The Free Press
On the eve of his inauguration, President Trump wasn’t wasting time with somber reflection or measuring the new drapes. He was, naturally, launching a meme coin called $TRUMP. Within moments of its launch on Friday, its market cap spiked to $14 billion—settling down today at $7.7 billion.
The $TRUMP launch was shortly followed by the First Lady’s own coin, $MELANIA: current market cap around $700 million.
The first couple has seen their net worth increase by billions because of this. . . at least on paper.
We had questions. A lot of them.
Starting with: How is this legal? What is a meme coin? Are people going to lose millions? Is this the digital equivalent of a commemorative inauguration coin or something else?
The Free Press, as it turns out, is not just politically diverse—we are coin-curious, too. Some people around the office seem to think it’s a Ponzi scheme. Others insist it’s twenty-first-century gold.
So for today we turned to Joe Nocera, our in-house curmudgeon, whose idea of financial innovation is the debit card, and Max Raskin, who has been teaching a class in cryptocurrency at the NYU School of Law for almost a decade and writes the Substack Interviews with Max Raskin.
Joe: Max, I am 72, so perhaps it’s natural that I’m suspicious of something as newfangled as a meme coin. But I’ve also been a financial journalist for over four decades, and what I’ve learned is that when something in the market seems too good to be true, it usually is. But before we put the gloves on, let’s start with the basics. What in the world is a meme coin, and why do the president and the first lady each have one?
Max: Because that’s where the money is.
A meme coin is a cryptocurrency—a digital asset—that usually has some funny or newsworthy properties. The largest and most famous meme coin is Dogecoin, which has been heavily promoted by Elon Musk and centers around a picture of a Shiba Inu.
If you ask people like outgoing SEC chair Gary Gensler or Senator Elizabeth Warren, it’s a pump-and-dump scheme designed to defraud grandmas, widows, orphans, and baby seals.
In reality, $TRUMP is a digital collectible akin to a commemorative coin. It just so happens that more people want to buy the Trump coin than the U.S. Capitol Visitor Center’s 2025 inauguration coin.
$TRUMP has a fixed supply of 1 billion tokens and a transparent allocation, with 20 percent being sold directly to the public and the president’s stake to be sold over the next three years. Like Bitcoin, Dogecoin, or any asset, for that matter, its price and value are determined by the subjective valuations of millions of individuals buying and selling it each day.
Joe: Well, yeah, that’s one way of putting it. But a commemorative coin has a fixed price—you can buy a Trump commemorative coin for $59.99 on eBay. Meanwhile, the $TRUMP meme coin trades at prices that fluctuate wildly, not just week to week but practically minute by minute. As for pump-and-dump, one of this president’s key skills is ripping off widows and orphans (remember Trump University?), so this seems par for the course. The MAGA faithful will buy it, pushing up the price—oh, excuse me, fixing its “subjective valuation”—and Trump will finally be what he’s always claimed to be: a billionaire.
Max: It’s true that there is a fixed dollar price for commemorative coins and baseball cards, but there is an active secondary market—just look at the price of Mickey Mantle rookie cards. But the broader point is that even with fixed-price goods, the dollar itself fluctuates in value depending on the whims of our political leadership and Federal Reserve. You’re probably old enough to remember when a dollar cost a nickel.
I’m not here to say that Trump’s coin is going to become the world’s reserve currency or that you should plow all your 401(k) into $MELANIA. But the idea that there should be competing currencies is a powerful one, championed by serious thinkers like Hayek and others. For too long, financial regulators have stifled competition and it is a good thing that the president of the United States is knocking them down a peg.
Joe: We’ve just started and you’re already trotting out Salma Hayek! I want to get to the issues of currencies, but first I have to ask you: Do you think it is appropriate for the president of the United States to issue a coin that will make him a billionaire three days before taking office? Yes, previous presidents have had outside income, like book royalties, but no president has ever taken advantage of his office for financial gain the way Trump has. I mean, how is this even legal?
Max: People don’t realize Friedrich Hayek was Salma’s father.*
There are two issues here—one about presidential ethics and the other about crypto policy.
