Eric Trump and Investors Sign Passivity Commitments
Eric Trump has agreed to pull back from decision-making at World Liberty Financial’s proposed national trust bank while the crypto business navigates the federal approval process. Eric, along with World Liberty co-founder Zak Folkman and Emirati investor Hamad Khalfan Ali Matar Alshamsi, signed separate commitments through connected companies to stay away from bank management decisions.
These arrangements, termed passivity commitments, were made public after World Liberty secured preliminary approval. According to the company, the agreements are designed to ensure that specific investors do not control the trust bank.
Federal Oversight and Regulatory Scrutiny
World Liberty spokesman David Wachsman stated that the company expects to remain under federal oversight for years. “World Liberty is intentionally running towards regulation and permanent supervision, not away from it. Before full approval and for many years afterward, the World Liberty Trust Company will fully cooperate with the OCC, a federal regulator, and will adhere to all other applicable laws and regulations,” Wachsman said.
The proposed crypto bank has drawn heightened scrutiny due to its ownership associations. Prior to Donald Trump taking office as president, World Liberty agreed to sell a 49% stake to a business linked to Sheikh Tahnoon bin Zayed, the brother of the UAE president. While Trump and his family hold financial interests in World Liberty, the company notes that none of them serve as officers, directors, or employees. The White House has rejected claims that these business interests present a conflict or that presidential power is being used for personal enrichment.
Federal charter reviews involve detailed financial checks of organizers and directors. World Liberty's filing names Zach Witkoff, son of presidential envoy Steve Witkoff, alongside Steve's brother Robert Witkoff and Witkoff Group executive Scott Alper.
Impact on USD1 Stablecoin and Wider Regulatory Landscape
Securing a federal charter would allow World Liberty to directly hold the assets supporting USD1, its dollar-backed stablecoin. This setup would enable the organization to manage issuance and reserves internally rather than relying on outside arrangements. USD1 currently has a market value of nearly $4 billion according to CoinGecko, positioning it among the world's largest stablecoins.
The filing coincides with a broader shift in federal policy toward crypto banking. U.S. Comptroller of the Currency Jonathan Gould stated that approving new bank charters is a priority, contrasting with the Biden administration's approach. World Liberty joins firms like Ripple, Paxos, Fidelity Digital Assets, and Coinbase, which received conditional trust bank approvals, though each company must still meet federal requirements before gaining full authorization.
