FinTax, a Financial Management and Tax Compliance firm for Web 3 brands outlined the major challenges facing the Donald Trump Team after the successful launch of an official Memecoin.
On January 18th, Donald Trump announced the launch of an Official memecoin via his X page and Truth Social. The launch kickstarted the biggest scramble in the crypto industry as millions of traders bought the coin sending its valuation up.
$Trump surged to $30.2 on its first launch day with a market cap of over $8 billion.
The memecoin launched on Solana hit a peak of $72 the next day before dropping to the current price of $53.2. It currently has a market capitalization of $10.7 billion.
Donald Trump’s team explained that the motive behind the launch of the memecoin was to celebrate a strong leader who stands tall in tough times.
This meme coin isn’t just about Trump’s political image. it also eulogized the story of his assassination attempt during the 2024 campaign.
The new $Trump memecoin falls under the PoltiFi category of cryptos and Fintax a Web 3 financial firm outlined some challenges and questions facing the Trump Team after the launch.
Is it a Security?
The question of whether $Trump is a security or not is very important as it determines the regulatory approach United States authorities will employ in dealing with the Token.
The Trump team explained on the official website of the memecoin that it is not a security and hasn’t promised any future profits.
Securities in the United States are classified by the Securities and Exchange Commission as an asset that meets the four requirements. Involves investing money, expecting profits, a common enterprise, and relying on the efforts of others.
Trump’s team clarified that it is not a security despite meeting some of the requirements.
The situation is compounded by the fact that the US SEC has not made its position on memecoins clear at the moment.
Should the $Trump memecoin begin to act like a Security, it is subject to thorough regulation and Investigation.
The Question of Tax Compliance
Another issue facing the Donald Trump team over the launch of their memecoin is the question of Tax compliance.
The US IRS stipulates that profits from investing in Crypto are taxable. The Donald Trump camp holds 80% of $TRUMP which it intends to unlock over three years.
The Dilemma stems from explaining whether unlocking of tokens is a taxable event since the US laws state that Capital gains tax only applies when assets are sold or traded.
Another strain of confusion is the question of the Cost Basis of $Trump. In US Tax law Capital Gains Tax is calculated based on the price you bought the asset for.
$Trump is a memecoin and constantly fluctuating in price making having a fixed cost basis a real challenge.
Precedence for Political Donations
Donald Trump’s launching a Memecoin disrupts the existing system of political donations in the United States and opens up a channel for abuse. Donald Trump launched a memecoin and made billions from it.
The argument that companies and firms might be buying $Trump as a means of political donation is valid and could create an avenue for bad actors in the political space.
In the U.S., the FEC has strict rules about transparency and limits on political donations. The launch of memecoins as a means of political donation bypasses FEC regulations and creates an avenue for breaking the law.
$TRUMP memecoin dipped by nearly 60% after his wife Melania launched her own memecoin $Melania. At the time of the report, the $Trump memecoin is exchanging hands for $53.17 dropping by 21.5% in the last 24 hours.
