US President Donald Trump announced that XRP, Cardano (ADA), Solana (SOL), Bitcoin (BTC), and Ethereum (ETH) would be part of a US crypto reserve.
He pointed out on Truth Social that the reserve would “elevate the critical industry after years of corrupt attacks by the Biden Administration,” assuring the US would become the world’s crypto capital.
Initially, he only mentioned XRP, SOL, and ADA as assets forming the reserve, so members of the BTC and ETH community were unpleasantly surprised that the two biggest cryptocurrencies by market cap wouldn’t be part of it. Around an hour after his first post, he clarified that valuable cryptos like BTC and ETH would be “at the heart of the reserve.”
Trump began discussing the concept of a strategic crypto reserve during his presidential campaign last year. After he took office, he signed an executive order to review the prospects of building the reserve.
However, the order did not explicitly mandate its formation. A digital asset working group was tasked with assessing the feasibility of a “digital asset stockpile,” which isn’t the same as a reserve. On March 2, Trump instructed the group to formally establish the reserve.
Behind the asset selection
XRP, ADA, SOL, BTC, and ETH were selected due to the unique benefits they bring to finance. Often referred to as the “digital gold,” Bitcoin has established itself as a store of value and a hedge against inflation.
Ethereum’s smart contract capabilities have transformed decentralized finance. XRP’s efficiency and speed make it valuable in global transactions, while Cardano’s scientific approach to blockchain technology adds a layer of utility and credibility. With low fees and high-speed transactions, Solana enhances blockchain scalability.
A series of posts on X link Elon Musk’s closeness to Trump to the prospect of Dogecoin (DOGE) joining the strategic reserve at some point.
Following the announcement, all five cryptocurrencies mentioned experienced significant price surges, contributing to a global crypto market rally of $300 billion. On March 3, the global crypto market cap reached $3.05 trillion, a 7.14% increase over the previous 24 hours, and almost all of the top 100 were in the green.
A watershed moment: Use of non-smart contract assets in DeFi
Few previous announcements have legitimized cryptocurrencies for retail investors to this extent. When the government starts holding digital assets, confidence in their long-term viability will increase.
Regulation could potentially stabilize the market. As government endorsement reduces perceived risks for the average consumer, businesses accepting crypto payments may see mainstream adoption.
The lucrative new investment opportunities include the use of non-smart contract assets like Bitcoin and XRP in DeFi applications, such as cross-chain yield farming, collateral for DeFi loans, decentralized trading, etc.
The Layer-1 blockchain Flare Network, which was designed for data-intensive use cases and powers on-chain financial solutions for high-value assets, is uniquely positioned in this new context.
Its FAssets system will enable assets like BTC and XRP to interact trustlessly with smart contracts on the network via collateralized minting, using Flare Time Series Oracle and Flare Data Connector for secure cross-chain functionality.
In response to the president’s announcement, Flare reminded the X community of the upcoming FAssets v1 mainnet launch, which will enable the network to unlock capital within and beyond DeFi.
This will be possible via trust-minimized bridging for non-smart contract assets like BTC, XRP, and DOGE. DeFi dApps supporting liquid restaking and denominated perpetuals are impending as well.
Holders of BTC, XRP, or DOGE can convert these assets to FAssets and take part in yield farming strategies on DeFi platforms, earning yield in ways that are impossible on the original blockchains. They don’t need to sell their holdings to unlock liquidity.
Instead, they can use their FAssets as collateral to take out crypto- or stablecoin-based loans on Flare-based lending protocols. Another option is trading FAssets on decentralized exchanges within the Flare ecosystem.
Also Read: Trump’s Crypto Policy Fuels Speculation, Bitcoin Holders Cautious
How does it work?
FAssets system agents provide over-collateralized assets (300%+) to facilitate minting and redemption. A system liquidator monitors agent collateralization levels to make sure the system remains secure and trustless.
XRP agents must deposit 500 XRP into the owner’s XRP address, and Bitcoin agents must hold 0.005 BTC or more in the owner’s Bitcoin address to cover the potential transaction fees.
The user account requests minting, which is followed by verification. Features such as KYC compliance and TEE-enabled efficiency and security facilitate the adoption of XRPFi products, among others.
The agent account locks the collateral, and the non-smart contract network transfers assets from the user to the agent’s account. The agent submits a minting request to FAssets. The system mints and sends FAssets to the user account. Users leverage the assets in various DeFi applications, unlocking additional earning opportunities.
As of February 2025, Flare’s TVL was over $80 million, an increase of 410% compared to a value of $15.92 million a year earlier. Liquid staking and real-world assets account for over half (56%) of Flare’s TVL, showing strong demand for flexible staking and yield-bearing options.
Incremental increases in minting caps will facilitate liquidity as the mainnet launch approaches. Once the mainnet becomes a fact, DeFi users will access the liquidity of trillion-dollar markets. Bitcoin’s market cap alone is $1.66 trillion, and XRP has a market cap of $153.84 billion.
Admittedly, questions remain. The US government has yet to detail the mechanisms for acquiring and managing reserve cryptocurrencies. It’s also unclear whether it will buy Bitcoin during price dips in the footsteps of El Salvador and if or when the reserve will expand to include other cryptocurrencies or stablecoins.
Some of the details will be ironed out at the first-ever cryptocurrency summit at the White House on March 7, which the president will host. The summit is organized by David Sacks, White House AI and Crypto Czar.
He is a limited partner of Multicoin Capital, which holds investments in SOL. In a 2021 interview, Sacks said he was “hodling” SOL, the blockchain’s native token. He reportedly sold all of his crypto holdings before joining the Trump administration.
