Trump Administration Crypto Asset Policy to Liberate $8 Trillion Retirement Market and ETF Staking Approval to Radically Change Investment Environment

Introduction

Policy shifts in the Trump administration, aggressive entry by institutional investors, and the rise of new business models are transforming crypto assets from traditional speculative assets into practical financial instruments. This paper analyzes key recent developments and discusses the impact of these changes on the overall market.

Building Institutional Foundations with the Trump Administration's Crypto Asset Policy

According to a report in the Financial Times, President Trump is considering an executive order to add virtual currencies, gold, private equity, and other investments to the 401(k) plan, the leading retirement plan in the United States. This move has the potential to bring about fundamental changes to the retirement plan investment framework, which has traditionally been considered conservative.

According to data from the American Investment Trust Association (ICI), the total assets of the U.S. 401(k) market amounted to approximately $8.7 trillion as of March 2024. The potential inflow of this huge pool of funds into crypto assets is of critical importance to market participants. Currently, investments are mainly limited to equity and bond mutual funds, but this proposal aims to greatly expand investment options.

Of course, such a major institutional change requires careful consideration. Retirement benefit plans are an important mechanism to support the nation's retirement infrastructure, and it is not appropriate to take on excessive risk. On the other hand, from the perspective of diversification, the addition of new investment targets may contribute to higher long-term returns.

Prior to discussions at the federal level, some states and institutional investors are already taking concrete steps to make crypto assets an investment target. In North Carolina, two bills were introduced in March 2024 that would allow up to 5% of assets to be allocated to crypto assets in certain state retirement funds.

Specific examples of investments by public pension funds have also been reported. The Wisconsin State Board of Investments announced that it holds $163 million worth of physical bitcoin ETFs. The Michigan State Retirement System also disclosed that it invested approximately $6.6 million in bitcoin ETFs and $10 million in Ethereum ETFs in 2024.

These examples show that crypto assets are gradually becoming more popular as investment targets, even among previously cautious public pension funds. A trend is steadily forming to recognize crypto assets as legitimate investment targets, albeit with certain limits in terms of risk management.

Even more noteworthy is the fact that the Trump administration is considering tax exemptions for small crypto asset transactions. This “de minimis” tax exemption would eliminate capital gains taxes on small payments made in Bitcoin (BTC) and other crypto assets. White House Press Secretary Caroline Levitt has acknowledged that the administration is actively considering this policy.

Under current U.S. tax law, all crypto asset transactions, even very small amounts, are subject to taxation and the obligation to declare gains. This complex tax treatment has been a major impediment to the daily use of crypto assets. The proposed exemption follows the current rule that profits earned on foreign currency transactions of less than $200 are exempt from taxation, which is expected to reduce the burden on users.

Custodia Bank CEO Caitlin Long noted that the changes could have an even greater impact than the recently passed pro-crypto asset legislation, the GENIUS Act. If this tax relief is realized, bitcoin is expected to strengthen its role from a mere investment asset to an everyday means of payment.

ETF market evolving with the introduction of a staking feature

Important developments are also taking place in the crypto asset ETF market. Documents filed with the U.S. Securities and Exchange Commission (SEC) reveal that the iShares Ethereum Trust (ticker: ETHA), managed by BlackRock, the world's largest asset manager, is considering adding a “staking” feature.

According to the filing, it is proposed that “all or a portion” of the Trust's Ethereum (ETH) holdings be staked through one or more trusted staking providers. Staking is a mechanism whereby a trust contributes to the maintenance of the network by depositing its crypto assets into the blockchain network and is rewarded for doing so.

Currently, the currently approved physical Ethereum ETFs do not allow this staking function, and the yield from staking, which is an important benefit of holding Ethereum, is not available when investing through an ETF. This limitation has been a factor in reducing the attractiveness of ETFs compared to direct holdings.

Bloomberg ETF analyst James Seifert said that the final deadline for a decision on BlackRock's application will be around April 2026, but the final deadline for other ETH ETF applications for staking features is late October of this year, and approval for these The final deadline for decisions on the staking functionality of the other ETH ETFs is late October of this year, and the company has indicated that approval of these applications is likely to occur by the fourth quarter of this year.

It is worth noting that on July 17, the U.S. physical ethereum ETF saw inflows of $602 million, surpassing those of the physical bitcoin ETF. This phenomenon is a clear indication of the growing interest of institutional investors in Ethereum. With the number of corporate purchases of ETH on the rise, the staking functionality in ETFs, if approved, could further increase the attention on ETH.

The introduction of a staking function has the potential to significantly improve the operational efficiency of ETFs. While traditional ETFs are essentially passive investment products that only hold assets, the staking feature will allow them to generate additional income. This is an attractive factor for investors and will be a driver for the expansion of the ETF market.

NFT market merging with traditional gaming platforms

Interesting developments are also taking place in the NFT market. Sappy Seals, an NFT collection developed on the Ethereum blockchain, is expanding to Roblox, a global gaming platform. The game, which appears to have been deployed in stealth so far, already appears to be attracting 2 million monthly users.

Sappy Seals is a 10,000-piece PFP NFT collection featuring seals. The management team said of Roblox, "It is considered to be the primary platform on which modern games are played. This is considered to be what the metaverse should be about," and the team highly praised the project, indicating that this development is a strategic move.

