Trump Administration Rejects Bitcoin, Tariff Funding for Sovernign Wealth Fund

The White House has expressed opposition to certain aspects of a sovereign wealth fund proposal presented by top advisers to President Trump. The plan, developed by Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, was submitted in response to an executive order issued by Trump in February. This order directed the Treasury and Commerce departments to create a framework for a US sovereign wealth fund within 90 days.

Ask Aime: Trump's opposition to a sovereign wealth fund proposal affects US market stability.

The proposal initially sparked speculation that the fund might be used to acquire Bitcoin on behalf of the US government. However, Bessent and Lutnick clarified that the fund would focus on warrants, equity, and other non-crypto investments. David Sacks, Trump’s crypto czar, had previously indicated that Bitcoin could be included in the fund’s portfolio. This possibility seems to have been ruled out after Trump signed a separate executive order establishing a strategic Bitcoin reserve and a digital asset stockpile on March 6, suggesting a standalone approach to crypto holdings.

Rumors also circulated that the fund might be financed through tariffs and other revenue sources, despite ongoing budget deficits. Lutnick later clarified that tariffs would not be used to support the sovereign wealth fund. The White House spokesperson, Kush Desai, stated that while the Treasury and Commerce Departments have developed plans in response to Trump’s directive, no final decisions have been made. The administration continues to view the initiative as part of its broader effort to safeguard national and economic security.

The proposal for a sovereign wealth fund was part of an executive order issued by President Trump in February. The order directed the Treasury and Commerce secretaries, in coordination with the National Economic Council's Kevin Hassett, to draft a plan for the fund within 90 days. The plan was to include recommendations for funding mechanisms, investment strategies, fund structure, and a governance model, as well as an evaluation of the legal considerations for establishing and managing the fund.

Sovereign wealth funds are typically used to invest assets from a country's natural resources with the aim of generating returns that provide a public windfall. Some of the most well-known funds are financed by revenue from gas or oil, such as Saudi Arabia's Public Investment Fund and Norway's sovereign wealth fund. These funds can help insulate countries from fluctuations in the value of natural resources, provide funds for government expenditures, and allow future generations to benefit from current oil and gas revenue.

The White House spokesperson, Kush Desai, stated that the administration remains committed to using every tool available to deliver on President Trump's directive to safeguard America's national and economic security. However, the spokesperson did not provide details on how proceeds from the sovereign wealth fund would be spent. In the past, President Trump has suggested that the fund could own a stake in TikTok, the popular social media platform that faces a U.S. ban unless its China-based parent company ByteDance divests from it.

Despite the rejection of parts of the proposal, President Trump has teased a "very big announcement" before his departure for the Middle East next week. However, sources have indicated that this announcement is unrelated to the proposed sovereign wealth fund. The president described the upcoming announcement as a "truly earth-shattering and positive development for this country and for the people of this country."

The rejection of parts of the proposal by the White House highlights the ongoing debate and internal disagreements within the administration regarding the establishment of a sovereign wealth fund. While the administration remains committed to safeguarding national and economic security, the specifics of the fund's structure, funding mechanisms, and investment strategies are still under consideration. The administration's approach to the sovereign wealth fund will likely continue to evolve as these details are debated and finalized.