U.S. President Donald Trump has signed an executive order creating a sovereign wealth fund, which could transform the nation's investment approach and incorporate new financial instruments.
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.
How Will the U.S. Fund It?
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 before recovering above $100,000. Some sources believe the administration could also explore public-private partnerships to bolster the fund’s resources.
Bitcoin and the U.S. Sovereign Wealth Fund
As cryptocurrencies continue to gain prominence globally, the U.S.'s new initiatives are drawing significant attention. Trump's nominee for Commerce Secretary, Howard Lutnick, known for supporting Bitcoin, considers it a promising component of the investment strategies.
The establishment of a sovereign wealth fund could mark a significant phase in U.S. economic policy, with further steps to be defined in the coming months.
