Quick Takes
- President Donald Trump has signed an executive order to establish a U.S. sovereign wealth fund. The treasury and commerce departments have been directed to explore the conditions to create the government-run investment fund within the next 12 months.
- The American Sovereign Wealth Fund will supposedly include a combination of liquid assets and domestic resources. Trump suggested that the fund could be used to acquire social media company TikTok’s U.S. business.
- Pro-Bitcoin senator Cynthia Lummis hinted in an X post that the sovereign wealth fund could directly invest in crypto assets, especially Bitcoin. This would be in line with the state-run funds of Norway and Abu Dhabi, which have exposure to the apex cryptocurrency.
- Although it is not confirmed whether the American sovereign wealth fund will invest in Bitcoin, the price of the world’s most valuable cryptocurrency rose to an intraday high of $102,000 following the EO signing.
On February 3, U.S. President Donald Trump signed an executive order directing the Treasury and Commerce Departments to establish a sovereign wealth fund. During the press event in the Oval Office, he asked Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to start reviewing the possibility of creating a SWF within a year.
Trump’s Proposed Sovereign Wealth Fund To Invest In Liquid Assets, Domestic Resources, And Possibly Bitcoin
Bessent noted that the sovereign wealth fund aims to “monetize the asset side of the U.S. balance sheet”. When questioned by a reporter, Trump said his policies were going to create a lot of wealth and it was “about time” that the country had a sovereign wealth fund.
The President suggested the fund could be financed through tariffs and other revenue streams. Sovereign wealth funds are state-owned investment funds that reinvest the government’s revenue – often earned from exporting natural resources – in sustainably profitable assets. The U.S. fund could involve a combination of liquid assets and domestic resources. Trump also mentioned that the fund could be used to acquire the video-sharing platform TikTok.
SWFs are typically created by the government to achieve objectives such as stabilizing the economy, generating wealth for future generations, and providing financial benefits to citizens. Several U.S. states, including Texas, Alaska, Wyoming, New Mexico, and Alabama, operate their own sovereign wealth funds, collectively managing $332 billion in assets across their respective funds, but the nation as a whole has never had one until now.
Bitcoin advocates have jumped on the bandwagon to speculate that the U.S. government could be taking active steps towards investing in Bitcoin with its sovereign wealth fund.
Could The American Sovereign Wealth Fund Invest In Bitcoin And Other Crypto Assets?
Senator Cynthia Lummis, a leading policy proponent of the world’s most valuable cryptocurrency, took to X after the EO signing to hint that it could be used to buy BTC, stating that it is a “Big deal”, making use of the Bitcoin symbol. Her tweet sent crypto enthusiasts into a frenzy.
Meanwhile, Bitcoin advocate Wayne Vaughan, who previously called on the U.S. government to establish a strategic Bitcoin reserve, said that both Bessent and Lutnick favor Bitcoin and could set up the wealth fund to invest in crypto assets. Despite the speculation, it is not yet clear how the American SWF or the proposed digital asset strategic reserve would incorporate Bitcoin.
Several of the world’s top state-run sovereign wealth funds have substantial exposure to crypto assets, especially Bitcoin.
Norway’s Government Pension Fund Global, considered to be the world’s largest sovereign wealth fund with an AUM of approximately $1.74 trillion, is said to indirectly hold nearly $400 million worth of Bitcoin. The Abu Dhabi Investment Authority (ADIA), another SWF goliath, recently surpassed the $1 trillion milestone in assets under management and reportedly invests in crypto projects and various digital assets.
However, establishing an American sovereign wealth fund does not guarantee that the government will invest in Bitcoin. Crypto advocates and policy leaders have good reason to believe that the flagship crypto asset could become a major investment focus of the fund.
While Treasury Secretary Bessent has expressed his interest in crypto, Commerce Secretary Lutnick has been vocal about his exposure to Bitcoin. His bond trading firm Cantor Fitzgerald acts as the custodian for stablecoin issuer Tether’s massive U.S. Treasury holdings.
Amid this speculation, the price of Bitcoin rebounded from its previous week’s low of $92,000 to an intraday high of $102,514. At the time of writing, BTC is trading at $99,202 – up 4.93% in the last 24 hours.
Also Read: Trump’s Crypto Policy: What To Expect In His New Presidency