The game on Roblox that has been officially announced is titled "Surf on a Seal. According to an interview with OpenSea, the game has been a hit within Roblox in the popular “obby” obstacle course genre.

This success shows that beyond the NFT community, Sappy Seals' IP is being embraced by Roblox's vast user base. One of the challenges faced by traditional NFT projects has been the difficulty in reaching the general public who are not familiar with crypto assets. However, the possibility of overcoming this barrier by integrating with existing popular platforms is emerging.

Integration with existing platforms such as Roblox is important for the practical application of NFT. Users can enjoy NFT-related content on familiar platforms without the need for complex wallet operations or the purchase of crypto assets. This is an important step toward mass adoption of NFTs.

Coinbase Corporate Trends

The stock price of Coinbase, a leading crypto asset exchange, temporarily reached $444 on July 18, reaching an all-time high. With this stock price increase, the company's market capitalization surpassed the $100 billion mark. Behind this strong price movement was a development in the U.S. legislature.

The U.S. House of Representatives passed important crypto asset legislation such as the GENIUS Act and the CLARITY Act, which has greatly improved investor sentiment. Brian Armstrong, CEO of Coinbase, expressed his hope that "we are finally on the verge of getting clear rules to grow this industry in the US.

Regulatory clarity has been a longstanding issue for the crypto asset industry as a whole. An ambiguous regulatory environment has increased uncertainty in business operations and hindered company growth. With the legal framework in place, companies will be able to develop more stable business plans and long-term investments will be encouraged.

The rise in stock prices has also been supported by increased interest from institutional investors. Quiver Quantitative reports that the State of Alaska has acquired a new $8 million worth of Coinbase shares. The Czech National Bank has also been identified as holding $18 million worth of shares.

These institutional investments are a sign of confidence in Coinbase as a company. The fact that public institutions such as state governments and central banks own shares indicates a high regard for the company's business model and potential. These investments also send a positive signal to other institutional investors and may attract further investment.

On the other hand, in contrast to these institutional investor purchases, there have also been notable share sales by management. According to Dataroma, Coinbase management sold a total of more than $230 million in shares this week alone. This includes $228 million for CEO Armstrong and $2 million for CFO Alecia Haas.

Stock sales by management are often perceived pessimistically in the marketplace. However, that interpretation should be interpreted with caution. One possibility is that management took profit-taking advantage of the soaring stock price. Another possibility is technical factors such as tax reasons or adjustments to an individual's asset allocation.

What is important is the timing and magnitude of the sale. A sale at a time when the stock price was at an all-time high does not necessarily imply pessimism about the future of the company. Rather, it can be viewed as a profit taking at an appropriate time.

The conflicting movements of buying by institutional investors and selling by management raise questions about the short-term valuation of stock prices. Investors need to synthesize these different signals and develop their own investment strategies.

On the other hand, long-term confidence in Coinbase as a company and in the crypto asset sector as a whole appears to be growing. The company's operating base is steadily being strengthened by an improving regulatory environment, the increased participation of institutional investors, and the development of new services.

Impact on the Overall Market and Future Outlook

These series of developments clearly indicate that the institutionalization of the crypto asset market is accelerating. Government policy support, the expansion of the ETF market, and the active participation of major firms are transforming crypto assets from traditional speculative assets into legitimate financial instruments.

Of particular note are policy supports such as inclusion in retirement plans and tax exemption for small transactions. These measures are expected to have the effect of promoting the everyday use of crypto assets and encouraging healthy market growth.

At the same time, risk management is becoming increasingly important in this rapidly changing environment. The crypto asset market remains volatile and requires adequate provisions for short-term price fluctuations. In particular, long-term asset management, such as retirement plans, requires careful risk assessment and appropriate asset allocation.

Investors need to make strategic decisions, balancing expectations for new opportunities with appropriate risk management. While the market is maturing, a thorough understanding of factors that differ from traditional financial instruments, such as technological risk and regulatory change risk, is also necessary.

Technological innovations, such as the emergence of new business models in the NFT market and the introduction of staking capabilities in ETFs, are also continuing to advance. These innovations are enhancing the value proposition of the crypto asset ecosystem and enabling it to appeal to a broader user base.

In particular, the integration of crypto asset technology with existing platforms, allowing more people to benefit from crypto asset technology, is critical to the overall development of the industry. Hiding technical complexity and providing services in a user-friendly manner will be key to mass adoption.

Summary

Multiple factors are interacting to drive the maturation of the overall crypto asset market, including policy support from the Trump administration, the evolution of the ETF market, the practical application of NFTs, and the growth of major firms.

These changes indicate that crypto assets are evolving from mere speculative assets to practical financial infrastructure. At the same time, there are risks associated with rapid change, and investors and market participants need to maintain a cautious and strategic approach.

In assessing future market trends, it is important to focus on changes in the regulatory environment, technological innovations, and institutional investor participation. The combined effect of these factors is likely to bring the crypto asset market into a new phase of growth. Market participants will be called upon to properly grasp this historic wave of change and develop strategies based on a long-term perspective.

Disclaimer
This article is for informational purposes only and is not a solicitation to invest. Crypto assets are risky and you should check the latest information at your own risk.