← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: Trump Wants U.S. Sovereign Wealth Fund, David Sacks Touts Stablecoins, FDIC Updates Crypto Banking Rules
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In this week's episode of the Coin Stories News Block, we cover these major headlines related to Bitcoin and global finance: Trump Signs Order to Create U.S. Sovereign Wealth Fund David Sacks: “Stablecoins Could Lower Long-term Rates” Czech...
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Welcome to the Coin Stories news block. I'm Natalie Brunel, and in just 10 minutes, the time it takes to mine a bitcoin block will provide you with insightful updates on bitcoin markets and the global economy. Everything you need to know in one block. Let's go. The United States appears to be on its way to having a sovereign wealth fund. President Trump started this week signing an executive order to create one. This is potentially a very big deal. Sovereign wealth funds have very long investment time horizons, and they typically invest in stores of value like gold, real estate, equities, and hard assets on top of that. Did you know that sovereign wealth funds are some of the largest pools of capital out there? To put them into perspective, Norway's fund has more than $1.5 trillion in assets under management, and Abu Dhabi's has around 1 trillion. If the US creates a sovereign wealth fund, bitcoin could very well be included in it. Not only because it's the best performing asset of the last Dec. But because of who Trump has put in charge of the fund. Newly appointed Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessen have been tasked with spearheading the effort. For those who don't know, Howard Lutnick is an outspoken bitcoin advocate. Last year on Pomp's show, he said that he personally owns hundreds and hundreds of millions of dollars worth of bitcoin, and it will soon be billions. And he added that every time bitcoin dips, he's a buyer. Not only that, but last year, Lutnik's firm, Cantor Fitzgerald announced a new $2 billion Bitcoin financing business. So let's just say Lutnick is quite the bitcoin bull. And now he's been put in charge of potentially the first US Sovereign wealth fund. What do you think that means? White House crypto czar David Sachs was asked about whether the strategic bitcoin reserve could actually be implemented through the sovereign wealth fund. And he basically said that's up to Lutnick. We still don't have any details of how the sovereign wealth fund's portfolio would be funded or what assets would be included, but this seems like a promising development. Howard Lutnick and Scott Bessant now have 90 days to deliver a plan to Trump on how this fund will be created. A US Sovereign wealth fund could be just another way that bitcoin adoption accelerates at the nation state level. All right, speaking of nation states, last week we highlighted how the Czech Republic Central bank announced that it is considering adding bitcoin as a reserve asset well now this week, Czech President Peter Pavel signed a bill on Thursday exempting crypto users from paying taxes on long term capital gains. You heard that right. If you hold Bitcoin for longer than three years in the Czech Republic, you don't have to pay any taxes. In addition to that, transactions up to around $4,000 do not need to be reported for tax purposes. This will do wonders for Bitcoin's use as a medium of exchange and as a form of money. Despite tax policies limiting Bitcoin's appeal as a currency, it hasn't stopped people from using it. Breeze recently put out a report on the current state of Bitcoin payments that highlighted how 650 million people now have access to Bitcoin second layer payment solution, the Lightning Network in the U.S. senators Lummis and Gillibrand's Responsible Financial Innovation act tried to do something similar, proposing a $200 de minimis exemption so that every time someone bought a coffee with Bitcoin it wouldn't trigger a taxable event. However, that bill has failed to gain traction, but the Czech Republic has taken this next big step. It reminds me of the book the Sovereign Individual. In it, the author explains how in the future countries will need to compete with one another via tax policies in in order to attract people and digital capital to their borders. And certainly the Czech Republic just became a much more attractive place to live to many bitcoiners around the world. President Trump is certainly competitive, so hopefully he takes note because it's hard to think of a bigger driver for Bitcoin adoption than eliminating capital gains tax here in the U.S. all right. Earlier this week, David Sachs made some waves with his first press conference on digital assets. Many were expecting and hoping for a big Bitcoin reserve announcement, but Sachs only said that he is still stuck studying the feasibility of one. And the real headline was his comments on stablecoins. Sachs said there's a priority to provide more regulatory clarity for stablecoins and pointed to Senator Bill Hagerty's Genius act which lays out a framework for payment stablecoins. He also added this Stablecoins really have.
