Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: What's happening in the world of crypto, though, because so
Speaker 2: much to delve into when it comes to the latest
Speaker 2: executive order.
Speaker 1: As many anticipate that.
Speaker 2: Such regulations will become more pro crypto, and we see
Speaker 2: that executive order signed last night with a reserve for bitcoin,
Speaker 2: we're now pleased to be welcoming to our TV and
Speaker 2: radio audiences around the world. Someone who can dive into
Speaker 2: this exact executive order. We bring in the White House
Speaker 2: AI and cryptos are David Sachs.
Speaker 1: It's busy.
Speaker 2: You're about to expect yet more people coming to the
Speaker 2: White House from the cryptosphere. Remind the American public and
Speaker 2: investors why you need a bitcoin reserve at all?
Speaker 3: Well, good to be here, I mean, the reason why
Speaker 3: we need a bitcoin reserve is that the federal government
Speaker 3: already owns some. In fact, it obtained around four hundred
Speaker 3: thousand bitcoin over the past decade through criminal and civil
Speaker 3: forfeitures and seizures, and so the government has to have
Speaker 3: a strategy for how it deals with this. In the past,
Speaker 3: the strategy has been simply to sell it in an
Speaker 3: ad hoc way, almost willy nilly and that cost American
Speaker 3: taxpayer something like seventeen billion dollars in lost value. So
Speaker 3: we want to have a long term strategy to maximize
Speaker 3: the value of these holdings. We've decided that that bitcoin
Speaker 3: is scarce, it's valuable, and that is strategic for the
Speaker 3: United States to hold on to.
Speaker 4: This as a long term reserve asset.
Speaker 3: So that's the plan with the two hundred thousand bitcoin
Speaker 3: that we believe are in the possession of the federal government.
Speaker 3: I say we believe because no one really knows for
Speaker 3: sure because we never had a proper audit. So that's
Speaker 3: one of the first things that this executive order provides
Speaker 3: that we're going to do a full government wide audit
Speaker 3: to find out what digital assets we actually have so
Speaker 3: they can be safeguarded and moved into a strategy that
Speaker 3: maximizes their long term value.
Speaker 5: Right.
Speaker 1: And then there's the stockpile.
Speaker 2: Talk to us about the nuance there and why you
Speaker 2: need to stockpile for old coins and how you're treating
Speaker 2: them differently.
Speaker 4: Right.
Speaker 3: Well, the idea there is again we're going to figure
Speaker 3: out what do we actually have on the federal balot sheet,
Speaker 3: and we're going to move those Like you said, all
Speaker 3: coins are digital assets other than bitcoin into a stockpile
Speaker 3: for safekeeping. The difference there is that the Secretary of
Speaker 3: the Treasury will exercise responsible stewardship over those assets, and
Speaker 3: he has the discretion to rebalance the portfolio or to
Speaker 3: sell items in that portfolio. But that's not true for bitcoin.
Speaker 3: The bitcoin we want to keep long term, So there's
Speaker 3: a difference there in objective. With the reserve, the goal
Speaker 3: is long term preservation. With the stockpile, the goal is
Speaker 3: responsible stewardship the portfolio management.
Speaker 5: In essence, David, the executive order also tasks Secretary Lutnik
Speaker 5: Investment with finding budget neutral ways that won't cost the
Speaker 5: taxpayer to add to that reserve. What qualifies as budget neutral?
Speaker 5: Can you give us some examples of how that would
Speaker 5: actually work well?
Speaker 3: Budget neutral this means it won't cost the tax or anything,
Speaker 3: It won't increase the deficit, it won't increase the debt.
Speaker 3: So that's basically the constraints on what they can do.
Speaker 3: If they can figure out creative ways to add to
Speaker 3: the stock to the reserve of bitcoin, they're allowed to
Speaker 3: accumulate more bitcoin, but again it cannot impose any burden
Speaker 3: on the federal deficit, debt or the taxpayer.
Speaker 4: So that's the rule.
Speaker 3: Now you can ask the question, well, how are they
Speaker 3: going to do that? And I think that's sort of
Speaker 3: up to them if they can figure out creative strategies
Speaker 3: that they believe are in the long term insto the country.
Speaker 3: They now have the authorization to develop those strategies.
Speaker 5: Do you think using savings that come from DOZE, for example,
Speaker 5: qualify is something that would be budget neutral?
Speaker 4: That's a good question. I don't know the answer to
Speaker 4: that question.
Speaker 3: I think that that's something that I have to be
Speaker 3: assessed by probably the Office of Management of Budget. I
Speaker 3: think that since DOZE is cutting the deficit that and
Speaker 3: we'd want to seek a way to rescind those appropriations,
Speaker 3: it probably would not count.
