DeFi Platform Also 'Joins the System'—Why Is Trump's WLFI Draping Itself in the Garb of a National Bank?

Original Author: Sanqing, Foresight News

On January 12, the Trump family-affiliated project World Liberty Financial (WLFI) launched its lending platform, World Liberty Markets.

Previously, on January 7, WLFI announced that its subsidiary WLTC Holdings LLC had submitted an application to the U.S. Office of the Comptroller of the Currency (OCC) to establish World Liberty Trust Company, National Association (WLTC), a national trust bank specifically designed for stablecoin operations.

The USD-pegged stablecoin USD1, issued by WLFI, saw its circulation exceed $3.4 billion within a year (CoinMarketCap data), becoming one of the faster-growing USD-pegged stablecoins.

Through the federal regulatory system and the liquidity lending market, WLFI is not only seeking use cases for USD1 but also attempting to break down the walls between TradFi and DeFi.

USD1 Total Market Cap Curve and Chain Distribution | Source: DeFiLlama

DeFi Lending Platform World Liberty Markets: The Practical Implementation of USD1

Five days after submitting its license application, WLFI's launch of World Liberty Markets marks the entry of its DeFi business into the operational phase. The platform is built on the Dolomite protocol, initially launched on Ethereum, and shows intentions for multi-chain expansion.

World Liberty Markets is positioned as a lending market revolving around USD1. Users can not only deposit assets on the platform to earn interest but also borrow other tokens using their held assets as collateral.

The lending asset system is centered on USD1 while also being compatible with various collateral types including ETH, USDC, USDT, WLFI, cbBTC, covering mainstream crypto assets and the protocol's native tokens. This platform structure serves both the need for USD1 accumulation and provides support for establishing its liquidity foundation within DeFi.

Currently Supported Tokens on WLFI Markets | Source: WLFI Official Website

In terms of governance, WLFI token holders possess proposal and voting rights, enabling them to make decisions on key matters such as adding collateral assets, adjusting interest rate parameters, or setting user incentives.

The platform's launch immediately triggered market feedback. Dolomite, the underlying protocol architecture provider, saw its native token DOLO close up 71.9% on the day.

DOLO/USDT Daily Chart | Source: Bitget

Simultaneously, WLFI launched an early incentive campaign to attract initial user participation by increasing USD1 deposit yields. According to the WLFI Markets page, the USD1 borrowing incentive function is provided by Merkl, with APY fluctuating in real-time.

While the regulatory application is still under review, the launch of World Liberty Markets allows WLFI to preemptively lay out business scenarios. Regardless of the final license outcome, USD1 has already begun transitioning from an issuance concept to on-chain lending utility, truly entering the competitive arena alongside mainstream DeFi ecosystems.

National Trust Bank License Application: Stablecoin Business Moves Towards Regulatory System

The core objective of WLFI's proposed subsidiary entity, World Liberty Trust Company (WLTC), is to obtain a national trust bank charter issued by the OCC. If approved, this would mean USD1's operations would shift from a third-party partnership model to a federally directly regulated "full-stack" model.

WLTC's envisioned business scope includes: directly handling the minting and burning of USD1 without relying on external intermediaries; providing direct exchange services between USD and USD1; offering regulated custody services for assets like USD1, gradually replacing third-party service providers such as BitGo.

The significance of this charter extends far beyond mere business integration. Obtaining OCC approval means the project enters a federally regulated system, with profound implications for user trust and institutional adoption.

Currently, Binance has been deeply involved in USD1's creation and added trading pairs, while Coinbase has also listed the asset. This regulatory endorsement can further alleviate user concerns. By directly accepting federal regulation, WLFI can better comply with regulatory requirements such as the GENIUS Act.

WLFI also aims to structure its design to block any potential conflicts of interest. To address potential political scrutiny, WLFI CEO Zach Witkoff stated that the trust company's structure is designed to avoid conflicts, with Trump and his family members not serving as executives nor exercising daily control.

Meanwhile, USD1 has gradually gained more institutional support, indicating its growing penetration within the industry. Abu Dhabi investment firm MGX used USD1 to purchase $2 billion worth of Binance shares, a transaction that also serves as a significant external endorsement.

Despite rapid progress, WLFI still faces multiple uncertainties. Discussions regarding conflicts of interest during the OCC's review period will be a focal point. Although Zach Witkoff emphasizes that the Trump family holds no executive positions or voting rights, in the current highly sensitive political environment, whether the application will be approved as scheduled remains uncertain.

Furthermore, although USD1 has grown rapidly, there remains a significant gap in liquidity depth and application scenarios compared to the two leading stablecoins, USDT and USDC. To expand further, WLFI needs to demonstrate that its advantages stem not only from compliance narratives and endorsements but also from providing technical experience, capital efficiency, and DeFi composability comparable to or superior to mainstream products.

Market Share of Various Stablecoins | Source: DeFiLlama

The Relationship Between the Charter and DeFi Lending: Indirect but Strategically Complementary

As the OCC gradually approves similar charters for companies including Circle, Ripple, BitGo, Paxos, and Fidelity, a regulated cryptocurrency banking system is taking shape.

There is no direct regulatory binding relationship between a national trust bank charter and DeFi lending, but there is significant indirect support.

Enhancing USD1's credibility and liquidity within DeFi. The federal regulatory status provides USD1 with a credit endorsement, attracting more capital into liquidity pools, thereby increasing the depth and stability of lending markets.

Bridging TradFi and DeFi. The fiat on-ramp facilitated by the charter lowers user barriers, making it easier for traditional users to participate in DeFi lending.

Building a truly closed-loop business system. WLFI plans to launch a mobile app, a USD1 debit card, and RWA integration (such as tokenized real estate as collateral) in the future, all of which will benefit from regulatory clarity and credit endorsement.