On March 2, President Donald Trump mentioned Cardano’s ADA (ADA) token among the cryptocurrencies to be included in the US strategic crypto reserve. Trump’s March 6 executive order clarified that altcoins would be part of the Digital Asset Stockpile (DAS) under the “responsible stewardship” of the Treasury.

ADA’s potential inclusion in a government-managed portfolio sparked industry-wide surprise and, at times, harsh criticism. Although it has loyal investors who have supported it for years, many in the crypto community questioned why the token was included in the digital asset stockpile.

Let’s analyze the blockchain to see if ADA’s fundamentals and utility support its place in the US Digital Asset Stockpile.

The case for ADA in the US Digital Asset Stockpile

Launched in 2017 via an ICO, Cardano is one of the oldest smart contract platforms. It differs from others through its research-driven design approach and its use of a delegated proof-of-stake mechanism combined with an extended UTXO accounting model.

Cardano’s ambition as a smart contract platform is well captured by X ‘Cardano_whale,’ who outlined the blockchain’s “non-negligible fees, voting power, decentralized consensus, all native token trading paired with it.”

The X post emphasizes ADA’s utility (something “most VC coins lack”) along with Cardano’s decentralized governance as key advantages.

Indeed, Cardano’s Project Catalyst is one of the largest decentralized funding initiatives in crypto. Through it, treasury funds from transaction fees and inflation are allocated democratically to community proposals. Also, unlike the Ethereum network, which still relies on offchain governance for major upgrades, Cardano aims to transition entirely to onchain governance.

The Plomin hard fork that took place on Jan. 29 marked the transition to “full decentralized governance,” according to the Cardano Foundation. It grants ADA holders “real voting power—on parameter changes, treasury withdrawals, hard forks, and the blockchain’s future.”

Cardano’s native coin, ADA, is used for network fees, staking, and governance. Its maximum supply is 45 billion, with 31 billion initially distributed—26 billion sold in the public sale and 5 billion allocated to IOHK, Emurgo, and the Cardano Foundation. 

The remaining 14 billion ADA were reserved for gradual release through minting. With 0.3% of ADA reserves distributed as rewards every five days, ADA inflation declines as reserves deplete. The current inflation rate is approximately 4%, with a circulating supply of 35.95 billion ADA.

While a capped supply can support a coin’s value and justify its inclusion in the DAS, other ADA metrics, such as fees and staking yields, lag far behind competitors. 

Should Cardano’s lagging activity raise concerns?

Despite its years in the smart contract ecosystem, Cardano has struggled to generate enough activity to establish itself among the leaders. As a result, ADA’s limited usage within the crypto ecosystem raises concerns about its long-term value.

According to Messari’s Q4 2024 State of Cardano report, the blockchain processed an average of 71,500 daily transactions, with 42,900 daily active addresses. Quarterly fees totaled $1.8 million, a stark contrast to Ethereum’s $552 million in fees over the same period, according to CoinGecko.

Cardano’s annualized real staking yield, adjusted for inflation, was approximately 0.7% in Q4, compared to Ethereum’s 2.73%.

Cardano key metrics overview, Q4 2024. Source: Messari

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Other blockchain activity metrics reinforce the concern about adding ADA into a government portfolio:

With 449 developers working on the blockchain, Cardano ranks 12th among blockchains in developer count, according to Electric Capital’s report.

Its stablecoins’ share is just 0.01% of the total $224 billion stablecoin market cap, per DefiLlama.

Cardano’s DeFi ecosystem is underdeveloped, accounting for just 0.3% of the total $169 billion DeFi sector. However, if we include its core staking, which does not require locking and therefore is not counted in the TVL, Cardano’s share will grow to 12%.

Cardano’s DApp activity remains low compared to other smart contract platforms. In Q4, it averaged just 14,300 daily DApp transactions—well outside the top 25 and a fraction of Solana’s 22 million. Even more concerning is its 73% decline from Q4 2023, when Cardano recorded 52,700 daily transactions. Such a sharp drop signals a troubling trend for a blockchain that is still in its growth phase.

Cardano DApp transactions, Q4 2024. Source: Messari

Is ADA’s potential enough to justify a US government investment?

The case for ADA in the strategic crypto reserve is far less clear than for Ethereum and Solana, which are leading blockchains in many different categories. Cardano’s low activity, limited adoption, and weak staking incentives raise serious doubts about ADA’s suitability for a government-managed asset pool.

On the other hand, ADA’s capped supply and Cardano’s focus on decentralization give it a unique edge over competitors. They could lead to greater adoption and relevance in the long run.

