Trump’s Crypto-AI Czar Is a Longtime Critic of Tech Regulation

(Bloomberg) -- David Sacks, President-elect Donald Trump’s surprise pick to guide policy on artificial intelligence and cryptocurrency, doesn’t have deep ties to either industry or an extensive track record of investing in them. What he does have, though, is even more important in the eyes of technology investors — a tech-friendly worldview and a long history of skepticism about government regulation.

Most Read from Bloomberg

“He will ensure the United States is at the cutting edge of innovation,” said Keith Rabois, who celebrated with Sacks at a private home in Miami Thursday night. Sacks will keep the country from falling behind China, and will protect “newly emerging tech from left-wing censorship and bias,” Rabois said.

The appointment of Sacks, a major Trump fundraiser, was not widely anticipated in Silicon Valley. The VC has only made a handful of crypto investments, and isn’t seen as a key player in the industry. He’s also made relatively few AI bets, though he’s a backer of xAI, the startup helmed by Elon Musk that has raised more than $10 billion this year.

But Sacks has long been critical of too much government involvement in the affairs of private companies. The 52-year-old founder of VC firm Craft Ventures and member of the so-called PayPal Mafia has been one of the loudest right-leaning voices in the industry for years.

The pick is seen as a boon to the startup world, where AI and crypto executives view government intervention as a potential existential threat. US action against crypto companies has driven many startups overseas. And AI leaders have worried that overly burdensome regulations could stifle the fledgling industry in the name of safety.

Crypto supporters celebrated the selection, which Trump said would give startups regulatory clarity. “Crypto and AI are two of the United States’ most pressing strategic priorities right now, and David Sacks is one of the only people in the world that is uniquely qualified to lead in this pivotal role,” said Kyle Samani, a managing partner at Multicoin Capital, where Sacks is an investor. Sacks will be an “invaluable asset in shaping the nation’s future,” Samani said.

Startup competition

Trump has signaled that he’ll take a friendly approach to both crypto and AI. Bitcoin has hit all-time highs since his election, and he has vowed to repeal President Biden’s 2023 AI executive order that requires developers to safety-test new models. AI is also a focus for Musk, a key Trump ally and a longtime friend of Sacks.

Investor Marc Andreessen, whose firm invests heavily in both industries, was ebullient at Sacks’ pick. “From the Wright Brothers to Starship With Chopsticks, in just a single election,” Andreessen wrote on X on Thursday night, referencing SpaceX’s latest achievement of landing re-usable starships.

OpenAI Chief Executive Officer Sam Altman also struck a celebratory note, writing on X, “congrats to czar @DavidSacks!”

But there’s been some trepidation over Sacks’ allegiances in the AI world. Sacks’ Craft Ventures is an investor in Musk’s xAI, and Sacks’ ties to Musk have raised questions about how he would treat rival companies in the fiercely competitive industry. Sacks has previously spoken critically of OpenAI, a key xAI competitor.

In a now-deleted post on X, Sacks said, “I’m all in favor of accelerating technological progress, but there is something unsettling about the way OpenAI explicitly declares its mission to be the creation of AGI.” AGI, or artificial general intelligence, refers to AI technology that can perform most tasks better than humans. Sacks did not respond to a request for comment on the post.

Sacks and Trump allies say that involvement in the industry is a prerequisite for understanding it, and that some perceptions of conflict of interest will be inevitable. “I think we should take people at their word,” said Shaun Maguire, an investor at the prestigious Sequoia Capital, which has backed both xAI and OpenAI. Sacks “won’t harm any competitors,” he said.

Sacks’ other bets include BitGo and Bitwise in the crypto world. In AI, Sacks co-founded a startup called Glue that makes chat software for companies, and he’s invested in developer startup Replit Inc. and AI writing tool CopyAI Inc. Sacks will not leave Craft, a spokeswoman said, and the new czar position will function as an advisory role, rather than a full-time government job. The appointment won’t require Sacks to divest or publicly disclose his assets. Like Musk, Sacks will be a special government employee. He can serve a maximum of 130 days per year, with or without compensation.

However, conflict of interest rules apply to special government employees, and Sacks would be required to recuse himself from matters that could impact his holdings.

Tech-Friendly

Some industry observers would have preferred the crypto and AI czar positions to be separate — a move that might have telegraphed the importance of each, and reflected the different risks and rewards of both technologies.

“While I am very encouraged by the new administration’s crypto-friendly focus, I would have preferred separate crypto and AI czars,” said Campbell Harvey, finance professor at Duke University. “Both need urgent, dedicated attention,” he said.

Sacks has forged a more wide-ranging career, rather than focusing on just AI or crypto. He first made a name for himself at PayPal, the payments company whose founders in the late 1990s included Musk and billionaire investor Peter Thiel. During a stint in Hollywood, he produced the 2005 satire Thank You for Smoking. At Craft, his venture firm with stakes in Musk-owned businesses including SpaceX, he has invested widely as well as serving as a host of the All-In podcast.

His comments about crypto on the podcast have not been universally positive, but he has discouraged attempts to penalize or control industry players. “The fact of the matter is you’ve got a lot of brilliant young entrepreneurs, computer scientists building this financial infrastructure of the future with crypto,” he said in a podcast episode in 2021. “We don’t necessarily want to interfere with that to the point where we break it.”

He’s also made significant money on crypto. Craft Ventures invested in Samani’s Multicoin Capital in 2018, which in turn was an early investor in the Solana cryptocurrency. The token was worth less than a dollar when it launched in 2020, but notched a peak price of around $250 in late 2021. “It will end up being about $1 billion of Solana for us in terms of returns,” Sacks said at the time.

More recently, in a November episode of the podcast after Trump’s election, Sacks took aim at the Securities and Exchange Commission’s aggressive positions on crypto under its chair, Gary Gensler. “The days of Gensler terrifying crypto companies — those days are about to be over."

--With assistance from Shirin Ghaffary, Olga Kharif, Katie Roof and Jackie Davalos.