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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: What's happening in the world of crypto, though, because so

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Speaker 2: much to delve into when it comes to the latest

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Speaker 2: executive order.

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Speaker 1: As many anticipate that.

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Speaker 2: Such regulations will become more pro crypto, and we see

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Speaker 2: that executive order signed last night with a reserve for bitcoin,

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Speaker 2: we're now pleased to be welcoming to our TV and

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Speaker 2: radio audiences around the world. Someone who can dive into

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Speaker 2: this exact executive order. We bring in the White House

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Speaker 2: AI and cryptos are David Sachs.

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Speaker 1: It's busy.

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Speaker 2: You're about to expect yet more people coming to the

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Speaker 2: White House from the cryptosphere. Remind the American public and

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Speaker 2: investors why you need a bitcoin reserve at all?

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Speaker 3: Well, good to be here, I mean, the reason why

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Speaker 3: we need a bitcoin reserve is that the federal government

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Speaker 3: already owns some. In fact, it obtained around four hundred

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Speaker 3: thousand bitcoin over the past decade through criminal and civil

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Speaker 3: forfeitures and seizures, and so the government has to have

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Speaker 3: a strategy for how it deals with this. In the past,

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Speaker 3: the strategy has been simply to sell it in an

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Speaker 3: ad hoc way, almost willy nilly and that cost American

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Speaker 3: taxpayer something like seventeen billion dollars in lost value. So

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Speaker 3: we want to have a long term strategy to maximize

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Speaker 3: the value of these holdings. We've decided that that bitcoin

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Speaker 3: is scarce, it's valuable, and that is strategic for the

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Speaker 3: United States to hold on to.

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Speaker 4: This as a long term reserve asset.

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Speaker 3: So that's the plan with the two hundred thousand bitcoin

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Speaker 3: that we believe are in the possession of the federal government.

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Speaker 3: I say we believe because no one really knows for

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Speaker 3: sure because we never had a proper audit. So that's

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Speaker 3: one of the first things that this executive order provides

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Speaker 3: that we're going to do a full government wide audit

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Speaker 3: to find out what digital assets we actually have so

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Speaker 3: they can be safeguarded and moved into a strategy that

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Speaker 3: maximizes their long term value.

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Speaker 5: Right.

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Speaker 1: And then there's the stockpile.

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Speaker 2: Talk to us about the nuance there and why you

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Speaker 2: need to stockpile for old coins and how you're treating

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Speaker 2: them differently.

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Speaker 4: Right.

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Speaker 3: Well, the idea there is again we're going to figure

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Speaker 3: out what do we actually have on the federal balot sheet,

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Speaker 3: and we're going to move those Like you said, all

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Speaker 3: coins are digital assets other than bitcoin into a stockpile

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Speaker 3: for safekeeping. The difference there is that the Secretary of

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Speaker 3: the Treasury will exercise responsible stewardship over those assets, and

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Speaker 3: he has the discretion to rebalance the portfolio or to

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Speaker 3: sell items in that portfolio. But that's not true for bitcoin.

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Speaker 3: The bitcoin we want to keep long term, So there's

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Speaker 3: a difference there in objective. With the reserve, the goal

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Speaker 3: is long term preservation. With the stockpile, the goal is

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Speaker 3: responsible stewardship the portfolio management.

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Speaker 5: In essence, David, the executive order also tasks Secretary Lutnik

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Speaker 5: Investment with finding budget neutral ways that won't cost the

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Speaker 5: taxpayer to add to that reserve. What qualifies as budget neutral?

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Speaker 5: Can you give us some examples of how that would

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Speaker 5: actually work well?

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Speaker 3: Budget neutral this means it won't cost the tax or anything,

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Speaker 3: It won't increase the deficit, it won't increase the debt.

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Speaker 3: So that's basically the constraints on what they can do.

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Speaker 3: If they can figure out creative ways to add to

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Speaker 3: the stock to the reserve of bitcoin, they're allowed to

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Speaker 3: accumulate more bitcoin, but again it cannot impose any burden

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Speaker 3: on the federal deficit, debt or the taxpayer.

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Speaker 4: So that's the rule.

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Speaker 3: Now you can ask the question, well, how are they

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Speaker 3: going to do that? And I think that's sort of

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Speaker 3: up to them if they can figure out creative strategies

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Speaker 3: that they believe are in the long term insto the country.

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Speaker 3: They now have the authorization to develop those strategies.

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Speaker 5: Do you think using savings that come from DOZE, for example,

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Speaker 5: qualify is something that would be budget neutral?

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Speaker 4: That's a good question. I don't know the answer to

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Speaker 4: that question.

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Speaker 3: I think that that's something that I have to be

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Speaker 3: assessed by probably the Office of Management of Budget. I

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Speaker 3: think that since DOZE is cutting the deficit that and

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Speaker 3: we'd want to seek a way to rescind those appropriations,

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Speaker 3: it probably would not count.

