WEBVTT - White House AI & Crypto Czar David Sacks Talks Bitcoin Reserve

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>What's happening in the world of crypto, though, because so

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<v Speaker 2>much to delve into when it comes to the latest

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<v Speaker 2>executive order.

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<v Speaker 1>As many anticipate that.

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<v Speaker 2>Such regulations will become more pro crypto, and we see

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<v Speaker 2>that executive order signed last night with a reserve for bitcoin,

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<v Speaker 2>we're now pleased to be welcoming to our TV and

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<v Speaker 2>radio audiences around the world. Someone who can dive into

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<v Speaker 2>this exact executive order. We bring in the White House

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<v Speaker 2>AI and cryptos are David Sachs.

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<v Speaker 1>It's busy.

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<v Speaker 2>You're about to expect yet more people coming to the

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<v Speaker 2>White House from the cryptosphere. Remind the American public and

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<v Speaker 2>investors why you need a bitcoin reserve at all?

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<v Speaker 3>Well, good to be here, I mean, the reason why

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<v Speaker 3>we need a bitcoin reserve is that the federal government

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<v Speaker 3>already owns some. In fact, it obtained around four hundred

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<v Speaker 3>thousand bitcoin over the past decade through criminal and civil

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<v Speaker 3>forfeitures and seizures, and so the government has to have

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<v Speaker 3>a strategy for how it deals with this. In the past,

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<v Speaker 3>the strategy has been simply to sell it in an

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<v Speaker 3>ad hoc way, almost willy nilly and that cost American

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<v Speaker 3>taxpayer something like seventeen billion dollars in lost value. So

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<v Speaker 3>we want to have a long term strategy to maximize

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<v Speaker 3>the value of these holdings. We've decided that that bitcoin

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<v Speaker 3>is scarce, it's valuable, and that is strategic for the

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<v Speaker 3>United States to hold on to.

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<v Speaker 4>This as a long term reserve asset.

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<v Speaker 3>So that's the plan with the two hundred thousand bitcoin

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<v Speaker 3>that we believe are in the possession of the federal government.

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<v Speaker 3>I say we believe because no one really knows for

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<v Speaker 3>sure because we never had a proper audit. So that's

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<v Speaker 3>one of the first things that this executive order provides

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<v Speaker 3>that we're going to do a full government wide audit

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<v Speaker 3>to find out what digital assets we actually have so

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<v Speaker 3>they can be safeguarded and moved into a strategy that

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<v Speaker 3>maximizes their long term value.

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<v Speaker 5>Right.

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<v Speaker 1>And then there's the stockpile.

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<v Speaker 2>Talk to us about the nuance there and why you

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<v Speaker 2>need to stockpile for old coins and how you're treating

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<v Speaker 2>them differently.

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<v Speaker 4>Right.

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<v Speaker 3>Well, the idea there is again we're going to figure

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<v Speaker 3>out what do we actually have on the federal balot sheet,

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<v Speaker 3>and we're going to move those Like you said, all

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<v Speaker 3>coins are digital assets other than bitcoin into a stockpile

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<v Speaker 3>for safekeeping. The difference there is that the Secretary of

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<v Speaker 3>the Treasury will exercise responsible stewardship over those assets, and

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<v Speaker 3>he has the discretion to rebalance the portfolio or to

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<v Speaker 3>sell items in that portfolio. But that's not true for bitcoin.

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<v Speaker 3>The bitcoin we want to keep long term, So there's

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<v Speaker 3>a difference there in objective. With the reserve, the goal

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<v Speaker 3>is long term preservation. With the stockpile, the goal is

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<v Speaker 3>responsible stewardship the portfolio management.

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<v Speaker 5>In essence, David, the executive order also tasks Secretary Lutnik

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<v Speaker 5>Investment with finding budget neutral ways that won't cost the

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<v Speaker 5>taxpayer to add to that reserve. What qualifies as budget neutral?

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<v Speaker 5>Can you give us some examples of how that would

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<v Speaker 5>actually work well?

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

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<v Speaker 3>It won't increase the deficit, it won't increase the debt.

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<v Speaker 3>So that's basically the constraints on what they can do.

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<v Speaker 3>If they can figure out creative ways to add to

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<v Speaker 3>the stock to the reserve of bitcoin, they're allowed to

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<v Speaker 3>accumulate more bitcoin, but again it cannot impose any burden

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<v Speaker 3>on the federal deficit, debt or the taxpayer.

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<v Speaker 4>So that's the rule.

