Analysis-Trump’s Crypto Team Takes Shape but Questions Remain Over Who Will Drive Policy
U.S. President-elect Donald Trump’s crypto policy is starting to take form with the announcement of a White House crypto czar and a new securities watchdog, though uncertainty lingers over who will steer policy and whether too many voices could hinder progress.
Trump recently declared his intent to fulfill his campaign promise of being a “crypto president” by appointing former PayPal executive and crypto proponent David Sacks as the new “White House A.I. & Crypto Czar.” Additionally, he nominated pro-crypto attorney Paul Atkins to head the Securities and Exchange Commission (SEC).
While crypto industry leaders welcomed the news, believing these appointments might end the previous administration’s crypto restrictions and foster innovation, some Washington analysts expressed concerns. The establishment of a crypto czar, a new position, introduces ambiguity regarding who will dictate crypto policy and raises the potential for conflicting policies.
“One significant concern is whether the policy will be driven by Sacks himself. A czar appointed by Trump will likely want to see rapid changes, but the SEC has adopted processes that cannot be expedited easily,” said Ian Katz, managing director of Capital Alpha Partners. “Personalities will be important,” he added.
Sacks, a Silicon Valley venture capitalist and a friend of billionaire Trump supporter Elon Musk, is an early investor in Bitcoin. In a 2017 interview, he noted that cryptocurrencies are transforming the internet but acknowledged the presence of fraud in the sector. However, there seems to be a lack of experience in policy-making based on an analysis of his background.
Conversely, Atkins is a former SEC official and a well-respected figure within Washington’s policy circles, advocating for crypto innovation as a means to enhance competition within financial services. Through his consultancy, he has aided crypto companies in navigating regulations.
“Atkins is somewhat predictable,” stated Lene Powell, a senior legal analyst at financial consultancy Wolters Kluwer. “Sacks, on the other hand, is from a different background.”
Both have expressed a desire for regulators to adopt a more accommodating stance toward crypto businesses, but neither has articulated a clear position on the classification of crypto tokens as securities, commodities, or utilities—an essential factor that will influence industry regulation.
“I believe we will see more constructive regulation, including necessary clarifications regarding what constitutes a security,” remarked Chen Arad, co-founder of Solidus Labs, a crypto compliance firm.
After Trump named Atkins as his SEC pick, Bitcoin, the largest cryptocurrency, surged past the $100,000 milestone for the first time, propelled by optimism that the new administration will adopt more favorable policies for the crypto market.
Throughout President Joe Biden’s term, the SEC took legal actions against numerous crypto companies, accusing them of breaching securities laws while banking regulators advised against financial institutions engaging with crypto. Meanwhile, Congress has struggled to enact legislation encouraging broader crypto acceptance.
The crypto sector is actively seeking an ambitious set of policies designed to enhance the acceptance of digital assets, including the development of a regulatory framework delineating when tokens should be classified as securities or commodities.
Trump stated in a recent post on his Truth Social platform that Sacks would “guide” crypto policy and “work on a legal framework to provide clarity” for the crypto industry, yet it remains ambiguous whether Sacks will take the helm of the administration’s crypto policy.
It is also unclear if Sacks will chair Trump’s crypto advisory council, which is expected to play a significant role in shaping crypto policies. Previously, it was indicated that the crypto czar would lead that council and coordinate policies amongst various regulatory bodies.
This coordination is essential, as crafting a legal framework for crypto will necessitate comprehensive insights from the SEC and the Commodity Futures Trading Commission, whose new chair has not yet been appointed. Input from Congress may also be required, as advised by legal experts.
Regulation of less controversial issues, such as proprietary bank trading and capital requirements, has been delayed for years due to inter-agency disagreements.
“It could very well lead to too many cooks in the kitchen,” Powell commented.
A spokesperson for Trump’s transition team has yet to clarify how the crypto czar’s role will function.
Concerns have been voiced by consumer protection advocates that the Trump administration’s crypto objectives might create gaps that could put investors at risk, a worry that the crypto industry largely downplays.
“I don’t anticipate under-regulation will occur,” asserted Anthony Scaramucci, founder of asset management firm SkyBridge and a former official in Trump’s administration. “I doubt it will lead to fraud; rather, it should help the U.S. maintain its standing as a leader in financial services.”