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Speaker 2: But you probably have to ask the O and B

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Speaker 2: that when you talk about the stewardship, particularly the stockpile,

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Speaker 2: could you be seeing things like staking lending. Is there

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Speaker 2: going to be other ways to maximize the volume there?

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Speaker 4: I mean, it's a good question.

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Speaker 3: I mean, you know, I think that the idea of

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Speaker 3: this executive order is to create the mandate. Right, so

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Speaker 3: first of all, we're going to move these digital assets

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Speaker 3: from wherever they are all over the government. We're going

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Speaker 3: to find out what they are. First of all, we're

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Speaker 3: going to do the account and we're going to do

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Speaker 3: the audit. Then we're going to move them into a

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Speaker 3: separate account for safekeeping. And then the Sectuary of the

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Speaker 3: Treasury and his team will be able to exercise portfolio

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Speaker 3: management and long term and responsible stewardship.

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Speaker 4: And yes, that could.

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Speaker 3: Include staking, it could include rebalancing, it could include sales.

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Speaker 3: These are all options that they can pursue if the

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Speaker 3: Sectary of the Treasury believes that these are in the

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Speaker 3: long term interests of the American people.

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Speaker 2: Just going into what's in the holding of the US government.

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Speaker 2: Going back to what President Trump mentioned over the weekend

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Speaker 2: talking of Ripple Solana, other alternative coins that people are

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Speaker 2: wondering whether they're going to be included in stot Paul,

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Speaker 2: will they Does the US own them? Why mention them

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Speaker 2: by the president?

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Speaker 3: Well, the President just mentioned the top five cryptocurrencies by

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Speaker 3: market cap, So I think people are just reading into

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Speaker 3: this a little bit too much. He just mentioned the

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Speaker 3: top five In terms of what we'll actually have.

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Speaker 4: Again, we have to do the accounting.

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Speaker 3: We're not sure at sitting here today whether the federal

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Speaker 3: government owns any of these alternative cryptocurrencies. We know it

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Speaker 3: owns bitcoin. I believe it owns some ethereum. I'm not

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Speaker 3: sure about the other ones. This is why we have

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Speaker 3: to do the accounting. Is that, to be honest, no

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Speaker 3: one's been able to give us a straight answer yet

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Speaker 3: in terms of what the federal government owns. And this

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Speaker 3: is part of the problem, is that we've never really

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Speaker 3: had a digital asset strategy before, and this is why

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Speaker 3: we've missed out on accumulating a lot of value for

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Speaker 3: the American people.

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Speaker 5: David, you mentioned earlier that you know you don't have

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Speaker 5: any additional cryptocurrency assets and where you've divested from your

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Speaker 5: interests there. However, Secretary Lutnik in July mentioned that he

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Speaker 5: had quote shed load of bitcoin. Do you think it's

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Speaker 5: important for these stewards of the Reserve and the stockpile

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Speaker 5: to divest from their cryptocurrency interests?

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Speaker 1: Do you know if they've done so already.

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Speaker 4: I can't speak to a situation.

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Speaker 3: You know, every member of the administration has to go

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Speaker 3: through the same ethics process and the same conflict of

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Speaker 3: interest process that I've gone through. So I'll let him

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Speaker 3: speak to his own situation, I can to say that

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Speaker 3: in my case, I divested or sold all the cryptocurrency

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Speaker 3: that I own prior to the start of the administration,

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Speaker 3: so there's no conflict in my case, I just want

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Speaker 3: to have the right innovation policies for the United States.

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Speaker 5: Do you think it's important, though, to just not have

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Speaker 5: that appearance of a conflict of interest?

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Speaker 4: Sure?

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Speaker 3: I mean, look, we're all subject to eighteen USC.

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Speaker 4: Two eight.

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Speaker 3: These are the conflict of interest provisions. Every member the

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Speaker 3: administration is subject to that. But I'm not going to

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Speaker 3: speak to anyone's situation, so we all are governed by

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Speaker 3: the same conflict of interest rules. In my case, I

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Speaker 3: choasted to divest everything. To make it simple, you should

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Speaker 3: ask every other member of the administration what their situation is.

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Speaker 2: How about the president, because I think here in lies

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Speaker 2: some of the issues for those who are on the

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Speaker 2: outside of crypto looking in and suddenly feel that the

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Speaker 2: US president has an exposure to mean coins or Solana.

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Speaker 2: How do you give the confidence to the US investor

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Speaker 2: base and indeed US population that this is totally legit.

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Speaker 3: Well, honestly, I think you're kind of making something up there.

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Speaker 3: I mean, how do you know that he has exposure

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Speaker 3: to Salona. Is that's something you just came up with.

