Author: TaxDAO

On January 18, US President-elect Donald Trump announced the launch of his exclusive cryptocurrency meme currency $TRUMP through social media. This news instantly detonated the cryptocurrency market. The market value of $TRUMP exceeded US$24 billion 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 strong personal characteristics of Trump.

Meme currency is a cryptocurrency designed based on Internet culture. It is characterized by high entertainment and viral spread. Meme coins are usually based on popular figures or events to attract investor 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 factors, has made the entire meme currency market reach a new high.

According to a statement from the Trump team, the issuance of $TRUMP is intended to "celebrate a Leaders who don’t back down in the face of adversity.” This meme coin not only centers on Trump's 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 excited about the future of $TRUMP.

Previously, meme coins related to celebrities were not uncommon, and $Doge ranked among the top ten in market capitalization during this bull market because of its close connection with Musk. The most special thing about $TRUMP is that it is a meme coin issued directly by Trump as president-elect, which is a pioneering work both in the cryptocurrency market and in the cryptocurrency field. From repeatedly promising to implement a series of policies that are beneficial to cryptocurrencies while in office, to participating in investments in multiple mainstream cryptocurrencies, to issuing related NFTs and issuing VC coins $WLFI (World Liberty Financial Coin), Trump and his family are very interested in cryptocurrencies. Market participation continues to deepen. The issuance of $TRUMP this time means that Trump chose to follow the craze of meme coins and enter the game personally as the president-elect and in the most down-to-earth way. As the first president to issue a meme currency, Trump used this unconventional behavior to directly inject his influence into the meme currency market, which not only directly showed his high recognition of cryptocurrency, but also helped cryptocurrency further " "Out of the Circle", attracting more attention and funds, and releasing positive signals for the crypto market in terms of prospects and liquidity.

However, this meme currency carnival is backed byIn the end, there are not only wealth effects and signals, but complex compliance risks hidden behind them. At a time when cryptocurrencies are increasingly gaining attention from various countries, Trump’s move will undoubtedly push cryptocurrencies directly into the spotlight to be scrutinized.

In terms of securities regulatory risks, a key question is: Is the meme coin a security? This is an important factor affecting its legitimacy. In the United States, cryptocurrencies issued through ICOs are considered securities and are 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. 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 publicly raise funds through the issuance of cryptocurrency and promise some kind of future return. Judging from the current situation, although the Trump team has publicly issued $TRUMP and has been purchased by investors, 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 made clear. If $TRUMP’s actual performance has the characteristics of a security, it may still be subject to SEC investigation and supervision.

Second is the issue of tax compliance. According to the U.S. Internal Revenue Service (IRS), capital gains from investing in cryptocurrencies are considered taxable income. 80% of $TRUMP held by the Trump team will be unlocked in batches over the next three years, which poses considerable challenges to its tax compliance. First, the question of whether $TRUMP unlocking constitutes a taxable event is worth noting. U.S. tax law provides that capital gains tax liability is triggered only when the asset is disposed of. Therefore, the unlocking of a cryptocurrency itself is generally not considered a taxable event unless the cryptocurrency is sold or used as a trade. Once a cryptocurrency is traded on the market or converted into another asset, capital gains are calculated and taxed based on the market price at the time of the transaction. How to determine the cost basis of $TRUMP once it is unlocked is another tricky question. In U.S. tax law, capital gains tax is calculated based on the asset's cost basis, which is the price at which it was purchased. But because $TRUMP’s price fluctuates wildly, determining the cryptocurrency’s cost basis can be complicated. 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 its capital gains. If the details of each transaction are not properly recorded, this can create a lot of headaches for tax filing.

In addition, the issuance of meme coins may also trigger controversy over donations. In the United States, the Federal Election Commission (FEC) has strict rules regarding donations.Transparency requirements and limits. If $TRUMP is used as a tool to raise funds, it is likely to circumvent the existing regulatory framework and hit a legal red line. At present, although there is no conclusive evidence that companies or individuals will purchase $TRUMP as a way to donate, the behavior of such politicians issuing meme coins and obtaining high profits may still seriously impact the existing donation order in the United States. Trump Pu may also be suspected of disguised corruption. It is worth noting that Trump chose to issue the currency before he officially took office, perhaps to avoid external accusations of his private use of public power and the realization of power. But even so, this currency issuance may have many negative impacts, especially if the currency price drops sharply, Trump's credibility may be severely damaged.

Trump’s launch of $TRUMP is undoubtedly a bold experiment with both significance and market influence, but it is exactly in line with his self-created image. Judging from market performance, $TRUMP 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 not only the economic risks of investment behavior, but also the legal and compliance risks. After all, the premise of "stud meme living in the palace" is to stay on the field.