Understanding the US BTC Reserves and Sovereign Wealth Fund in One Article

The rapid emergence of BTC and digital asset reserves legislation at the state level marks a fundamental shift in the government's view of cryptocurrency as a speculative asset and potential strategic reserve.

Article Author, Source: Michael Tabone, CoinTelegraph

Article translation: Golden Finance

On February 4th, the new Cryptocurrency czar David Sacks stated at a press conference that the bicameral Cryptocurrency working group is studying the strategic BTC reserve (SBR), and emphasized that the concept of sovereign wealth fund is somewhat different.

In fact, sovereign wealth fund (SWF) has been widely understood by the Cryptocurrency community and is often mistakenly seen as a tool that can naturally include BTC or other digital assets. SWF is a government-owned investment fund that manages national savings, typically established from surplus revenues such as oil profits or trade income.

Their main objectives are long-term growth and wealth preservation, ensuring economic stability for future generations. Unlike central banks that focus on managing currency and monetary policy, sovereign wealth funds take a more strategic approach, investing in real estate, stocks, infrastructure, and local businesses.

Essentially, they prioritize stable growth over high-risk investments, making them an important tool for countries seeking to ensure financial security beyond immediate needs.

The definition of a sovereign wealth fund is that Sacks quickly pointed out the reason why sovereign wealth funds should not be confused with SBR. The scope of sovereign wealth funds may be used for purposes broader than specific reserves, including supporting domestic companies and market infrastructure.

Bill Hughes, Senior Legal Counsel at blockchain software company Consensys, pointed out that the concept of sovereign wealth fund was ordered to be created by U.S. President Donald Trump on February 3, and can serve as a "second choice if the strategic reserve limited to cryptocurrency is not successful."

With the momentum generated by these measures, they pose an important question about the role of cryptocurrency in national investment strategies and what this means for the broader digital asset industry in 2025 and beyond.

The United States has established state-level sovereign wealth funds and a BTC reserve plan

A few states already have sovereign wealth funds that meet the traditional U.S. definition of sovereign wealth funds. The Alaska Permanent Fund was established in 1976, introducing oil revenues into a diversified investment portfolio to support state budgets and annual dividends for residents.

The Permanent School Fund in Texas uses revenue from oil and gas to fund public education while ensuring financial stability. Similarly, the Permanent Mineral Trust Fund in Wyoming and the Legacy Fund in North Dakota invest revenue from oil, gas, and mineral extraction to smooth budget fluctuations and preserve wealth for future generations.

The Permanent Fund for Resource Taxes in New Mexico adopts a similar model of reinvesting the revenue from resource taxation to support the state's fiscal health. While these funds have different purposes, they share a common goal: transforming temporary resource prosperity into lasting financial security.

If analysts also include surplus-retained state-managed funds (such as emergency funds or stabilization funds), the figure will increase. Some of these funds will be invested, sometimes in diversified investment portfolios.

In this way, as many as 23 states have some form of such investment tools. However, their authorization and structure may differ from the "classic" sovereign wealth fund model.

The positive side is that 15 states have now introduced BTC and digital asset legislation. In these states' current races, Arizona and Utah are tied for the lead in terms of legislative votes.

The proposed Arizona bill would establish a strategic BTC reserve fund with a cap of 10% of public funds, but only if the US government establishes its own SBR. It is in line with Senator Lummis' BTC bill, which aims to enable states to participate in federally managed plans.

A bill in Utah will allow for 10% of several major state funds to be invested in digital assets, protecting self-custody and ensuring nodes are not classified as money transmitters. The bill in Utah has a broad definition of 'digital asset' and does not directly mention BTC, taking a comprehensive approach to integrating cryptocurrency into the state's investment strategy.

The bills (HB1184) in North Dakota and (HB201) in Wyoming did not pass their respective state procedures.

This is a matter of time, not a matter of whether it will appear or not.

The rapid emergence of BTC and digital asset reserve legislation at the state level signals a fundamental shift in the government's view of Cryptocurrency as a speculative asset and potential strategic reserve.

Whether these efforts will translate into actual BTC holdings or remain symbolic gestures will depend on political will, regulatory transparency, and market conditions. However, what can be certain is that these attempts have already gone beyond theory.

As states experiment with digital asset reserves, the federal government is formulating its own sovereign wealth strategy. The role of BTC in public finance is no longer a question of 'whether', but 'when' and 'how'.