A blockchain-enabled U.S. sovereign wealth fund: funding constraints, regulatory barriers, and portfolio implications

The creation of a U.S. sovereign wealth fund (SWF) has long been hindered by fiscal fragmentation, political resistance, and regulatory ambiguity. At the same time, blockchain technology is redefining institutional transparency, asset tokenization, and capital allocation in global finance. This study presents the first empirical simulation of a blockchain-enabled U.S. SWF, evaluating how tokenized asset allocations and on-chain disclosure mechanisms impact risk-adjusted returns and the cost of capital under varying regimes of regulatory and geopolitical uncertainty. Framing the SWF as a politically contingent institutional investor, we assess how financial technologies interact with the U.S. political economy to either amplify or dampen sovereign investment efficiency. Using System-GMM, rolling regressions, and quantile and threshold models across macro-financial data from 2015-2024, we find that Ethereum consistently enhances portfolio performance, but its benefits are highly sensitive to regulatory clarity. In contrast, Bitcoin's volatility renders it unsuitable for sovereign use. These findings underscore how institutional investment outcomes are co-determined by technological design and policy stability, offering new insights into the political economy of sovereign asset governance. Our results speak directly to policymakers, regulators, and institutional investors designing sovereign financial institutions in an era of digital disruption and regulatory flux.