Sovereign funds: a new class of investors for crypto?

By announcing the creation of the first US sovereign wealth fund in early February, Donald Trump sparked considerable excitement within the crypto ecosystem, fueling speculation about the U.S. acquiring Bitcoin and other cryptocurrencies through this fund. Since then, the U.S. president has established a national Bitcoin strategic reserve, and a stockpile of other cryptos.

It remains to be seen whether the American sovereign fund will make substantial Bitcoin purchases, especially since the fund won't be operational until late 2025 or early 2026. Nevertheless, this announcement and the ensuing speculation underscored the growing interest among states in Bitcoin and, to a lesser extent, other cryptocurrencies.

Direct state investments in crypto through sovereign wealth funds are still limited, but crypto assets are increasingly seen as viable additions to national portfolios. 

Bitcoin ETFs: the institutional gateway to crypto exposure

The year 2024 marked a turning point, particularly with the launch of Bitcoin Spot ETFs in the U.S., which have attracted over $102 billion in assets under management as of February 24, 2025.

Previously, the few sovereign funds that ventured into crypto mostly focused on Bitcoin mining or investing in crypto-related companies. Now, they can gain direct exposure without major barriers.

Bitcoin's remarkable rise in 2024 can largely be attributed to these evolving dynamics.

What is a sovereign wealth fund?

A sovereign wealth fund is a state-owned investment fund, typically fueled by budget surpluses.

According to the International Forum of Sovereign Wealth Funds, there are nearly 100 sovereign wealth funds globally, collectively managing over $9 trillion in assets.

About 45% of these funds are financed by revenues from natural resources, while the majority come from commercial surpluses.

These funds are reinvested across various asset classes, such as stocks, bonds, and real estate, with the objective of benefiting the nation's residents. The approach generally focuses on long-term growth and stability.

The world's largest sovereign wealth fund is Norway’s, which recorded a record profit of €213 billion in 2024—equivalent to €300,000 per Norwegian citizen.

Abu Dhabi and China round out the top three. It is worth noting that the overwhelming majority of sovereign wealth funds in the world are located in Asia or the Middle East.

While a Norwegian fund holds the first position, the second fund outside these regions ranks 20th: Russia’s National Welfare Fund. 

The first North American fund ranks 21st — the sovereign fund of the Canadian province of Alberta.

Sovereign funds and crypto: what do we know? 

Until recently, only a few sovereign wealth funds had ventured into direct investments in Bitcoin or other cryptocurrencies. 

The most well-known example is Bhutan’s sovereign fund, Druk Holding and Investments. Ranked 76th globally, it held 10,635 BTC at the end of February 2025, valued at over $1 billion, according to Arkham Intelligence.

The Himalayan kingdom took an early leap into the crypto space, launching a Bitcoin mining program in April 2019, making it one of the first nations to bet on cryptocurrency. El Salvador followed, though not through a traditional sovereign wealth fund.

However, in the past few months, there has been a notable shift. More sovereign funds are now gaining direct exposure to crypto. The introduction of Bitcoin Spot ETFs in January 2024 has played a significant role in accelerating this trend.

The sovereign fund of the U.S. state of Wisconsin was the first to invest in Spot ETFs through the iShares Bitcoin Trust ETF, currently holding 6 million shares, valued at approximately $321 million as of February 14, 2025.

By mid-February 2025, Abu Dhabi’s sovereign wealth fund, Mubadala Investment Co., followed suit, acquiring 8.2 million shares in the iShares Bitcoin Trust ETF, worth $436.9 million as of February 18, 2025. 

Sovereign Funds: Also Indirectly Exposed to Crypto

Despite this growing interest, most sovereign funds with Bitcoin and crypto exposure still do so indirectly. Abu Dhabi’s fund, for instance, has financed blockchain and crypto startups through venture capital funds. It has also invested in exchanges like Coinbase and DeFi platforms. Norway’s pension fund has invested in Coinbase and Strategy (formerly MicroStrategy) shares — the largest publicly listed crypto exchange and the private company holding the most Bitcoin.

Singapore’s Temasek Holdings has invested in blockchain companies and cryptocurrency infrastructure, like FTX (which turned out to be a failed investment) and Binance.

Conclusion

In the last couple of years, institutional perspectives on Bitcoin and cryptocurrencies have evolved significantly.

The launch of Bitcoin Spot ETFs in January 2024 was a turning point, enabling investment funds to gain direct exposure to Bitcoin without relying on exchanges.

While some sovereign funds quickly capitalized on this opportunity, many remain cautious. However, the pace of adoption is steadily increasing.

Bitcoin’s limited supply and decentralized structure position it as a potentially safer asset in the long term compared to traditional investments.

Furthermore, Bitcoin is increasingly viewed as a hedge against rising geopolitical and economic uncertainties, resembling gold's role as a safe-haven asset—a parallel highlighted by their similar trajectories in 2024.

If the U.S. were to invest heavily in Bitcoin, it could spark an arms race to accumulate this scarce digital asset.