Author | TaxDAO
On January 18, US President-elect Donald Trump announced the launch of his exclusive cryptocurrency meme coin $TRUMP through social media. This news instantly set off the cryptocurrency market. The market value of $TRUMP exceeded 24 billion US dollars on the first day of its issuance, becoming a well-deserved market focus. From ordinary investors to senior traders, almost everyone has shown great enthusiasm for this meme coin with a strong personal touch of Trump.
Meme coins are a type of cryptocurrency designed based on Internet culture, which are characterized by high entertainment and virality. Meme coins are usually based on hot figures or events to attract investors' attention, emphasizing market sentiment rather than actual economic functions. From the early Dogecoin ($Doge) to the recent $Pepe, the rise of these meme coins has always been inseparable from the public's "speculative carnival". The $TRUMP issued by Trump this time, with its strong personal brand effect and unique combination with political factors, has brought the entire meme coin market to a new high.
Trump personally enters the market: once again sending positive signals to the crypto market
According to a statement from the Trump team, the release 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 his experience of being assassinated during the 2024 campaign into the narrative, further stimulating the market's emotional resonance. Combined 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 $Doge was closely associated with Musk, and ranked among the top ten in market value in this bull market. The most special thing about $TRUMP is that it is a meme coin directly issued by Trump as the president-elect, which is a pioneering work both in the cryptocurrency market and in the political field. From repeatedly promising to implement a series of policies favorable to cryptocurrencies during his term, to participating in the investment of various mainstream cryptocurrencies, to issuing related NFTs and issuing VC coins $WLFI (World Liberty Financial Coin), Trump and his family have been increasingly involved in the crypto market. The issuance of $TRUMP this time means that Trump has chosen to follow the craze of meme coins and personally enter the game as the president-elect in the most down-to-earth way. As the first president to issue meme coins, Trump has directly injected his political influence into the meme coin market with this unconventional behavior, which not only directly shows his high recognition of cryptocurrencies, but also helps cryptocurrencies to further "go out of the circle" and attract more attention and funds, and releases positive signals for the crypto market in terms of policy prospects and liquidity.
From on-chain carnival to rational reflection
However, behind this meme coin frenzy is not only the wealth effect and political signals, but also complex compliance risks. At a time when cryptocurrencies are increasingly valued by governments around the world, Trump's move has undoubtedly put cryptocurrencies directly under the spotlight for scrutiny.
In terms of securities regulatory risk, a key question is: Is the meme coin a security? This is an important factor affecting its legality. In the United States, cryptocurrencies issued through ICOs are considered securities and are subject to strict supervision by the SEC. In the United States, the Securities and Exchange Commission (SEC) usually relies on the Howey Test to determine whether an asset constitutes a security. The test includes four elements: investment of money, expectation of profits, common enterprise, and derived from the efforts of others. The core feature of ICO is to raise funds publicly by issuing cryptocurrencies and promise some future returns. From the current situation, although the Trump team publicly issued $TRUMP and obtained investors' purchases, it has stated on the $TRUMP official website that the cryptocurrency is not a security and has not promised the possibility of future profits. Therefore, it is difficult to identify $TRUMP as a security. However, the SEC's attitude towards meme coins has not yet been clarified. If the actual performance of $TRUMP has the characteristics of securities, it may still be investigated and regulated by the SEC.
The second is the issue of tax compliance. According to the regulations of the U.S. Internal Revenue Service (IRS), capital gains from investing in cryptocurrencies are considered taxable income. The 80% of $TRUMP held by the Trump team will be unlocked in batches over the next three years, which poses a considerable challenge to its tax compliance. First of all, the question of 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 assets are disposed of. Therefore, the unlocking of cryptocurrencies itself is generally not considered a taxable event unless the cryptocurrency is sold or used for trading. Once the cryptocurrency is traded on the market or converted into other assets, capital gains must be calculated and taxes paid based on the market price at the time of the transaction. After $TRUMP is unlocked, how to determine its cost basis is another thorny issue. In U.S. tax law, the calculation of capital gains tax is based on the cost basis of the asset, that is, the price at the time of purchase. However, due to the sharp price fluctuations of $TRUMP, determining the cost basis of cryptocurrencies can be very complicated. In particular, if the Trump team chooses to sell these cryptocurrencies in batches, the timing and market price of each transaction will affect the calculation of its capital gains. If the details of each transaction are not properly recorded, this will cause great trouble for tax filing.
In addition, the issuance of meme coins may also cause controversy in political donations. In the United States, the Federal Election Commission (FEC) has strict transparency requirements and limits on political donations. If $TRUMP is used as a tool to raise political funds, it is likely to circumvent the existing regulatory framework and touch the legal red line. At present, although there is no conclusive evidence that companies or individuals will purchase $TRUMP as a way of political donations, the behavior of such politicians issuing meme coins and making high profits may still seriously impact the existing political donation order in the United States, and Trump may also be suspected of disguised corruption. It is worth noting that Trump chose to issue coins before officially taking office, perhaps to avoid accusations from the outside world that he abused public power for private purposes and cashed in power. But even so, this coin issuance may also bring many negative effects, especially if the coin price falls sharply, Trump's political credibility may suffer a heavy blow.
Summarize
Trump's launch of $TRUMP is undoubtedly a bold experiment with both political significance and market influence, but this is exactly in line with his self-created political image. Judging from the market performance, $TRUMP has successfully ignited investment enthusiasm in a short period of time, attracted countless attention to meme coins, and has unprecedented influence. However, in the face of FOMO and FUD, people should still remain rational and pay attention to both the economic risks of investment behavior and its legal and compliance risks. After all, the premise of "all-in meme living in the palace" is to stay on the field.
