The convergence of emerging financial technologies and traditional diplomatic relations has created novel challenges for legal frameworks governing digital asset regulation and conflicts of interest in government. Recent developments involving the Trump administration, United Arab Emirates (UAE) investment entities, and the cryptocurrency firm World Liberty Financial (WLF) illustrate the complexity of applying established ethical principles to rapidly evolving digital asset markets and international technology transfer policies.¹
The Regulatory Landscape: The GENIUS Act and Stablecoin Framework
The passage of the GENIUS Act in July 2025 marked a watershed moment for cryptocurrency regulation in the United States.² The law established the first comprehensive federal framework for stablecoins, creating licensing requirements for domestic issuers and participation standards for foreign entities in the U.S. stablecoin market.³ Under the act, all stablecoin issuers must maintain reserves backed by high-quality, liquid assets with market value equal to the par value of circulating tokens, subject to regular audits and anti-money laundering compliance.⁴
The act includes a provision prohibiting members of Congress and senior executive-branch officials from issuing payment stablecoins during their public service.⁵ However, this restriction does not extend to family members or business associates, creating potential gaps in conflict-of-interest prevention that recent events have highlighted.
The World Liberty Financial Structure
WLF, co-founded by members of the Trump and Witkoff families, operates through a governance token structure that limits any single digital wallet to 5 percent of governance power.⁶ The company’s USD1 stablecoin, backed by U.S. treasuries and designed as “Genius Act compliant,” represents a significant test case for the new regulatory framework.⁷ Following the $WLFI token’s listing on exchanges in September 2025, the Trump family’s stake was valued at approximately $5 billion.⁸
The financial architecture becomes more complex when examined alongside international investments. Sheikh Tahnoon bin Zayed Al Nahyan, a member of the UAE’s ruling family, had one of his investment firms deposit $2 billion into WLF, effectively providing the company with substantial capital capable of generating significant annual returns through interest income.⁹ This transaction involved MGX, established with assistance from G42, using WLF’s USD1 stablecoin for investment in Binance, a major cryptocurrency exchange.¹⁰
Technology Transfer and National Security Considerations
Parallel to these financial developments, the UAE pursued access to advanced artificial intelligence (AI) chips through G42, a technology firm controlled by Sheikh Tahnoon.¹¹ Under the Biden administration, such access was restricted due to national security concerns regarding potential technology transfer to China, given G42’s historical partnerships with Chinese technology companies.¹² Two weeks after it was disclosed that a $2 billion MGX-Binance transaction would use World Liberty Financial’s USD1 stablecoin, the Trump administration approved the sale of hundreds of thousands of AI chips to the Emiratis, despite concerns that the chips could be shared with China.¹³
This policy shift represented a significant change from previous restrictions, with the Trump administration agreeing to grant the UAE access to hundreds of thousands of advanced American-made AI chips, primarily from Nvidia.¹⁴ The timing of this approval, following closely after the cryptocurrency investment, has raised questions about the relationship between private financial interests and public policy decisions.
Legal and Ethical Framework Challenges
The intersection of these developments presents several challenges to existing conflict-of-interest frameworks. Traditional approaches to government ethics assume clear separation between public duties and private financial interests. However, the digital assets introduce complexities that existing legal structures may not adequately address.
Key figures in the administration hold dual roles that complicate traditional conflict analysis. Steve Witkoff, serving as Middle East envoy while maintaining financial interests in WLF, exemplifies the challenge of applying conventional recusal and divestiture principles to emerging financial instruments.¹⁵ Similarly, David Sacks, the administration’s AI and crypto czar, participated in chip negotiations while maintaining Silicon Valley investment activities, including relationships with Gulf investors.¹⁶ Despite divesting over $200 million in crypto holdings before assuming his White House role, Sacks’ firm Craft Ventures retained a 2.5 percent stake in BitGo, a crypto custody firm that serves as the custodian for WLF’s USD1 stablecoin and is currently pursuing a federal banking charter.¹⁷
The direct operational connection is further illustrated by Fiacc Larkin, who serves as both G42’s head of crypto and WLF’s chief strategic adviser, creating a direct link between the entities involved in both the cryptocurrency investment and chip negotiations.¹⁸
Regulatory Implications and Policy Considerations
The GENIUS Act’s framework, while comprehensive, may not fully address conflicts arising from family-controlled entities and international investment structures. The act features a stipulation that would “prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin product during their time in public service,” but this restriction does not extend to family members or cover investment structures involving foreign entities.¹⁸
Congressional oversight has intensified as members of the Senate Banking Committee have raised concerns that the Trump family will earn millions from a UAE-connected crypto deal.²⁰ These same senators are concerned that this deal coincides with the administration’s plan to approve the sale of U.S. AI chips to an Emirati firm with ties to China, leading to calls for a divestiture from WLF.
During a conference at Georgetown University, SEC Chairman Paul Atkins was specifically asked about conflicts of interest in the crypto industry, including those related to WLF. Although Atkins declined to address the relationships directly, he nonetheless affirmed that the SEC would establish standards and “attempt to root out” such conflicts.21Reiterating the agency’s commitment to principle, due process, and the rule of law, Atkins stated that the agency would enforce existing statutes and investigate where necessary, noting further that the SEC does not currently have direct jurisdiction over WLF.22
Implications for Future Regulatory Development
These developments highlight several areas where legal frameworks may require updating to address digital-age conflicts of interest.
First, the global nature of cryptocurrency markets creates jurisdictional complexities that traditional conflict-of-interest rules may not adequately address. When family members hold interests in entities receiving foreign government investments, existing disclosure and recusal requirements may prove insufficient.
Second, the technical complexity of blockchain-based financial instruments makes oversight challenging. The governance token structure of WLF, while limiting individual wallet control, may not prevent coordinated influence through multiple related entities.
