The $500 million UAE investment in World Liberty Financial has triggered rare bipartisan criticism, even as regulatory progress in the digital asset sector continues.
Although investigations involving former President Donald Trump often divide along party lines, the transaction has drawn scrutiny from conservative media and lawmakers across the aisle. As a result, the controversy now threatens the passage of key legislation on digital asset market structure that the crypto industry views as critical for regulatory clarity.
Bipartisan scrutiny intensifies
World Liberty Financial sold a 49% stake to UAE government official Sheikh Tahnoon bin Zayed Al Nahyan for $500 million, days before Trump’s January 2026 inauguration. According to the Wall Street Journal, $187 million of the initial $250 million payment flowed to Trump-controlled entities. Moreover, the timing coincided with discussions on potentially easing U.S. microchip export restrictions to the UAE, which had been imposed over concerns about semiconductor diversion to China.
Conservative outlet National Review published what it described as “the first in a series of five posts” detailing what it called “The Sordid Story of Trump, the Trump–Witkoff Family Business, and the UAE.” Consequently, the publication marked one of the first significant instances of conservative media criticism of the arrangement.
Rep. Ro Khanna launched a formal House investigation and requested that WLF provide detailed revenue distribution information by March 1. Additionally, bipartisan calls emerged for Commerce Secretary Howard Lutnick’s resignation after newly released Jeffrey Epstein documents contradicted his sworn testimony regarding the timing of severed ties.
Even crypto influencer Carl Moon told his 1.5 million X followers that Trump has been “bad for crypto,” reflecting wider discontent within parts of the sector.
Legislative stakes rise
The controversy has complicated efforts to advance the CLARITY Act and the Digital Commodity Intermediaries Act. Because Senate passage requires 60 votes, Republicans must secure the support of at least 7 Democrats.
Sen. Cory Booker stated the UAE deal “has created more of a sense of moral urgency for us to have ethics as part of market structure.” Therefore, Democrats have made ethics provisions a non-negotiable component of negotiations after months of stalled discussions.
At the same time, the White House faces a month-end deadline to resolve separate disagreements over stablecoin “yield versus rewards” provisions. As a result, Banking Committee deliberations have slowed further.
Regulatory progress continues
Despite the political turbulence, regulatory developments have advanced. Erebor Bank received full national bank charter approval on February 7-8 and opened with $635 million in capital, becoming the first fully approved crypto-focused national bank.
Additionally, the Commodity Futures Trading Commission clarified that national trust banks may issue payment stablecoins. Federal Reserve Governor Chris Waller also confirmed progress on “skinny” master accounts that would provide crypto firms access to Federal Reserve payment rails before the end of 2026.
However, market sentiment remains mixed. Token prices for WLF’s governance token and Trump’s $TRUMP memecoin have fallen sharply from their issue levels. Nevertheless, institutional backing for Erebor Bank signals continued confidence in the long-term development of regulated digital asset infrastructure, even as ethics concerns reshape the political debate.