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<v Speaker 3>Now you can ask the question, well, how are they

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<v Speaker 3>going to do that? And I think that's sort of

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<v Speaker 3>up to them if they can figure out creative strategies

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<v Speaker 3>that they believe are in the long term insto the country.

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<v Speaker 3>They now have the authorization to develop those strategies.

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<v Speaker 5>Do you think using savings that come from DOZE, for example,

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<v Speaker 5>qualify is something that would be budget neutral?

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

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<v Speaker 4>that question.

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<v Speaker 3>I think that that's something that I have to be

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<v Speaker 3>assessed by probably the Office of Management of Budget. I

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<v Speaker 3>think that since DOZE is cutting the deficit that and

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<v Speaker 3>we'd want to seek a way to rescind those appropriations,

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<v Speaker 3>it probably would not count.

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<v Speaker 2>But you probably have to ask the O and B

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<v Speaker 2>that when you talk about the stewardship, particularly the stockpile,

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<v Speaker 2>could you be seeing things like staking lending. Is there

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<v Speaker 2>going to be other ways to maximize the volume there?

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<v Speaker 4>I mean, it's a good question.

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<v Speaker 3>I mean, you know, I think that the idea of

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<v Speaker 3>this executive order is to create the mandate. Right, so

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<v Speaker 3>first of all, we're going to move these digital assets

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<v Speaker 3>from wherever they are all over the government. We're going

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

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<v Speaker 3>going to do the account and we're going to do

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<v Speaker 3>the audit. Then we're going to move them into a

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<v Speaker 3>separate account for safekeeping. And then the Sectuary of the

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<v Speaker 3>Treasury and his team will be able to exercise portfolio

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<v Speaker 3>management and long term and responsible stewardship.

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<v Speaker 4>And yes, that could.

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<v Speaker 3>Include staking, it could include rebalancing, it could include sales.

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<v Speaker 3>These are all options that they can pursue if the

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<v Speaker 3>Sectary of the Treasury believes that these are in the

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<v Speaker 3>long term interests of the American people.

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<v Speaker 2>Just going into what's in the holding of the US government.

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<v Speaker 2>Going back to what President Trump mentioned over the weekend

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<v Speaker 2>talking of Ripple Solana, other alternative coins that people are

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<v Speaker 2>wondering whether they're going to be included in stot Paul,

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<v Speaker 2>will they Does the US own them? Why mention them

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<v Speaker 2>by the president?

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<v Speaker 3>Well, the President just mentioned the top five cryptocurrencies by

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<v Speaker 3>market cap, So I think people are just reading into

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<v Speaker 3>this a little bit too much. He just mentioned the

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<v Speaker 3>top five In terms of what we'll actually have.

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<v Speaker 4>Again, we have to do the accounting.

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<v Speaker 3>We're not sure at sitting here today whether the federal

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<v Speaker 3>government owns any of these alternative cryptocurrencies. We know it

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<v Speaker 3>owns bitcoin. I believe it owns some ethereum. I'm not

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<v Speaker 3>sure about the other ones. This is why we have

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<v Speaker 3>to do the accounting. Is that, to be honest, no

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<v Speaker 3>one's been able to give us a straight answer yet

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<v Speaker 3>in terms of what the federal government owns. And this

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<v Speaker 3>is part of the problem, is that we've never really

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<v Speaker 3>had a digital asset strategy before, and this is why

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<v Speaker 3>we've missed out on accumulating a lot of value for

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<v Speaker 3>the American people.

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<v Speaker 5>David, you mentioned earlier that you know you don't have

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<v Speaker 5>any additional cryptocurrency assets and where you've divested from your

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<v Speaker 5>interests there. However, Secretary Lutnik in July mentioned that he

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<v Speaker 5>had quote shed load of bitcoin. Do you think it's

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<v Speaker 5>important for these stewards of the Reserve and the stockpile

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<v Speaker 5>to divest from their cryptocurrency interests?

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<v Speaker 1>Do you know if they've done so already.

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<v Speaker 4>I can't speak to a situation.

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<v Speaker 3>You know, every member of the administration has to go

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<v Speaker 3>through the same ethics process and the same conflict of

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<v Speaker 3>interest process that I've gone through. So I'll let him

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<v Speaker 3>speak to his own situation, I can to say that

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<v Speaker 3>in my case, I divested or sold all the cryptocurrency

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<v Speaker 3>that I own prior to the start of the administration,

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<v Speaker 3>so there's no conflict in my case, I just want

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<v Speaker 3>to have the right innovation policies for the United States.