Speaker 2: But you probably have to ask the O and B
Speaker 2: that when you talk about the stewardship, particularly the stockpile,
Speaker 2: could you be seeing things like staking lending. Is there
Speaker 2: going to be other ways to maximize the volume there?
Speaker 4: I mean, it's a good question.
Speaker 3: I mean, you know, I think that the idea of
Speaker 3: this executive order is to create the mandate. Right, so
Speaker 3: first of all, we're going to move these digital assets
Speaker 3: from wherever they are all over the government. We're going
Speaker 3: to find out what they are. First of all, we're
Speaker 3: going to do the account and we're going to do
Speaker 3: the audit. Then we're going to move them into a
Speaker 3: separate account for safekeeping. And then the Sectuary of the
Speaker 3: Treasury and his team will be able to exercise portfolio
Speaker 3: management and long term and responsible stewardship.
Speaker 4: And yes, that could.
Speaker 3: Include staking, it could include rebalancing, it could include sales.
Speaker 3: These are all options that they can pursue if the
Speaker 3: Sectary of the Treasury believes that these are in the
Speaker 3: long term interests of the American people.
Speaker 2: Just going into what's in the holding of the US government.
Speaker 2: Going back to what President Trump mentioned over the weekend
Speaker 2: talking of Ripple Solana, other alternative coins that people are
Speaker 2: wondering whether they're going to be included in stot Paul,
Speaker 2: will they Does the US own them? Why mention them
Speaker 2: by the president?
Speaker 3: Well, the President just mentioned the top five cryptocurrencies by
Speaker 3: market cap, So I think people are just reading into
Speaker 3: this a little bit too much. He just mentioned the
Speaker 3: top five In terms of what we'll actually have.
Speaker 4: Again, we have to do the accounting.
Speaker 3: We're not sure at sitting here today whether the federal
Speaker 3: government owns any of these alternative cryptocurrencies. We know it
Speaker 3: owns bitcoin. I believe it owns some ethereum. I'm not
Speaker 3: sure about the other ones. This is why we have
Speaker 3: to do the accounting. Is that, to be honest, no
Speaker 3: one's been able to give us a straight answer yet
Speaker 3: in terms of what the federal government owns. And this
Speaker 3: is part of the problem, is that we've never really
Speaker 3: had a digital asset strategy before, and this is why
Speaker 3: we've missed out on accumulating a lot of value for
Speaker 3: the American people.
Speaker 5: David, you mentioned earlier that you know you don't have
Speaker 5: any additional cryptocurrency assets and where you've divested from your
Speaker 5: interests there. However, Secretary Lutnik in July mentioned that he
Speaker 5: had quote shed load of bitcoin. Do you think it's
Speaker 5: important for these stewards of the Reserve and the stockpile
Speaker 5: to divest from their cryptocurrency interests?
Speaker 1: Do you know if they've done so already.
Speaker 4: I can't speak to a situation.
Speaker 3: You know, every member of the administration has to go
Speaker 3: through the same ethics process and the same conflict of
Speaker 3: interest process that I've gone through. So I'll let him
Speaker 3: speak to his own situation, I can to say that
Speaker 3: in my case, I divested or sold all the cryptocurrency
Speaker 3: that I own prior to the start of the administration,
Speaker 3: so there's no conflict in my case, I just want
Speaker 3: to have the right innovation policies for the United States.
Speaker 5: Do you think it's important, though, to just not have
Speaker 5: that appearance of a conflict of interest?
Speaker 4: Sure?
Speaker 3: I mean, look, we're all subject to eighteen USC.
Speaker 4: Two eight.
Speaker 3: These are the conflict of interest provisions. Every member the
Speaker 3: administration is subject to that. But I'm not going to
Speaker 3: speak to anyone's situation, so we all are governed by
Speaker 3: the same conflict of interest rules. In my case, I
Speaker 3: choasted to divest everything. To make it simple, you should
Speaker 3: ask every other member of the administration what their situation is.
Speaker 2: How about the president, because I think here in lies
Speaker 2: some of the issues for those who are on the
Speaker 2: outside of crypto looking in and suddenly feel that the
Speaker 2: US president has an exposure to mean coins or Solana.
Speaker 2: How do you give the confidence to the US investor
Speaker 2: base and indeed US population that this is totally legit.
Speaker 3: Well, honestly, I think you're kind of making something up there.
Speaker 3: I mean, how do you know that he has exposure
Speaker 3: to Salona. Is that's something you just came up with.
