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 immediately ignited the cryptocurrency market. The market capitalization of $TRUMP exceeded $24 billion on the first day of issuance, becoming the undisputed focus of the market. From ordinary investors to seasoned traders, almost everyone has shown an extremely high enthusiasm for this meme coin with a strong Trump personal flavor.
Meme coins are cryptocurrencies designed based on Internet culture, characterized by high entertainment value and viral spread. Meme coins are usually based on popular figures or events to attract investor attention, emphasizing market sentiment rather than actual economic function. From the early Dogecoin ($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, relying on its strong personal brand effect and the unique combination with political factors, has pushed the entire meme coin market to a new high.
Trump Personally Enters the Field: Releasing Positive Signals for the Crypto Market Again
According to the statement of Trump's team, the issuance of $TRUMP is intended to "celebrate a leader who does not shrink back in adversity". This meme coin not only takes Trump's political image as the core, but also incorporates his experience of being assassinated in the 2024 election campaign in 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 even ranked among the top ten in market value in this bull market due to its close connection with Musk. The most special thing about $TRUMP is that it is a meme coin directly issued by Trump as a president-elect, which is an innovation in both the cryptocurrency market and the political field. From repeatedly promising to implement a series of policies favorable to cryptocurrencies during his tenure, to participating in investment in various mainstream cryptocurrencies, to issuing related NFTs and the VC coin $WLFI (World Liberty Financial Coin), Trump and his family's participation in the crypto market has been deepening. This issuance of $TRUMP means that Trump has chosen to follow the trend of meme coins, and personally enter the game in the most down-to-earth way as a president-elect. As the first president to issue a meme coin, Trump has directly injected his political influence into the meme coin market through this unconventional behavior, not only directly showing his high recognition of cryptocurrencies, but also helping cryptocurrencies to further "break out of the circle" and attract more attention and capital, releasing 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, there are not only wealth effects and political signals, but also hidden compliance risks. At a time when cryptocurrencies are increasingly being valued by governments around the world, Trump's move has undoubtedly pushed cryptocurrencies directly into the spotlight for scrutiny.
In terms of securities regulatory risks, a key question is: Does this meme coin constitute a security? This is an important factor affecting its legality. In the United States, cryptocurrencies issued through ICOs are regarded as securities and subject to strict regulation 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. This test includes four elements: investment of money, expectation of profits, common enterprise, and derived solely from the efforts of others. The core feature of ICOs is to publicly raise funds by issuing cryptocurrencies and promise some future returns. From the current situation, although the Trump team has publicly issued $TRUMP and received investment from investors, it has already stated on the $TRUMP official website that the cryptocurrency does not belong to securities and has not promised the possibility of future profits, so it is difficult to identify $TRUMP as a security. However, the SEC's attitude towards meme coins is not yet clear, and if the actual performance of $TRUMP has the characteristics of securities, it may still be subject to SEC investigation and regulation.
Secondly, there is the issue of tax compliance. According to the regulations of the US Internal Revenue Service (IRS), the 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, it is worth noting whether the unlocking of $TRUMP constitutes a taxable event. US tax law stipulates that capital gains tax obligations are only triggered when assets are disposed of. Therefore, the unlocking of cryptocurrencies is usually not considered a taxable event, unless the cryptocurrencies are sold or used for transactions. Once the cryptocurrencies are traded in the market or converted into other assets, the capital gains must be calculated based on the market price at the time of the transaction and the corresponding taxes must be paid. After the unlocking of $TRUMP, how to determine its cost basis is another thorny issue. In US tax law, the calculation of capital gains tax is based on the cost basis of the asset, that is, the purchase price. However, due to the violent price fluctuations of $TRUMP, determining the cost basis of the cryptocurrency may be very complex. Especially if the Trump team chooses to sell these cryptocurrencies in batches, the timing and market price of each transaction will affect the calculation of their 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 raise controversies over political contributions. In the United States, the Federal Election Commission (FEC) has strict transparency requirements and contribution limits for political donations. If $TRUMP is used as a tool to raise political funds, it is very likely that the existing regulatory framework will be circumvented, touching the legal red line. At present, although there is no conclusive evidence that any company or individual has used the purchase of $TRUMP as a way of political contribution, the behavior of politicians issuing meme coins and obtaining huge profits may still seriously disrupt the existing political contribution order in the United States, and Trump may also be suspected of indirect corruption. It is worth noting that Trump chose to issue coins before officially taking office, perhaps to avoid accusations of public power for private use and power monetization. However, this coin issuance may still bring many negative impacts, especially if the coin price plummets, Trump's political credibility is likely to suffer a heavy blow.
Summary
Trump's launch of $TRUMP is undoubtedly a bold experiment with both political significance and market impact, but this is precisely in line with the political image he has created for himself. From the market performance, $TRUMP has successfully ignited investment enthusiasm in a short period of time, attracting countless attention to meme coins, with unprecedented influence. However, in the face of FOMO and FUD, people should still maintain rationality, and pay attention not only to the economic risks of investment behavior, but also to its legal and compliance risks. After all, the premise of "going all in on meme coins in the palace" is to stay in the game.