In a move that could reignite optimism around Ethereum, the Trump family-linked decentralized finance (DeFi) platform World Liberty Financial (WLFI) has deposited a whopping 10,000 ether (ETH), worth $33 million, into liquid staking giant Lido Finance. The substantial stake, revealed by blockchain data from Arkham Intelligence, has sparked hopes that U.S. regulators may soon greenlight the inclusion of staking rewards in spot ETH exchange-traded funds (ETFs).
The potential policy shift, if realized, could be a game-changer for Ethereum, which has seen its once-dominant position eroded by the meteoric rise of competitors like Solana. With former crypto skeptic Gary Gensler stepping down as SEC Chair and Hester Peirce, known for her receptiveness to digital assets, taking the reins of the agency’s crypto task force, the stars may be aligning for a regulatory thaw.
A High-Stakes Bet on Regulatory Rapprochement
World Liberty Financial’s move comes on the heels of the platform amassing over $110 million in various cryptocurrencies, including wrapped bitcoin (wBTC), Tron’s TRX, and Ethereum-based tokens like AAVE, LINK, and Ethena’s ENA. The Trump family’s involvement in the DeFi upstart, combined with the substantial ETH stake, suggests a calculated gambit to sway regulatory sentiment in favor of the second-largest cryptocurrency by market cap.
The President of the USA is staking ETH
Eric Conner (@econoar) January 20, 2025
The stakes are high for Ethereum, which has seen its once-unassailable lead eroded by upstart rivals offering faster transactions and lower fees. The ability for ETF investors to earn staking rewards could be the shot in the arm needed to reignite interest in the pioneering smart contract platform.
Staking Rewards: The Key to Reviving ETH’s Fortunes?
Staking, the process of locking up cryptocurrency to earn rewards for securing the network, has emerged as a key battleground in the intensifying competition between blockchain ecosystems. Ethereum’s transition to a proof-of-stake consensus mechanism in 2022, known as “the Merge,” made staking an integral part of its economic model.
However, U.S. regulators have thus far been reluctant to allow ETFs, which package cryptocurrencies into traditional investment vehicles, to offer staking rewards to their investors. The SEC’s wariness stems from concerns that staking could run afoul of securities laws by representing an investment contract.
- $12 billion in U.S. spot ETH ETFs could benefit from staking rewards approval
- Hester Peirce, new head of SEC crypto task force, open to reconsidering ETF staking
A shift in the regulatory winds, however, could unlock a torrent of pent-up demand. With over $12 billion in assets under management, U.S. spot ETH ETFs represent a massive untapped market for staking rewards. The ability to offer this yield could dramatically reduce the products’ expense ratios, making them more attractive to cost-conscious investors.
The Trump Factor: Crypto’s Ace in the Hole?
The Trump family’s growing embrace of crypto, embodied by World Liberty Financial’s ETH stake, could be the deciding factor in swaying regulators. With Trump-appointed SEC commissioners holding a 3-2 majority and Gary Gensler’s departure removing a key obstacle, the stage may be set for a détente between the agency and the crypto industry.
Ethereum stands to be the prime beneficiary of any such rapprochement. As the first and most established smart contract platform, it remains the foundation of much of the crypto ecosystem, hosting critical DeFi protocols, stablecoins, and non-fungible tokens (NFTs). A revival in ETH’s prospects could lift the entire crypto market.
ETH will have a multi-week giga pump at some point in 2025, around staking ETF news… If [you’re] too long ETH, that’s when you dump and switch to better performing assets.
Alex Krüger, partner at Asgard Markets
Of course, regulatory progress is far from assured, and the crypto market’s notorious volatility means any gains could prove fleeting. As trader Alex Krüger cautions, even a “giga pump” in ETH’s price around a staking ETF approval could be an opportune time to rotate into other high-performing digital assets.
A New Chapter for Crypto and Traditional Finance
Regardless of the near-term price action, World Liberty Financial’s ETH stake may come to be seen as a pivotal moment in crypto’s maturation and integration with traditional finance. As the lines between centralized and decentralized markets blur, the regulatory framework will need to adapt to keep pace.
For Ethereum, which has long aspired to be the “world computer” hosting a vibrant decentralized economy, the stakes could not be higher. With the winds of regulatory change starting to blow in its favor and the backing of influential figures like the Trumps, it may yet reclaim its place at the vanguard of the crypto revolution.
Only time will tell if this high-stakes bet pays off, but one thing is certain: The crypto world will be watching with bated breath as the drama unfolds in the halls of power and on the blockchain.