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The potential to ensure American dollar dominance internationally, to increase the usage of the US dollar digitally as the world's reserve currency and in the process create potentially trillions of dollars of demand for US Treasuries, which could lower long term interest rates.
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Okay, so these comments sparked some debate on X. It's no secret that stablecoins are a huge source of demand for treasury bills today like money market funds, stablecoin issuers like Tether must hold liquid reserves for redemptions. Their latest report shows they now hold $94 billion in T bills making them the sixth largest foreign holder for right behind the UK. But here's the issue. Short term T bills are not the same as long term treasury bonds. The idea that stablecoins could drive demand for long duration treasuries and lower long term rates like Sachs suggested doesn't really make sense. Tether CEO Paolo Arduino recently dismissed the idea of Tether owning Treasury bonds in an interview saying quote, the single most important thing for stablecoins is that we need to be able to liquidate our reserves immediately and pay out our users. And he added that holding long duration government debt poses significant liquidity, geopolitical and financial risks, emphasizing his preference for holding Bitcoin as a long term reserve asset instead. And he puts his money where his mouth is. Tether now holds $7.8 billion worth of Bitcoin in its reserves. I mean think about it. Why would stablecoin issuers want to hold illiquid 10 to 20 year bonds when they could just hold short duration T bills? The only way this could happen is if the government mandated them to do it through some piece of legislation. But here's the thing, that would only make it harder for stablecoin issuers to meet redemptions, adding more risk to the entire market. So why would the government push for something like this? I mean desperation I guess. They need to manufacture demand for treasury bonds to keep long term rates low so they can continue to afford to run multi trillion dollar deficits. Treasury Secretary Scott Bessant even admitted this saying on Thursday that the Trump administration is focused on keeping the 10 year treasury yield low. So it sounds like they see these stablecoins as a potential mechanism to achieving goal. But if they do force these issuers to hold long duration bonds, these stablecoins would then more likely be anything but stable. Pivoting now to developments on the regulatory front. This week we got not one but two Senate hearings on the debanking of crypto businesses and individuals aka Operation Chokepoint 2.0. In these hearings, industry leaders like Mara's Fred Thiel testified about how regulators systemically denied this industry access to basic banking services. And leading up to the hearing we got more evidence of this when the FDIC released 175 documents that contained correspondence between FDIC officials and banks regarding their crypto related activities. And from the documents we counted around 30 instances where a bank simply wanted to offer its clients the ability to buy, sell, hold Bitcoin and the FDIC shut it down. Here's how it generally played out. Step one A bank wanted to offer Bitcoin products OR services. Step 2 the FDIC instructed them to pause its plan and await further guidance. Step 3 the bank terminated its Bitcoin plans. Now that evidence is coming to light that clearly shows how the FDIC discriminated against an entire industry, the agency is finally changing its tune. This week it announced plans to quote revise bank guidelines for crypto, aiming to allow banks to embark on some crypto activities without getting permission first. And this all comes just a few weeks after the SEC rescinded its controversial SAB 121 rule that prohibited banks from working with digital assets and also created a new crypto task force led by SEC Commissioner Hester Peirce. On Tuesday, Peirce published a policy statement that laid out the task force's 10 priorities, including clarifying what is and isn't a crypto security, improving registration pathways for companies, and providing regulatory clarity on token offerings, broker dealers, custody lending and ETF products. She stated that the task's goal is to reduce uncertainty and encourage responsible innovation and create a more workable regulatory framework for crypto assets. This is exactly the kind of regulatory clarity that some large investors have been waiting for. Institutions and high net worth individuals who have been hesitant now appear to be finally diving in case in point. Tiger 21, a network of ultra wealthy investors, just allocated 1 to 3% of its $200 billion AUM into Bitco. Tiger 21's CEO said that some of its members are now all in on Bitcoin and view it as a gold substitute. This is the kind of serious money that needs to flow into Bitcoin if we ever want to see those huge price targets become reality. The good news? Bitcoin appears to be well on its way. Ark Invest just published its annual Big Ideas report and shared that Bitcoin is currently on pace to meet its 2030 price target. And what's Ark's bull case? $1.5 million per bitcoin, so buckle up. That's it for the news block. Your weekly Bitcoin and economic news update. I'm Natalie Brunel. Make sure you're subscribed to Coinstory so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking and make sure you check out our newsletter. TheNewsblock.substack.com.