As you note, government officials are not barred from making money while in office. Whether it was President Obama’s millions of dollars in book royalties or then–Governor Bush’s ownership of the Texas Rangers, presidents are not required to divest from their financial assets when they are elected. They cash in huge after their time in office, and it seems the critique of President Trump is just that he’s more successful at it than they were. Or that somehow issuing a meme coin is not legitimate.
But that’s exactly what the new administration is seeking to change. President Trump is sending a message to financial regulators that digital assets are a legitimate financial instrument, and his administration intends to support them. Specifically, he is sending a message to the Securities and Exchange Commission that its jurisdiction is not unlimited and it cannot shut down any financial product it doesn’t like.
Joe: There is no question that the SEC was out of control when it came to cryptocurrency. Especially after the collapse of Sam Bankman-Fried’s crypto platform FTX, the agency and its commissioner, Gary Gensler, viewed crypto with deep suspicion, and insisted, without any congressional backing, that most cryptocurrencies were securities, which meant the SEC had regulatory authority over them. It didn’t.
But just because the president and his wife have their own meme coins doesn’t mean the government should just stand aside and let a thousand flowers bloom. It’s not just Trump who is trying to take advantage of the ill-informed; unless there is some regulation, you’ll likely see a different kind of flowering: of scams.
Max: Just because you think a buyer is stupid doesn’t mean the seller is a scam artist. Someone paid millions of dollars for a piece of modern art that consisted of a shark in a formaldehyde tank. When the artist, Damien Hirst, was criticized by people who said anyone could do that, he responded, “But I did.” Anyone can create a coin; it’s up to the artistic, political, and psychological sensibilities of the buyers to make their decisions. I think the entire phenomenon of cryptocurrency is partially a reaction to the vagaries of the Federal Reserve and the politicization of our financial system.
As for the SEC, I wrote a paper with Todd Henderson at the University of Chicago School of Law proposing a useful legal test for determining whether a digital asset is a security and therefore falls under the purview of the SEC. The test has been adopted by many, including the U.S. District Court for the Southern District of New York. We asked whether the promoters of a digital asset are necessary to work on the project for it to exist. If the answer is no, then it is not a security—that’s because the project is decentralized and doesn’t rely on the entrepreneurial efforts that characterize companies that issue securities.
President Trump’s token, as well as most non-fungible tokens (NFTs), satisfies the test and therefore should not fall within the ambit of the SEC. It is a collectible or a currency and therefore more akin to art than publicly traded stock. President Trump is making no promises to build something that his investors are relying on.
Joe: Leaving aside Damien Hirst (please!), maybe, as you say, it’s a good thing to have competing currencies. (I’m not convinced.) But the dollar is backed by the full faith and credit of the U.S. government. Meme coins are backed by nothing. They ride up and down on a wave of air. My own belief is that eventually it will all collapse, just like internet stocks at the turn of the century. And then how will people feel about the president giving crypto his seal of approval by issuing a get-rich-quick meme coin?
Max: I agree with you—it’s almost certain that we are in a short-term mania. But the reason Bitcoin and other cryptocurrencies don’t go away is because there is an underlying demand for a private digital asset that is not controlled by central banks around the world.
What gives all currencies value is not the full faith and credit of the governments backing them, but rather supply and demand. The German Mark had the full faith and credit of the Weimar government in the early 1920s, but the government abused that trust. The result was hyperinflation.
Our own Federal Reserve has engaged in all sorts of politically motivated policies that affect the dollar and make its value unpredictable.
To many of us who believed in Bitcoin from the beginning, it is akin to gold, which people have valued for centuries without any government backing. Like gold, it has a limited supply, is divisible, durable, fungible, and portable. And in a world where previously neutral institutions are being corrupted, it is important to have a measure of value not subject to the vicissitudes of political whim.
One of the earliest adopters of Bitcoin was someone named Erik Voorhees, who I interviewed back in 2013 when the price of Bitcoin was around $140 and he had just become a millionaire. He was a believer in sound money and a hardcore ideological libertarian. So I was surprised when he said he was cashing out. He quickly added “. . . of dollars.”
*Dear reader: This is a joke.
Donald Trump, just sworn in as the 47th president, was reelected to be a wrecking ball to the Beltway elites. And while this populist moment feels unprecedented, Eli Lake, host of our new show Breaking History, says it’s not—the rebuke of the ruling class is encoded in our nation’s DNA. Listen to the first episode below or wherever you get your podcasts.