A section of the American public has expressed their misgivings about the country’s intentions of establishing a Sovereign Wealth Fund(SWF). That follows President Donald Trump’s signing of an Executive Order (EO) directing Treasury Secretary Scott Bessent and his nominee for the Commerce Department, Howard Lutnick, to create the investment tool. Speaking during the EO’s signing on Monday at the Oval Office, Mr. Trump expressed his excitement at development. He said, “We’re going to create a lot of wealth for the fund, and I think it’s about time this country had a sovereign wealth fund. ” Expectedly, news of Mr. Trump’s action stirred his fanbase, with some suggesting the SWF could pave the way for creating a Bitcoin Strategic Reserve, one of his campaign promises. That excitement, however, failed to rub off on some US citizens, who took to X to express their apprehension about the proposed SWF. Where is disquiet over Trump’s Sovereign Wealth Fund push coming from? A major point of contention is the opaqueness of the SWF. The president and his team haven’t spelled out how the fund will work, something that X users Michelle Denver and Dave Shaffer alluded to when replying to Whitehouse Press Secretary Karoline Leavitt’s tweet on the EO. Another concern is that the fund could be misused. Doug Arrowsmith labeled the program a government-funded Oligarchy and crypto ponzi scheme, sentiments that resonated with another user, Squirrelmecha . Meanwhile, Tatiana Fuchs likened the fund to money laundering at the highest levels, and the Grand Duchess chimed in, “That’s code for Elon Musk’s piggy bank.” Their fears tally with the findings of a 2024 Carnegie Endowment for International Peace study . This research found that a lack of governance and regulatory safeguards risks turning SWFs into “conduits of corruption, money laundering, and other illicit activities.” Others considered it a wrong choice to establish an SWF when America is already buried in debt. The concept of sovereign wealth funds was said to be for countries with surplus by Wayne Dupree who identified himself as a conservative voter. Max Műller and Max deFreitas also had no kind words to say about the decision, arguing that it was ill advised for a country as deeply in debt as the U.S. Still of concern was Mr. Trump’s seemingly going back on his word on cutting down the government. Steve Hamill pointed to that with a tinge of sarcasm, referring to how the Department of Government Efficiency (DOGE) is threatening to shut down one government slush fund (USAID) only to create a new one. So, what does establishing a US Sovereign Wealth Fund entail? Talking to reporters after the EO’s signing, Mr. Bessent gave a 12-month time frame to have the SWF up and running. During that time, he and his treasury counterpart will need to first get congressional approval, as the vehicle will need laws anchoring its operations. Despite the GOP’s majority over the Democrats in the legislature, it might need to reach across the aisle to gain political goodwill for the SWFs’ smooth running. That could be challenging, considering the parties’ fractious relationship. If Trump’s SWF is to receive the green light from Congress, then the next challenge would be to raise the funds. Many think this will be difficult in the current environment of the country’s growing public debt and budget deficit. A proposal made has been to implement cost cutting measures such as the Elon Musk led DOGE office is currently implementing. However, these interventions have been contentious, with some analysts implying they could present grounds for litigation derailing the effort. Thirdly, Bessent and Co will need to set up the structure for the SWF’s management and oversight. That would involve creating a broadly acceptable, transparent, independent, and professional team to run the fund. They will also need the public’s buy-in from taxpayers, some of whom have reservations about the proposed SWF. Finally, they will need to develop the rules and regulations that keep it in compliance with US Securities laws. Some of the objectives that the US is expecting from the SWF are to create a long term revenue source, to buffer its economy from market shocks, and to relieve its debt problems. Cryptopolitan Academy: Are You Making These Web3 Resume Mistakes? - Find Out Here