Speaker 2: Well, ultimately, when we think about the mean coin exposure
Speaker 2: in particular, and people trying to understand for what reason
Speaker 2: we have a trump coin from Milan your coin, is
Speaker 2: there a clearer way that the US president can disassociate
Speaker 2: himself from any event upside when it comes to cryptocurrencies.
Speaker 3: Well, I think he's already spoke to the trump coin,
Speaker 3: and I think that that is a collectible. The SEC
Speaker 3: said it's a collectible. Collectibles have no intrinsic value, they're
Speaker 3: not security. Is there in a different category, And I
Speaker 3: think as long as you issue at meme coin and
Speaker 3: disclaim that there's no intrinsic value, it can just be
Speaker 3: a collectible. So that is a different category I think
Speaker 3: than what we're talking about here with cryptocurrencies.
Speaker 1: What do you make some of the market reaction?
Speaker 5: I mean, clearly Bitcoin down later earlier today on the
Speaker 5: back of just not really getting what they were hoping for.
Speaker 5: You know, if the government is not going to buy
Speaker 5: additional crypto, then what's really the benefit. But can you
Speaker 5: say for sure that the administration is not open to
Speaker 5: using taxpayer dollars in the future. Is that completely off
Speaker 5: the table according to this EO, it is.
Speaker 3: We've said that this will not cost taxpayers a dime.
Speaker 3: So we've been very clear in this executive Order that
Speaker 3: we will not use taxpayer funds to basically accumulate more
Speaker 3: crypto unless it can be done in a completely budget
Speaker 3: neutral way. No increase in the death st no increase
Speaker 3: in the debt, no use of taxpayer funds, no burden
Speaker 3: on the taxpayer. We've been very clear in this Executive
Speaker 3: Order about that.
Speaker 5: David, Let's move on to artificial intelligence, where you're also
Speaker 5: weighing in on policy there. The Biden Executive Order was
Speaker 5: repealed in January. What is in the works currently that
Speaker 5: you can share about how that's looking and who's involved.
Speaker 3: So the president is week one executive order on AI
Speaker 3: that rescinded the Biden EO. By the way, that was
Speaker 3: a very burdensome executive order that Biden had passed, those
Speaker 3: over one hundred pages of burn some regulations on AI companies.
Speaker 3: The whole industry hated it. He rescinded that, and he
Speaker 3: tasked three people to basically evaluate a new and create
Speaker 3: a new AI action plan and those people are the
Speaker 3: head of the Office of Science Technology Policy, the now
Speaker 3: Security Advisor, myself, and so we're currently working on that
Speaker 3: plan and we'll have more information for you about that
Speaker 3: once we're ready to present.
Speaker 2: How confident are you at this moment around AI leadership
Speaker 2: here in the United States that thick and fast the
Speaker 2: news coming out of China, for example, of the latest
Speaker 2: models that are incredibly powerful with less data and ultimately
Speaker 2: more efficient. How you exercising the view that AI can
Speaker 2: be still a leader for the United States and not
Speaker 2: losing its leadership versus China.
Speaker 3: Well, I'm confident in American leadership, but we can't be
Speaker 3: complacent about it. I mean, it's very clear that China
Speaker 3: is going to be very, very competitive. Something like roughly
Speaker 3: half of the AI researchers in the world are from China.
Speaker 3: They are very good at math and science, and you've
Speaker 3: seen with the launch of deep Seek that they're very good.
Speaker 3: They're very good AI software companies. So this is going
Speaker 3: to be a very competitive race, and we have to
Speaker 3: win that race. But we can't be complacent about that
Speaker 3: in any way. It's going to be a very tough
Speaker 3: competition here.
Speaker 2: There's actually reporting from other news sources that maybe deep
Speaker 2: seat would be bad from apps here in the United States.
Speaker 1: Do you think that's appropriate.
Speaker 3: It's pretty mature for me to comment on something like that.
Speaker 3: If the administration announces a policy on that, then I'll
Speaker 3: comment on it.
Speaker 5: Then let's talk about some of the other voices inside
Speaker 5: the White House as of late that could potentially.
Speaker 1: Chime in on AI policy.
Speaker 5: Elon Musk is he involved in any capacity.
Speaker 4: Not in what we're doing.
Speaker 3: So you know, again, we have an office within the
Speaker 3: White House and we deal with crypto and AI policy.
Speaker 3: Elon's doing doge and these are two totally separate initiatives.
