A bipartisan proposal for cryptocurrency legislation could grant President Trump a significant tax advantage by allowing the deferral of capital gains taxes on his digital asset portfolio. According to Bloomberg News, the ethics addendum to the crypto bill, which has yet to be released publicly and is still being negotiated between the White House and lawmakers, includes a provision requiring the president to divest from crypto-related businesses. This development comes as Trump reported more than $1.4 billion in income from his family's crypto ventures in 2025, showing how he now derives most of his income from digital assets that have benefited from his policies. The divestiture requirement addresses key Senate Democrats' conditioning of their support for the long-awaited bill on strong ethics provisions that would restrict political figures from profiting from personal crypto ventures.
Democratic senators Elizabeth Warren and Richard Blumenthal have formally requested the SEC investigate TRUMP meme coin for potential fraud following its dramatic collapse. According to reports from AMBCrypto, the senators sent a letter to SEC Chair Paul Atkins asking the agency to determine whether the president-linked token involved illegal fraudulent activity or allowed insiders to obtain improper gains. The lawmakers specifically stated that 'President Trump made $636 million in profits from the memecoin alongside early buyers' and expressed concern that 'President Trump's memecoin scheme may constitute an illegal scam, such as a 'rug pull'. The letter arrived on August 3, 2026, highlighting the intersection of regulatory reform and presidential crypto conflicts. The senators urged the SEC to investigate whether a 'fraudulent scheme' was underway to prevent further extraction from TRUMP memecoin holders, noting that 'late buyers are always left catching knives and hefty losses' in typical pump-and-dump schemes.
The scale of investor losses surrounding the TRUMP token has reached unprecedented levels, with nearly 989,000 wallets losing a combined $3.81 billion according to blockchain analytics firm Nansen. As reported by multiple outlets, data showed that 988,905 of the 1.48 million wallets that purchased TRUMP were carrying losses by the end of June. The Solana-based token, which launched shortly before Trump returned to the White House in January 2025, has seen its value collapse approximately 97% from its all-time high of $46. Currently, TRUMP trades near $1.47 with a market capitalization of approximately $366 million and daily volume near $159 million, according to CoinMarketCap. The token saw brief price spikes around two Mar-a-Lago gala events where top token holders were invited to dine with the president, but these events did not sustain any recovery. The lawmakers noted that 'once $TRUMP was launched, the coin became 'an abandoned project' - a pattern that tracks with investor concerns about the token's sustainability.
The investigation comes amid questions about Trump's crypto-related income, with reports indicating he earned approximately $636 million from the meme coin while his wider crypto-related income exceeded $1.4 billion in 2025. According to financial disclosures reported by US media, these figures have intensified questions about whether a sitting president should benefit from digital assets while shaping federal crypto policy. The New York Times reports that Trump-linked entities earned approximately $636 million from the token through a combination of initial allocation sales and ongoing transaction fees collected by the protocol. The asymmetry is stark: for every dollar the president's side earned, buyers lost approximately six dollars, creating what critics describe as an unprecedented conflict of interest where the most powerful figure in crypto regulation simultaneously profits from a personal memecoin.
The TRUMP investigation comes as the Digital Asset Market Clarity Act remains stalled due to an ethics provision dispute. The bill, which would create a comprehensive framework for classifying crypto assets as securities or digital commodities, has bipartisan support in principle and passed committee with votes from both parties. However, Democrats and Republicans cannot agree on provisions that would restrict senior government officials, including the president, from directly profiting from crypto projects while in office. The core dispute centers on whether the bill should include ethics restrictions that would retroactively apply to existing tokens like TRUMP. President Trump agreed to accept limited restrictions, but Democrats described the proposed language as meaningless in practice. Bipartisan negotiators Thom Tillis and Ruben Gallego are drafting compromise language that would restrict government officials from launching new tokens while potentially grandfathering existing positions. Senate Democrats are also calling for improved language for illicit finance and stablecoin yield provisions before backing the bill, with some Republicans also withholding support. The bill may need over ten Democrats for it to sail through and hit the 60-vote threshold, and the Senate is expected to go on recess on August 6, 2026.
