ieExplains: What is Trump's new meme coin and what does this mean for the crypto market?

Trump's venture into the crypto market marks a significant shift in his perspective, with the president-elect previously labelling the digital assets a "scam" in 2021.

However, throughout his presidential campaign, Trump embraced the crypto market, calling for further deregulation of the sector and accepting Bitcoin for donations from supporters. 

Following the launch of $TRUMP, Melania Trump unveiled her own cryptocurrency which, according to CoinMarketCap, had a market capitalisation of $1.9bn on Monday.

But what is a meme coin and what does this mean for the wider crypto market?

What is a meme coin?

A meme coin is a type of cryptocurrency often inspired by jokes, internet memes or cultural trends. Compared to more mainstream cryptocurrencies like Bitcoin or Ethereum, meme coins usually lack an underlying utility, value or technological innovation.

Compared to other products on the speculative market, their value is primarily driven by social media buzz rather than asset fundamentals. 

Why did Donald and Melania Trump launch their own meme coins?

Trump has made explicit overtures to the crypto industry throughout his presidential campaign and subsequent election, with reports that he even considered an executive order designating the asset class a “national priority.”

The president-elect’s previous forays into crypto include digital collectables that show him in a variety of poses and costumes, including as a superhero. Along with his sons, he’s also endorsed World Liberty Financial, a project that has been much-hyped but for which details remain scarce.

Trump has promised to be a "crypto president", and is expected to issue executive orders to reduce regulatory roadblocks and promote widespread adoption of digital assets.

Overall, it seems Trump's new meme coin appears to be a strategic move to capitalise on the crypto sector's growing popularity, enhance his brand with younger generations, and signal a supportive stance toward the industry.

Are these meme coins safe?

The website for the president-elect’s token describes it as “the only official Trump meme.” However, the website's small print states the president-elect’s token isn’t intended to be an “investment opportunity, investment contract, or security of any type.” 

Despite this, Trump supporters immediately started buying, with major exchanges like Coinbase and Binance confirming their intentions to list the token on their platforms.

The website for Melania’s project also says that the token isn’t supposed to be an investment opportunity or security, noting: “Melania memes are digital collectables intended to function as an expression of support for and engagement with the values embodied by the symbol MELANIA.”

Are these meme coins a cause for concern?

The prospect of looser regulations around crypto policy and a president that actively embraces and promotes the sector has been met with fanfare by the industry, turbocharging a rally in Bitcoin and other major cryptos following Trump's election victory in November.

However, several ethical and political concerns have been raised about the president-elect's new coin. The launch of the official Trump token represents the latest blending of politics and decentralised finance, with fears that this may blur the lines between governance, influence and profit. 

Some industry analysts have also expressed concerns about political figures wielding so much power in speculative markets, which is likely to cause significant challenges for regulators.

Overall, Trump and Melania's new meme coins come with several potential risks when it comes to conflicts of interest and foreign influence, which will demand careful scrutiny once the president-elect takes office.