U.S. President Donald Trump has signed an order to create a sovereign investment fund that may include Bitcoin. The initiative has stirred controversy due to the involvement of notable crypto advocates in the fund's leadership.
What Is a Sovereign Wealth Fund?
Sovereign wealth funds are state-owned investment funds that reinvest government revenues into various assets, such as stocks, bonds, and real estate. Some SWFs are funded by natural resource profits, while others leverage trade surpluses.
Funding the U.S. Sovereign Wealth Fund
Unlike oil-rich nations that use surplus revenues, the U.S. operates with a budget deficit. Trump has suggested that tariffs and other revenue streams could help finance the fund. Recent tariff announcements have already impacted financial markets, with Bitcoin briefly dropping below $91,000.
Bitcoin and the U.S. Sovereign Wealth Fund
Crypto advocates took notice when Howard Lutnick, a known Bitcoin supporter, was appointed to lead the fund. Lutnick and Senator Cynthia Lummis have expressed support for Bitcoin possibly being part of the fund's portfolio. Trump's administration is expected to take a more favorable stance towards cryptocurrencies.
Officials are expected to submit a detailed plan within 90 days, outlining investment strategies and potential legal hurdles. The fund is expected to be operational within 12 months and may be used for various initiatives, potentially including the acquisition of TikTok.