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Speaker 2: Well, ultimately, when we think about the mean coin exposure

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Speaker 2: in particular, and people trying to understand for what reason

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Speaker 2: we have a trump coin from Milan your coin, is

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Speaker 2: there a clearer way that the US president can disassociate

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Speaker 2: himself from any event upside when it comes to cryptocurrencies.

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Speaker 3: Well, I think he's already spoke to the trump coin,

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Speaker 3: and I think that that is a collectible. The SEC

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Speaker 3: said it's a collectible. Collectibles have no intrinsic value, they're

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Speaker 3: not security. Is there in a different category, And I

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Speaker 3: think as long as you issue at meme coin and

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Speaker 3: disclaim that there's no intrinsic value, it can just be

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Speaker 3: a collectible. So that is a different category I think

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Speaker 3: than what we're talking about here with cryptocurrencies.

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Speaker 1: What do you make some of the market reaction?

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Speaker 5: I mean, clearly Bitcoin down later earlier today on the

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Speaker 5: back of just not really getting what they were hoping for.

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Speaker 5: You know, if the government is not going to buy

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Speaker 5: additional crypto, then what's really the benefit. But can you

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Speaker 5: say for sure that the administration is not open to

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Speaker 5: using taxpayer dollars in the future. Is that completely off

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Speaker 5: the table according to this EO, it is.

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Speaker 3: We've said that this will not cost taxpayers a dime.

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Speaker 3: So we've been very clear in this executive Order that

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Speaker 3: we will not use taxpayer funds to basically accumulate more

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Speaker 3: crypto unless it can be done in a completely budget

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Speaker 3: neutral way. No increase in the death st no increase

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Speaker 3: in the debt, no use of taxpayer funds, no burden

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Speaker 3: on the taxpayer. We've been very clear in this Executive

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Speaker 3: Order about that.

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Speaker 5: David, Let's move on to artificial intelligence, where you're also

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Speaker 5: weighing in on policy there. The Biden Executive Order was

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Speaker 5: repealed in January. What is in the works currently that

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Speaker 5: you can share about how that's looking and who's involved.

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Speaker 3: So the president is week one executive order on AI

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Speaker 3: that rescinded the Biden EO. By the way, that was

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Speaker 3: a very burdensome executive order that Biden had passed, those

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Speaker 3: over one hundred pages of burn some regulations on AI companies.

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Speaker 3: The whole industry hated it. He rescinded that, and he

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Speaker 3: tasked three people to basically evaluate a new and create

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Speaker 3: a new AI action plan and those people are the

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Speaker 3: head of the Office of Science Technology Policy, the now

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Speaker 3: Security Advisor, myself, and so we're currently working on that

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Speaker 3: plan and we'll have more information for you about that

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Speaker 3: once we're ready to present.

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Speaker 2: How confident are you at this moment around AI leadership

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Speaker 2: here in the United States that thick and fast the

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Speaker 2: news coming out of China, for example, of the latest

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Speaker 2: models that are incredibly powerful with less data and ultimately

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Speaker 2: more efficient. How you exercising the view that AI can

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Speaker 2: be still a leader for the United States and not

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Speaker 2: losing its leadership versus China.

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Speaker 3: Well, I'm confident in American leadership, but we can't be

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Speaker 3: complacent about it. I mean, it's very clear that China

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Speaker 3: is going to be very, very competitive. Something like roughly

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Speaker 3: half of the AI researchers in the world are from China.

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Speaker 3: They are very good at math and science, and you've

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Speaker 3: seen with the launch of deep Seek that they're very good.

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Speaker 3: They're very good AI software companies. So this is going

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Speaker 3: to be a very competitive race, and we have to

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Speaker 3: win that race. But we can't be complacent about that

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Speaker 3: in any way. It's going to be a very tough

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Speaker 3: competition here.

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Speaker 2: There's actually reporting from other news sources that maybe deep

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Speaker 2: seat would be bad from apps here in the United States.

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Speaker 1: Do you think that's appropriate.

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Speaker 3: It's pretty mature for me to comment on something like that.

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Speaker 3: If the administration announces a policy on that, then I'll

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Speaker 3: comment on it.

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Speaker 5: Then let's talk about some of the other voices inside

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Speaker 5: the White House as of late that could potentially.

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Speaker 1: Chime in on AI policy.

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Speaker 5: Elon Musk is he involved in any capacity.

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Speaker 4: Not in what we're doing.

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Speaker 3: So you know, again, we have an office within the

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Speaker 3: White House and we deal with crypto and AI policy.

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Speaker 3: Elon's doing doge and these are two totally separate initiatives.

