The Funding: How VCs view Trump's memecoin and crypto executive order

Donald Trump wasted no time making waves in the crypto world. Just days before his inauguration as U.S. President, he launched the TRUMP memecoin, and soon after taking office, he signed an executive order establishing a working group to evaluate the creation of a national crypto stockpile, among other things. These moves are already raising questions about their implications for the crypto industry.

The TRUMP memecoin has made history as the first cryptocurrency directly associated with a presidential candidate. Within hours of its launch, it broke records for trading volume and market capitalization. However, concerns have emerged about its allocation structure — 80% of the total supply is reportedly controlled by Trump-linked entities, set to unlock over three years starting in April. The memecoin now constitutes the largest part of the President's net worth, sparking speculation about the market impact if Trump or his organizations were to sell a significant stake. Trump has also said little about his memecoin’s success since its launch, aside from social media reposts.

"If he or his organizations do sell a significant stake, almost no one in the industry or in Washington DC, except for those who stand to profit off of it, will be supportive," said Rob Hadick, general partner at Dragonfly. "And it will only strengthen the claims that this was a serious ethical violation and it will create even more crypto partisanship. So for the sake of all of us, I hope he doesn't."

Some say Trump is unlikely to sell anytime soon. "The potential reputational damage from being perceived as 'rug-pulling' the market would far outweigh any financial gains," said Boris Revsin, general partner and managing director of Tribe Capital, which manages $1.8 billion in assets.

Beyond market dynamics, the memecoin could complicate crypto regulation. Hadick noted that its launch opens up a significant avenue for, or at least creates the appearance of, potential government corruption or foreign influence, making reasonable legislation harder to pass. He added that it undermines efforts by entrepreneurs focused on technical innovation by drawing liquidity and attention away from other areas of crypto.

Still, the launch showcased the power of decentralized finance. "It was significant, and frankly awesome, that this launch was done on DeFi rails rather than CeFi," said Hadick, noting it could help bring more users and capital onchain.

Some other VCs see both opportunities and risks. Ed Roman, co-founder and managing partner of Hack VC, called the memecoin a "double-edged sword." While it legitimizes memecoins and drives mainstream adoption, its high fully-diluted valuation poses a "significant risk" if the token collapses, Roman said.

Memecoins, he added, can be healthy for crypto if investors are educated on their risks. They have "no fundamental tangible value, so it's akin to a casino rather than a stable asset," he said. Those who don't understand this "will suffer inevitable losses."

Adam Winnick, general managing partner at Finality Capital Partners, described the TRUMP launch as both "fascinating and frustrating." He called it fascinating because tokenizing influence on such a scale could have huge implications for the crypto industry, the U.S., and society as a whole. But the nature and timing of the launch, he said, was "so audacious" and frustrating. "It puts a major spotlight on our industry and I just hope we are ready for it."

The launch could also pave the way for more tokens tied to public figures. "Tokens likely going to come flooding in and we'll see more celebrity-like tokens. It's a trade but wouldn't marry it," said Dan Matuszewski, co-founder and principal of CMS Holdings, which bought the TRUMP memecoin and sold it and "didn't catch the top or the bottom."

Trump's crypto executive order

While the TRUMP memecoin captured market attention, his executive order shifted focus toward policy. The order's most crucial point was evaluating the feasibility of creating a national digital asset stockpile.

Some see the evaluation of a stockpile itself as a historic step for the industry, even though some had expected that the government would issue a direct order to set up a bitcoin strategic reserve. "In my opinion, this is the best we could hope for and a great sign for the industry that the administration is even willing to consider it," said Dragonfly's Hadick. He noted, however, that the idea of the U.S. government buying crypto directly is likely to face opposition. "There is going to be significant opposition by most traditional economic advisors... I expect when it's all said and done, that the outcome is likely to be a letdown to the market."

Others highlighted the global significance of the proposal. "If the government actually starts buying crypto on the open market, it could create a domino effect, pushing other nations to follow suit — even if they aren't entirely confident in the crypto space — simply out of the need to stay competitive," said Brandon Potts, partner at Framework Ventures.

But will the evaluation lead to a positive decision? And how long could it take? The executive order proposes a six-month evaluation period, but some VCs believe the process could move faster. "If they wanted to, they could likely finalize the framework within weeks, taking inspiration from crypto's ethos of fast execution," said Tribe Capital's Revsin.

"We do anticipate that they will proceed with establishing a reserve and that it will include the purchase of crypto assets, starting with Bitcoin and potentially expanding to other digital assets over time," he added.

While the specifics of the plan remain uncertain, the VCs said the executive order has made one thing clear: crypto is now a priority for the Trump administration, and the coming months will determine how far the U.S. is willing to go in embracing digital assets at a national level.

To subscribe to the free The Funding newsletter, click  here .