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 head for the Securities and Exchange Commission (SEC). However, there are lingering questions regarding who will ultimately steer the policy and whether too many voices may complicate progress.
On a Thursday announcement, Trump named former top PayPal executive and crypto advocate David Sacks as the “White House A.I. & Crypto Czar.” Just a day prior, he declared that he would nominate Paul Atkins, a pro-crypto attorney, to lead the SEC. This suite of appointments has sparked optimism among crypto executives who anticipate that the new administration will reverse the previous administration’s strict crypto policies and foster innovation.
However, some analysts from Washington warn that the introduction of a crypto czar could create confusion about who is actually in charge of crypto policy. There is concern that overlapping roles might lead to conflicting approaches.
One crucial question is whether policy direction will be dictated by Sacks himself. “A czar appointed by Trump is going to want to see changes fairly quickly, but the SEC has processes, and you can’t just snap your fingers at the SEC and have new rules,” remarked Ian Katz, managing director of Capital Alpha Partners. He also emphasized that the personalities involved in this new framework will have significant influence.
David Sacks, a Silicon Valley venture capitalist and friend of Elon Musk, has been an early investor in bitcoin. He previously noted in a CNBC interview that cryptocurrencies are transforming the internet but also acknowledged the existence of fraudsters within the sector. However, according to available information, he lacks experience in policy-making or leadership.
Conversely, Paul Atkins has a proven track record as a former SEC official and is well-respected in Washington policy circles. He has voiced his support for crypto innovation as a means to enhance competition within financial services and has helped various crypto companies navigate regulatory environments through his consultancy.
“Atkins is kind of a known quantity,” noted Lene Powell, a senior legal analyst at a financial consultancy. Sacks, however, comes from “a different sphere.”
Both Sacks and Atkins have indicated the need for regulators to adopt a more favorable stance towards crypto companies. Nonetheless, neither has clarified their positions on how to categorize crypto tokens as securities, commodities, or utilities—an essential issue that will determine the nature of industry regulations.
Experts expect to see more constructive regulations that include clarification on what constitutes a security. “I think we’ll see more constructive regulation. Obviously, that includes some clarification around what is (a) security or not,” said Chen Arad, co-founder of a crypto compliance company.
Bitcoin, the leading cryptocurrency, surged past the $100,000 mark for the first time following Trump’s announcement of Atkins as the SEC leader. This surge reflects widespread optimism regarding potential softer crypto regulations from the new administration.
During Biden’s presidency, the SEC under his administration has filed lawsuits against numerous crypto firms on allegations of violating securities laws. Bank regulators also advised caution towards banks engaging with crypto, and Congress has struggled to advance legislation that would facilitate broader crypto adoption.
The crypto industry is eager for a comprehensive set of policies that could foster the acceptance of digital assets. This includes designing a regulatory framework that delineates when tokens should be classified as securities versus commodities.
Trump’s announcement on his Truth Social platform indicated that Sacks would “guide” crypto policy and “work on a legal framework so that the crypto industry has … clarity.” However, it remains ambiguous whether he will lead the administration’s crypto strategy.
Moreover, it is uncertain if Sacks will head Trump’s crypto advisory council, which is anticipated to hold significant sway in the development of crypto policy. Coordination among various regulatory bodies will be essential, as establishing a legal framework for crypto will require substantial input from the SEC and the Commodity Futures Trading Commission (CFTC). The appointment of a new CFTC chair remains pending and may necessitate congressional input.
Concerns have been raised that potential issues related to non-crypto regulatory matters, such as proprietary bank trading and capital regulations, have been bogged down for years due to disputes among agencies. Too many stakeholders in crypto policy could further complicate matters. “It definitely would be a lot of cooks,” Powell observed.
A spokesperson for the Trump transition team has yet to provide insights into how the crypto czar position will operate. While some advocates for consumer protection worry that the administration’s crypto agenda might create risks for investors, many in the industry dismiss these fears, asserting that under-regulation is unlikely.
Anthony Scaramucci, founder of an asset management firm and a former member of the Trump administration, expressed confidence regarding the impending regulatory environment. “I don’t think there will be under-regulation. I don’t think it will create fraud, but I think it will help the United States maintain what it should be, which is our mantle of financial services leadership,” he commented.
