Impact of the Crypto Regulator on American Investors
With David Sacks being assigned as the Crypto and AI Strategist, earning the informal title of Crypto and AI czar, crypto enthusiasts and promoters should be curious about how this appointment will impact the sector in 2025. The crypto market has observed a positive response to the election of President-Elect Trump, with bitcoin surging over 40% since the election's results were confirmed. Sacks's background as a multi-decade angel investor in tech firms and his tenure as PayPal's COO have led to a generally optimistic view of this appointment within the crypto marketplace. As the influence of the first pro-crypto Congress and the multiple guarantees made by the Trump campaign to crypto investors become tangible, it appears prudent to examine this development more intimately.
There are a few noteworthy considerations to keep in mind, despite the positive reception given to Sack’s appointment in recent news headlines. Firstly, Sack’s position is primarily advisory, and it is presumed that the majority of his tasks will involve collaborating with Congress on crypto and AI matters. Secondly, Sack’s lack of experience in the public sector and potential conflicts of interest may divert attention away from more sector-specific labor. It has been reported that Sack’s appointment is one as a special government employee anticipated to work approximately 130 days a year.
This appointment warrants closer examination, particularly regarding its influence on the crypto sector's evolution.
Fulfillment of Campaign Promises
The creation of this position sends a clear message to the markets; promises and commitments made by the Trump campaign and transition team are more likely to be honored. One such promise that has sparked significant discussion is the establishment of a strategic bitcoin reserve, which, while seemingly straightforward at a high level, does have a distinct set of advantages and disadvantages. Another promise, centering on the dismissal of chair Gensler from the SEC, has already been carried out since Gensler announced his resignation in January 2025.
Other guarantees, including a pledge to make the U.S. the world’s crypto hub, necessitate ongoing advocacy and efforts at every governmental level. Another statement focusing on the abolition of capital gains on bitcoin transactions would require Congress to modify the tax code to institute a lasting change. Lastly, promises surrounding the creation of a crypto advisory council, opposition to the U.S. CBDC, and reconfiguring the policy landscape to be more accommodating of crypto will also need unwavering support and advocacy at the federal level.
With Sack’s appointment, at the very least, crypto will have a high-level government advisor and advocate to help ensure that promises and commitments are upheld.
A Lighter Hand from U.S. Regulators
Without a doubt, the most prominent policy change that the incoming Trump administration will enact is the significant reduction of regulatory obstacles and resistance that have been hurdles for crypto entrepreneurs. These hindrances may seem like typical complaints about regulatory misalignment in almost every industry, yet two recent events highlight the extent of these anti-crypto policies.
Recent disclosures indicate that the Biden Administration’s FDIC sent numerous letters to U.S. banks urging them to halt all crypto-related activities. Although the FDIC did not explicitly instruct banks to avoid crypto activity or wrap up their relationships with crypto clients, the implications of these letters are evident, especially given the allegations leveled by former Silvergate executives such as Chris Lane. Furthermore, serial entrepreneur and venture capitalist Marc Andressen added fuel to this debate by asserting that crypto entrepreneurs and start-ups had been systematically de-banked under the Biden Administration.
With the campaign contributions (the crypto lobby contributed nearly $200 million to the current election cycle) and the pro-crypto appointments that have been announced, such regulatory headwinds are likely to transition to tailwinds.
Crypto Dollars
In the context of bitcoin's substantial price surge since November and the debate around strategic bitcoin reserves, as well as the campaign pledge to battle against a U.S. CBDC, the notion of crypto dollars may appear remote. Nevertheless, closer scrutiny of the impact of a pro-crypto regulatory and executive regime reveals a different scenario. Specifically, several trends and developments have already commenced that could, in a straightforward manner, contribute to a crypto or tokenized dollar. U.S. treasuries are already being tokenized in the billions of dollars, major TradFi institutions have deployed blockchain and/or tokenized solutions, and payment processors (including credit card firms) are embracing tokenized payments. Under the pro-crypto climate that appears set to dominate U.S. crypto discussions, the tokenization of the dollar or even a crypto dollar is virtually inevitable.
A crypto czar will not resolve all the difficulties facing the crypto sector, but will spur creativity and growth; 2025 promises to be an exciting year for investors and advocates alike.
In light of Sacks's appointment as the crypto and AI strategist, there might be a potential shift in the digital asset landscape. With his expertise in tech investments and background from PayPal, Sacks could advocate for the utilization of digital assets in various sectors.
Moreover, the pro-crypto stance of the Trump administration could lead to the development and implementation of digital currencies. As shown by the increasing interest in tokenizing U.S. treasuries and the acceptance of tokenized payments, a pro-crypto climate could accelerate the transition towards crypto dollars.
