President-elect Donald Trump has appointed venture capitalist and former PayPal chief operating officer David Sacks to serve in the newly created position of “AI and crypto czar.”
In this role, Sacks will be charged with “making America the clear global leader in both areas,” Trump said in a statement on Truth Social. “He will safeguard Free Speech online and steer us away from Big Tech bias and censorship. He will work on a legal framework so the Crypto industry has the clarity it has been asking for and can thrive in the U.S.”
Sacks has long been an investor in artificial intelligence companies, including Palantir, Meta Platforms and Elon Musk’s xAI. This past May, he co-founded Glue, an AI-based work chat tool that combines features from AI platforms like ChatGPT with human chat platforms such as Slack. He’s also an investor in blockchain platform provider Solana.
“Bitcoin is fulfilling PayPal’s original vision to create ‘the new world currency,”’ Sacks told CNBC in 2017.
Having a business-friendly “czar” in charge of cryptocurrency and AI could lead to lighter government restrictions on banks’ technology projects, fintech partnerships and attempts to work with digital asset companies, experts say.
Industry reactions
Cross River CEO Gilles Gade called Sacks’ nomination “a pivotal moment for the future of fintech and a decisive step toward harnessing the transformative power of technology in financial services.” He noted Sacks’ expertise in fintech, AI and crypto.
He “brings the visionary leadership we urgently need to modernize outdated regulatory frameworks and protect consumers in an era of rapid innovation,” Gade said.
The current fragmented regulatory system “has stifled progress, leaving consumers vulnerable and businesses without the clarity they need to thrive,” Gade said. “It’s time for a unified, forward-thinking body that understands both the complexities of technology and the needs of the market.”
Nathan McCauley, CEO and co-founder of Anchorage Digital, whose Anchorage Digital Bank is the only crypto-native bank to hold a charter from the Office of the Comptroller of the Currency, also sounded a positive note.
“David is a seasoned investor and entrepreneur and has been a thoughtful voice on both crypto and AI for years,” McCauley said. “We are excited for his leadership and the message that the White House is sending with this role: crypto and AI are two of the most important new technologies of this century and we want to get it right.”
Gade and McCauley know Sacks by his reputation; neither has worked directly with him.
Todd Baker, a senior fellow at the Richman Center for Business, Law & Public Policy at Columbia University and the managing principal of Broadmoor Consulting, noted the incoming AI and crypto czar’s many industry connections.
“Sacks is part of several well-known affinity groups: the Silicon Valley South Africans – Peter Thiel, Elon Musk, Roelof Botha [managing director of Sequoia Capital]; the Stanford Review conservatives — Thiel, Senator Josh Hawley [R-Missouri], Jay Bhattacharya [professor of medicine at Stanford University and Trump’s nominee to lead the National Institutes of Health], Keith Rabois [managing director of Khosla Ventures] and many others,” Baker said. Sacks is also a member of “the so-called PayPal mafia — Musk, Thiel, Botha, Max Levchin [founder of Affirm] and Reid Hoffman [co-founder of LinkedIn].”
“As do many in Silicon Valley, he appears to hold libertarian/anti-government and techno-determinist — technological advancement is inevitable and shouldn’t be restrained — views, although when these views conflict with his personal interests, as when he forcefully argued for a full bailout of depositors at Silicon Valley Bank, he shows flexibility,” Baker said. “Along with many in the Trump orbit, he has a significant personal financial interest in cryptocurrency speculation and AI.”
Caitlin Long, founder and CEO of Custodia Bank, a Wyoming bank that serves digital asset businesses, fintechs, banks and start-ups, said Sacks was one of the first to focus on the idea that “AI will need crypto because traditional payment systems are too outdated for AI-driven payments.”
“Micropayments never caught on with humans but they work great for machines,” Sacks said in a 2017 tweet. “Cryptocurrencies are how AIs will pay each other.”
An end to Chokepoint 2.0?
For the past two years, banks have been in a holding pattern when it comes to working with or even providing bank accounts for crypto companies, a situation critics dubbed “Chokepoint 2.0.” For instance, hundreds of community banks were planning to partner with a company called NYDIG to let
On Friday, Coinbase published some of these letters, which the crypto exchange obtained through a Freedom of Information Act request. The letters state, in part, “at this time, the FDIC has not yet determined what, if any, regulatory filings will be necessary for a bank to engage in this type of activity. As a result, we respectfully ask that you pause all crypto-related activity.”
With Sacks overseeing cryptocurrency, the rules for banks could change, but this is likely to take some time, Baker said.
“As is apparent from this and other appointments made by Trump, a large effort to force crypto trading and other forms of crypto-related speculation into mainstream financial markets and the U.S. financial regulatory structure is underway,” he said.
“Whether this can be fully achieved without legislation is doubtful, although legislation is theoretically possible if the Republicans make it a priority.
“Absent legislation, how far partial integration can be advanced depends on how solicitous Trump’s appointees at the OCC, FDIC, CFTC and other regulatory agencies are to the interests of the crypto lobby. The appointment of the crypto-friendly Scott Atkins to head the SEC is a good indicator of the type of financial regulator we are likely to see at the other agencies,” Baker said.
At the banking agencies, “we should expect to see a significant loosening of the currently tight policies restricting banks from servicing crypto businesses, although standard risk management rules will still apply so any expansion is likely to be controlled and gradual,” Baker said.
“The lessons learned by regulators at Silvergate Bank, Signature Bank and Farmington State Bank will not be entirely forgotten. It is likely that more national crypto trust banks will be chartered and that there will be continued pressure on the Fed to allow state-chartered uninsured crypto banks of various types to gain access to the payments system.”