

In order for the coins to be traded in Austria, a white paper must theoretically be submitted to the competent authority 20 days before publication, according to the EU Regulation on Markets in Crypto Assets (MiCAR), which came into force at the end of last year. This must present and describe essential characteristics, rights and obligations, as well as associated risks. However, authorisation by the FMA is not required. After the 20-day period, the memecoins can be offered. However, if the FMA finds violations, it can withdraw the coins from circulation.

Where can you buy such memecoins?

Such memecoins can be bought and sold via relevant crypto exchanges, including in Austria. There is no prohibition on trading “fun” or politically associated memecoins, says an FMA spokesman to the KURIER. There is no white paper for the Trump coins. However, because there is still a transition period until the end of the year, crypto exchanges that already have a license would only have to comply with money laundering regulations in connection with such memecoins.

Could Austrian politicians also issue such memecoins?

The technology is open to everyone, says crypto economist Taudes. However, it would only work if there was also a large community. “It’s a fan article.” He is quite sure that people are already sitting together in the parties who are making corresponding considerations. However, it is not only questionable whether there are enough crypto-savvy people in this country, but whether such a memecoin could not also be used to disguise campaign donations.

Such concerns also exist in the USA. Foreign governments could buy into the memecoin and thus exert influence on US politics, Jordan Libowitz of the organization Citizens for Responsibility and Ethics fears to the Washington Post. In any case, the memecoin reflects the extent to which Trump could use every lever of the government to make money for himself.