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Speaker 5: But let's talk a little bit more about what the

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Speaker 5: contours of the AI policy could look like. I realize

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Speaker 5: you can't share too much at the moment, but what

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Speaker 5: will be your priority areas? A lot of the talk

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Speaker 5: has been around AI competitiveness and what we've seen coming

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Speaker 5: out of Trump's President Trump's comments around the Chips Act

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Speaker 5: and then National Science Foundation layoffs. There is some concern

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Speaker 5: that this could undermine competitiveness if there's not enough federal

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Speaker 5: funding going to research.

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Speaker 1: What are your thoughts on that?

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Speaker 3: Well, I think there are some items that are policy

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Speaker 3: items that are coming up very quickly. So, for example,

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Speaker 3: there was this eleventh hour policy that was announced by

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Speaker 3: or rule that was now called the Diffusion Rule, that

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Speaker 3: was announced by the Biden administration, and that governs the

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Speaker 3: sale of advanced AI chips or GPUs to countries all

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Speaker 3: across the world. They're basically an international version of the

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Speaker 3: Export Controls. There's one hundred and twenty day clock on

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Speaker 3: that in order for the Trump administration to weigh in

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Speaker 3: and make whatever modifications we want to make. So, for example,

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Speaker 3: I think that's probably going to be one of the

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Speaker 3: first policy items on our plate that we have to

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Speaker 3: address because there's a clock on it. So I think

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Speaker 3: that you export controls are a big area. Diffusion is

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Speaker 3: a big area. Just the you know, how we govern

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Speaker 3: the licensing of the most sophisticated chips and semiconductor manufacturing

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Speaker 3: equipment is sort of at the heart of the policy

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Speaker 3: discussion right now.

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Speaker 2: Would you ultimately be supporting an end to the Chips Act.

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Speaker 3: I don't think that anyone in the administration has said

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Speaker 3: we want to end it, but the President has been

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Speaker 3: very critical of it, and I think with good reason.

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Speaker 3: I mean, I think the intent of the Chips Act

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Speaker 3: was good. We were trying to get semiconductor manufacturing to

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Speaker 3: occur in the.

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Speaker 4: United States, but it's so strategic.

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Speaker 3: The problem is that the money went to, frankly, a

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Speaker 3: lot of companies who are losing in that very competitive market.

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Speaker 3: And some of those companies haven't even used the money

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Speaker 3: that they were granted because they're not doing very well.

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Speaker 3: So the Chips Act is had, I think, mixed results

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Speaker 3: at a high cost, and the question is just whether

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Speaker 3: we can do something much better. And I think what

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Speaker 3: the President has said is that he would like to

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Speaker 3: use terrorists as an incentive to get companies to onshore

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Speaker 3: their semiconductor manufacturing here. And the advantage of that approach

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Speaker 3: is that the best companies have to do it too.

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Speaker 3: They can't kind of drag their feet or they're going

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Speaker 3: to be hit with terrifts. So I think the President

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Speaker 3: has figured out a very powerful weapon, a very powerful

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Speaker 3: incentive to get the best companies to want to onshore

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Speaker 3: their manufacturing, including for semiconductors, and that is very strategic

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Speaker 3: for the United States.

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Speaker 2: TSMC putting money where its mouth is and potentially in

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Speaker 2: response to tariff concerns.

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Speaker 3: For you, right, you saw that. Yeah, sorry you mentioned

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Speaker 3: the SMC. I think it's a very good point. We

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Speaker 3: did a press conference with them just earlier in the

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Speaker 3: week and they announced over one hundred billion dollar investment

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Speaker 3: in the US and a big part of the reason

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Speaker 3: why is because of the President's Tariff's policies give them

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Speaker 3: a strong incentive to want to move some manufacturing here

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Speaker 3: because they know that if they don't do that, they're

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Speaker 3: going to be here with the tariff.

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Speaker 2: With forty five seconds. They've got to ask you, therefore,

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Speaker 2: should Intel not be getting the money? Is that the

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Speaker 2: company you're hinting at.

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Speaker 3: I'm not saying they shouldn't get it, but I think

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Speaker 3: that everyone knows that Intel's a very challenged company right now,

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Speaker 3: and I think that it's unfortunately.

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Speaker 4: We want Intel to do well.

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Speaker 3: We want domestic chip manufacturing, and Intel is a legendary

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Speaker 3: company and it is one of the few companies in

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Speaker 3: the United States that's capable of doing advanced chip manufacturing.

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Speaker 3: So we want them to do well, and I think

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Speaker 3: we will try to do whatever we can to help

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Speaker 3: them do well well.

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Speaker 2: You're going to be speaking with lots of leaders from

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Speaker 2: other companies today. Of course, over at the White House

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Speaker 2: leaders of crypto exchanges.

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Speaker 1: Across the ball We thank you so much.

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Speaker 2: The White House AI and cryptos are David Sachs, head

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Speaker 2: of that unimportant White House crypto meeting,