Trump's memecoin 'distracts from the greater good,' draws criticism from crypto insiders and Washington leaders

The launch of President-elect Donald Trump's memecoin days before his inauguration is being received pretty poorly by both crypto pundits and critics in Washington. 

Trump's memecoin "distracts from the greater good," a person involved in crypto policy told The Block. 

"There already is an insane amount of reputational risk in crypto," that person said. "Expectations are sky high to show the legitimacy of this industry and this distracts from the greater good. A pro-crypto president is wonderful, but I wish he focused on all the good the industry has done."

Trump, who has been favorable to the crypto industry over the past year, launched a TRUMP memecoin over the weekend with his wife, Melania Trump , following suit with one of her own, both with billions of dollars in market cap. 

Memecoins , which are cryptocurrencies often based on internet memes and pop culture references — looking at you, DOGE — have gained popularity over the years and, though they can yield significant returns, are also super volatile. Memecoins are viewed very differently from other crypto with more established ecosystems such as bitcoin and ether.  

The Trumps' memecoin launch also happened very shortly after U.S. Securities and Exchange Commission Chair Gary Gensler posted his farewell speech to the agency. Notably, Gensler has said that most cryptocurrencies qualify as securities. 

Dennis Kelleher, CEO of Better Markets, blasted Trump's memecoin launch in an email. Better Markets is a nonprofit, nonpartisan organization working on building a strong financial system and has been critical of crypto.

"Trump’s latest brazen crypto scheme will likely be lucrative for him, his fellow-billionaires, and Wall Street financiers, but Main Street Americans will pay the price for his elimination of customer, investor and financial stability protections for this high-risk, volatile financial product with no legitimate use," Kelleher said in the email. 

The Trumps' memecoin launch comes at an interesting time for Congress and federal agencies as they shift to potentially become more open to the crypto industry than in years past. Trump has tapped crypto-friendly former regulator  Paul Atkins to lead the SEC, and a Republican sweep in the Senate and House could lead to more movement on crypto-related bills. 

Washington is expected to have the most pro-crypto Congress yet, and pro-crypto lawmakers, such as Senate Banking Committee Chair Tim Scott and House Financial Services Committee Chair French Hill, are leading key committees holding the purse strings for bills to regulate the industry. 

Rep. Ro Khanna (D-Calif.), who has been supportive of crypto, called for a ban on elected officials from having memecoins. 

"Elected officials must be barred from having meme coins by law," Khanna said in a post on X on Sunday. "Meme coins are highly speculative and like gambling must be regulated by the SEC. They are neither neutral money (not controlled by insiders) nor platforms for innovation."

Cody Carbone, president of The Digital Chamber, said Trump's memecoin launch was not necessarily a surprise. 

"It's not the full embrace of crypto we expected, but who could be surprised?" he said. "If the President is comfortable embracing the meme craze, then I imagine he’s fully comfortable with Bitcoin, decentralization, and the myriad of wonderful use cases of blockchain technology." 

However, Carbone also warned investors to be vigilant. 

"I’m optimistic and hoping for the best, but do your own research," he said.