U.S. President Donald Trump has signed an executive order to establish a U.S. sovereign wealth fund, drawing interest from both economic and crypto circles.
What is a Sovereign Wealth Fund?
Sovereign wealth funds (SWFs) are state-owned investment funds that reinvest government revenues into various assets such as stocks, bonds, and real estate. Some SWFs are funded through natural resource profits, while others leverage trade surpluses.
How Will the U.S. Fund It?
Unlike oil-rich nations, the U.S. operates with a budget deficit. Trump has suggested that tariffs and other revenue streams might be used to finance the fund. Recent tariff announcements have already affected financial markets, with Bitcoin briefly dropping below $91,000 before recovering above $100,000. The administration is also exploring public-private partnerships to enhance the fund's resources.
Bitcoin and the U.S. Sovereign Wealth Fund
Attention to Bitcoin's potential role in the fund comes from the support of figures like Howard Lutnick, CEO of Cantor Fitzgerald, tapped for Commerce Secretary. Lutnick is a well-known Bitcoin supporter, and his firm custodies Tether’s U.S. government securities. U.S. Senator Cynthia Lummis also suggested potential Bitcoin accumulation by the fund, implying that digital assets might play a role under the Trump administration's direction. While there's no official confirmation, speculation suggests the U.S. might follow countries like El Salvador in Bitcoin accumulation.
The executive action requires officials to present a detailed plan within 90 days, covering investment strategies, fund structure, governance, and potential legal challenges. Treasury Secretary Scott Bessent stated the fund should be operational within the next 12 months. Trump also hinted at possibly using the fund for acquiring TikTok, adding intrigue to the development. How the situation unfolds will need to be closely monitored.