Third, the intersection of emerging-technology regulation with foreign policy creates novel scenarios where private financial interests may align with or conflict with national security considerations. The simultaneous cryptocurrency investment and chip export approval illustrate how traditional separation between commercial and diplomatic spheres may be challenged by integrated global technology markets.
Conclusion
The convergence of cryptocurrency regulation, foreign investment, and technology transfer policy presents unprecedented challenges for legal frameworks governing conflicts of interest in government. While the GENIUS Act establishes important regulatory foundations for stablecoins, the WLF case suggests that additional measures may be necessary to address family-controlled entities and international investment structures.
The legal and financial professions must grapple with how traditional ethical principles apply to rapidly evolving technologies and global investment patterns. As digital assets become increasingly integrated with traditional diplomatic and commercial relationships, regulatory frameworks must evolve to maintain public trust while supporting innovation in financial markets. The ongoing scrutiny of these transactions will likely influence future legislative and regulatory approaches to conflicts of interest in the digital economy.
ENDNOTES
¹ Eric Lipton, David Yaffe-Bellany, Bradley Hope, Tripp Mickle & Paul Mozur, Anatomy of Two Giant Deals: The U.A.E. Got Chips. The Trump Team Got Crypto Riches, N.Y. Times, Sept. 15, 2025. https://www.nytimes.com/2025/09/15/us/politics/trump-uae-chips-witkoff-world-liberty.html
² Trump signs landmark GENIUS Act, hailing “exciting new frontier” for crypto, CBS News, July 19, 2025, https://www.cbsnews.com/news/trump-signs-genius-act-crypto-bill/.
³ The GENIUS Act: A Framework for U.S. Stablecoin Issuance, Sidley Austin LLP, July 21, 2025, https://www.sidley.com/en/insights/newsupdates/2025/07/the-genius-act-a-framework-for-us-stablecoin-issuance.
⁴ How will the GENIUS Act work in the US and impact the world?, World Economic Forum, https://www.weforum.org/stories/2025/07/stablecoin-regulation-genius-act/.
⁵ What to know about the GENIUS Act, a crypto regulation bill, ABC News, June 18, 2025, https://abcnews.go.com/Business/genius-act-crypto-regulation-bill/story?id=121981442.
⁶ Aimee Picchi, New crypto token boosts Trump family’s wealth by $5 billion, CBS News, Sept. 2, 2025. https://www.cbsnews.com/news/trump-wlfi-world-liberty-financial-crypto-wealth/
⁷ World Liberty Financial’s Stablecoin USD1 Now Available on Coinbase, BusinessWire, Aug. 22, 2025. https://www.businesswire.com/news/home/20250822028641/en/World-Liberty-Financials-Stablecoin-USD1-Now-Available-on-Coinbase
⁸ Trump fortune balloons by billions after family firm’s crypto token starts trading, Guardian, Sept. 2, 2025. https://www.theguardian.com/technology/2025/sep/02/trump-world-liberty-financial-cryptocurrency
⁹ Lipton et al., supra note 1.
¹⁰ Id.
¹¹ Id.
¹² Amit Bansal, Inside Trump’s crypto empire and its impact on international relations, The Econ. Times, Sept. 7, 2025. https://economictimes.indiatimes.com/news/international/global-trends/inside-trumps-crypto-empire-and-its-impact-on-international-relations/articleshow/123742425.cms?from=mdr
¹³ NYT: UAE Chips Deal Linked to $2B Investment in Trump Family Cryptocurrency Firm, Democracy Now!, Sept. 16, 2025, https://www.democracynow.org/2025/9/16/headlines/nyt_uae_chips_deal_linked_to_2b_investment_in_trump_family_cryptocurrency_firm.
¹⁴ Policy and Profit: Examining the Intersection of U.S. Chip Exports and UAE Crypto Investments, Red-Team News, Sept. 15, 2025, https://redteamnews.com/cyber-laws-regulations/policy-and-profit-examining-the-intersection-of-u-s-chip-exports-and-uae-crypto-investments/.
¹⁵ Lipton et al., supra note 1.
¹⁶ Id.
¹⁷ Crypto czar David Sacks’s portfolio included Bitcoin, Coinbase and Robinhood, Fortune Crypto, Mar. 14, 2025, https://fortune.com/crypto/2025/03/14/david-sacks-bitcoin-coinbase-robinhood-200-million-divestments-crypto-portfolio/; U.S. Crypto Firms Circle, BitGo, Coinbase and Paxos Pursue Bank Licenses as 2 Bills Push for Stablecoin Regulation, Yahoo Finance, Apr. 22, 2025, https://finance.yahoo.com/news/u-crypto-firms-circle-bitgo-010550048.html.
¹⁸ Lipton et al., supra note 1.
¹⁹ ABC News, supra note 5.
²⁰ Warren, Van Hollen Call on Trump and Trump Family to Divest from World Liberty Financial, U.S. Senate Committee on Banking, Housing, and Urban Affairs, https://www.banking.senate.gov/newsroom/minority/warren-van-hollen-call-on-trump-and-trump-family-to-divest-from-world-liberty-financial-sound-alarm-on-foreign-governments-using-trump-crypto-to-curry-presidential-favors.
21 Paul Atkins, Chairman, U.S. Securities & Exch. Comm’n, A Conversation with Paul Atkins, Chairman, U.S. Securities and Exchange Commission, Psaros Ctr. for Fin. Mkts. & Pol’y, YouTube (Sept. 25, 2025), https://www.youtube.com/playlist?list=PLIfTUYna5reJNiIoJYDiJg5UYoKGhmpdg.
22 Id.
This post comes to us from David Krause, emeritus associate professor of finance at Marquette University.