Furthermore, projects like those by Atrium Lab are exploring Cardano’s native compatibility with Bitcoin through the eUTXO system, which could potentially unlock a new framework for DeFi on Bitcoin and drive activity to Cardano.

Could this possibility be enough to justify ADA’s place in the digital asset stockpile?

As David Nage, the portfolio manager of the venture capital firm Arca, put it, 

“Like the rest of crypto, the Cardano ecosystem needs to find and support developers to create products and applications that millions of people enjoy and depend on. Then, they need brilliant storytellers to solidify the narrative behind it to build mass, sustainable audiences. After all that, putting ADA into a US national reserve begins to make more sense, in my opinion. It can be done.”

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Cryptocurrency and fintech companies are increasingly seeking bank charters in an attempt to grow their businesses under the Trump administration, according to a report from Reuters, which talked to more than half a dozen industry executives.

The moves come as the administration is seen as more industry-friendly and there are opportunities to gain the licenses that regulators under previous administrations may have been slow to approve.

While discussions about pursuing bank charters are on the rise, it is unknown how many companies will ultimately follow through. It can cost tens of millions of dollars to start up a bank, but there are benefits such as increased credibility with the general public.

According to Reuters, 144 bank charter applications were approved every year between 2000 and 2007, but that number shrank to only five approved per year between 2010 and 2023. 2008 marked the year of the great financial crisis and subsequently increased scrutiny on banks.

The Trump administration has signaled openness to innovation in the finance sector, especially in the cryptocurrency industry. Since his January inauguration, President Trump has created a crypto working group, signed an executive order to create a national strategic Bitcoin (BTC) reserve, and hosted the first White House crypto summit.

Related: Wyoming defends crypto-friendly bank charter regime in Custodia Bank’s lawsuit with Fed

Crypto companies that have applied for bank charters in US

Although it is uncommon for crypto companies to seek bank charters in the United States, there are examples of some who succeeded in the 2020s. Crypto exchange Kraken was approved for a bank charter in Wyoming in 2020, Anchorage Digital Bank received its charter in January 2021, and crypto lender Nexo purchased a stake in a holding company that owns a federally-chartered bank in 2022.

Companies face challenges when applying for bank charters in the United States such as compliance with anti-money laundering laws and adherence to the Bank Secrecy Act. The increased regulatory oversight and centralization may also run contrary to the spirit of crypto, where decentralization is a core value.

However, securing a bank charter comes with a major financial benefit: companies that do so can lower the cost of capital by accepting deposits.

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Institutional investors are increasingly bullish on cryptocurrency, with 83% saying they plan to up crypto allocations in 2025, according to a March 18 report by Coinbase and EY-Parthenon. 

Already, nearly three-quarters of firms surveyed said they hold cryptocurrencies other than Bitcoin (BTC) and Ether (ETH), and a “significant majority” said they plan to boost crypto allocations to 5% or more of their portfolios, the report said. 

They are motivated by the view that “cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years,” according to the report.

Coinbase, the US’ largest crypto exchange, and EY-Parthenon, a consultancy, based the findings on interviews with more than 350 institutional investors in January. 

Among institutional altcoin holdings, XRP (XRP) and Solana (SOL) are the most popular, the survey found. 

Coinbase and EY-Parthenon surveyed more than 350 financial institutions on crypto. Source: Coinbase

Related: Stablecoin adoption, ETFs to propel crypto performance in 2025: Citi

Altcoin ETFs incoming

Altcoin holdings could rise even further if US regulators approve planned exchange-traded fund (ETF) listings this year.

Asset managers are awaiting a greenlight from the US Securities and Exchange Commission to list more than a dozen proposed altcoin ETFs. 

Litecoin (LTC), SOL and XRP are seen as the most likely to see near-term approval, according to Bloomberg Intelligence. 

On March 17, the Chicago Mercantile Exchange (CME) Group, the largest US derivatives exchange by volume, launched futures contracts tied to SOL, marking a significant step toward institutional adoption of the altcoin. 

Stablecoins and DeFi take off

Meanwhile, stablecoins continue to see institutional uptake, with 84% of respondents either holding stablecoins or exploring doing so, the survey found. 

According to the report, institutions are using “stablecoins for a variety of use cases beyond just facilitating crypto transactions, including generating yield (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).”

In December, investment bank Citi said stablecoin adoption will accelerate onchain activity, including in decentralized finance (DeFi). 

The survey found that only 24% of institutional investors currently use DeFi platforms, but that figure is expected to grow to nearly 75% in the next two years. 

“Institutions are attracted to DeFi for myriad reasons, citing derivatives, staking, and lending as the use cases they are most interested in, followed closely by access to altcoins, crossborder settlements, and yield farming,” the report said.

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