Speaker 5: But let's talk a little bit more about what the
Speaker 5: contours of the AI policy could look like. I realize
Speaker 5: you can't share too much at the moment, but what
Speaker 5: will be your priority areas? A lot of the talk
Speaker 5: has been around AI competitiveness and what we've seen coming
Speaker 5: out of Trump's President Trump's comments around the Chips Act
Speaker 5: and then National Science Foundation layoffs. There is some concern
Speaker 5: that this could undermine competitiveness if there's not enough federal
Speaker 5: funding going to research.
Speaker 1: What are your thoughts on that?
Speaker 3: Well, I think there are some items that are policy
Speaker 3: items that are coming up very quickly. So, for example,
Speaker 3: there was this eleventh hour policy that was announced by
Speaker 3: or rule that was now called the Diffusion Rule, that
Speaker 3: was announced by the Biden administration, and that governs the
Speaker 3: sale of advanced AI chips or GPUs to countries all
Speaker 3: across the world. They're basically an international version of the
Speaker 3: Export Controls. There's one hundred and twenty day clock on
Speaker 3: that in order for the Trump administration to weigh in
Speaker 3: and make whatever modifications we want to make. So, for example,
Speaker 3: I think that's probably going to be one of the
Speaker 3: first policy items on our plate that we have to
Speaker 3: address because there's a clock on it. So I think
Speaker 3: that you export controls are a big area. Diffusion is
Speaker 3: a big area. Just the you know, how we govern
Speaker 3: the licensing of the most sophisticated chips and semiconductor manufacturing
Speaker 3: equipment is sort of at the heart of the policy
Speaker 3: discussion right now.
Speaker 2: Would you ultimately be supporting an end to the Chips Act.
Speaker 3: I don't think that anyone in the administration has said
Speaker 3: we want to end it, but the President has been
Speaker 3: very critical of it, and I think with good reason.
Speaker 3: I mean, I think the intent of the Chips Act
Speaker 3: was good. We were trying to get semiconductor manufacturing to
Speaker 3: occur in the.
Speaker 4: United States, but it's so strategic.
Speaker 3: The problem is that the money went to, frankly, a
Speaker 3: lot of companies who are losing in that very competitive market.
Speaker 3: And some of those companies haven't even used the money
Speaker 3: that they were granted because they're not doing very well.
Speaker 3: So the Chips Act is had, I think, mixed results
Speaker 3: at a high cost, and the question is just whether
Speaker 3: we can do something much better. And I think what
Speaker 3: the President has said is that he would like to
Speaker 3: use terrorists as an incentive to get companies to onshore
Speaker 3: their semiconductor manufacturing here. And the advantage of that approach
Speaker 3: is that the best companies have to do it too.
Speaker 3: They can't kind of drag their feet or they're going
Speaker 3: to be hit with terrifts. So I think the President
Speaker 3: has figured out a very powerful weapon, a very powerful
Speaker 3: incentive to get the best companies to want to onshore
Speaker 3: their manufacturing, including for semiconductors, and that is very strategic
Speaker 3: for the United States.
Speaker 2: TSMC putting money where its mouth is and potentially in
Speaker 2: response to tariff concerns.
Speaker 3: For you, right, you saw that. Yeah, sorry you mentioned
Speaker 3: the SMC. I think it's a very good point. We
Speaker 3: did a press conference with them just earlier in the
Speaker 3: week and they announced over one hundred billion dollar investment
Speaker 3: in the US and a big part of the reason
Speaker 3: why is because of the President's Tariff's policies give them
Speaker 3: a strong incentive to want to move some manufacturing here
Speaker 3: because they know that if they don't do that, they're
Speaker 3: going to be here with the tariff.
Speaker 2: With forty five seconds. They've got to ask you, therefore,
Speaker 2: should Intel not be getting the money? Is that the
Speaker 2: company you're hinting at.
Speaker 3: I'm not saying they shouldn't get it, but I think
Speaker 3: that everyone knows that Intel's a very challenged company right now,
Speaker 3: and I think that it's unfortunately.
Speaker 4: We want Intel to do well.
Speaker 3: We want domestic chip manufacturing, and Intel is a legendary
Speaker 3: company and it is one of the few companies in
Speaker 3: the United States that's capable of doing advanced chip manufacturing.
Speaker 3: So we want them to do well, and I think
Speaker 3: we will try to do whatever we can to help
Speaker 3: them do well well.
Speaker 2: You're going to be speaking with lots of leaders from
Speaker 2: other companies today. Of course, over at the White House
Speaker 2: leaders of crypto exchanges.
Speaker 1: Across the ball We thank you so much.
Speaker 2: The White House AI and cryptos are David Sachs, head
Speaker 2: of that unimportant White House crypto meeting,