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<v Speaker 5>Do you think it's important, though, to just not have

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<v Speaker 5>that appearance of a conflict of interest?

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<v Speaker 4>Sure?

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<v Speaker 3>I mean, look, we're all subject to eighteen USC.

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<v Speaker 4>Two eight.

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<v Speaker 3>These are the conflict of interest provisions. Every member the

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<v Speaker 3>administration is subject to that. But I'm not going to

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<v Speaker 3>speak to anyone's situation, so we all are governed by

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<v Speaker 3>the same conflict of interest rules. In my case, I

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<v Speaker 3>choasted to divest everything. To make it simple, you should

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<v Speaker 3>ask every other member of the administration what their situation is.

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<v Speaker 2>How about the president, because I think here in lies

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<v Speaker 2>some of the issues for those who are on the

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<v Speaker 2>outside of crypto looking in and suddenly feel that the

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<v Speaker 2>US president has an exposure to mean coins or Solana.

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<v Speaker 2>How do you give the confidence to the US investor

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<v Speaker 2>base and indeed US population that this is totally legit.

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

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<v Speaker 3>I mean, how do you know that he has exposure

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<v Speaker 3>to Salona. Is that's something you just came up with.

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<v Speaker 2>Well, ultimately, when we think about the mean coin exposure

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<v Speaker 2>in particular, and people trying to understand for what reason

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<v Speaker 2>we have a trump coin from Milan your coin, is

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<v Speaker 2>there a clearer way that the US president can disassociate

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<v Speaker 2>himself from any event upside when it comes to cryptocurrencies.

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<v Speaker 3>Well, I think he's already spoke to the trump coin,

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<v Speaker 3>and I think that that is a collectible. The SEC

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

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<v Speaker 3>not security. Is there in a different category, And I

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<v Speaker 3>think as long as you issue at meme coin and

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<v Speaker 3>disclaim that there's no intrinsic value, it can just be

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<v Speaker 3>a collectible. So that is a different category I think

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<v Speaker 3>than what we're talking about here with cryptocurrencies.

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<v Speaker 1>What do you make some of the market reaction?

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<v Speaker 5>I mean, clearly Bitcoin down later earlier today on the

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<v Speaker 5>back of just not really getting what they were hoping for.

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<v Speaker 5>You know, if the government is not going to buy

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

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<v Speaker 5>say for sure that the administration is not open to

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<v Speaker 5>using taxpayer dollars in the future. Is that completely off

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<v Speaker 5>the table according to this EO, it is.

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<v Speaker 3>We've said that this will not cost taxpayers a dime.

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<v Speaker 3>So we've been very clear in this executive Order that

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<v Speaker 3>we will not use taxpayer funds to basically accumulate more

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<v Speaker 3>crypto unless it can be done in a completely budget

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<v Speaker 3>neutral way. No increase in the death st no increase

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<v Speaker 3>in the debt, no use of taxpayer funds, no burden

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<v Speaker 3>on the taxpayer. We've been very clear in this Executive

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<v Speaker 3>Order about that.

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

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<v Speaker 5>weighing in on policy there. The Biden Executive Order was

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<v Speaker 5>repealed in January. What is in the works currently that

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<v Speaker 5>you can share about how that's looking and who's involved.

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<v Speaker 3>So the president is week one executive order on AI

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<v Speaker 3>that rescinded the Biden EO. By the way, that was

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<v Speaker 3>a very burdensome executive order that Biden had passed, those

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<v Speaker 3>over one hundred pages of burn some regulations on AI companies.

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<v Speaker 3>The whole industry hated it. He rescinded that, and he

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<v Speaker 3>tasked three people to basically evaluate a new and create

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<v Speaker 3>a new AI action plan and those people are the

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<v Speaker 3>head of the Office of Science Technology Policy, the now

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<v Speaker 3>Security Advisor, myself, and so we're currently working on that

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<v Speaker 3>plan and we'll have more information for you about that

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<v Speaker 3>once we're ready to present.

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<v Speaker 2>How confident are you at this moment around AI leadership

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<v Speaker 2>here in the United States that thick and fast the

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<v Speaker 2>news coming out of China, for example, of the latest

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<v Speaker 2>models that are incredibly powerful with less data and ultimately

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<v Speaker 2>more efficient. How you exercising the view that AI can

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<v Speaker 2>be still a leader for the United States and not

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<v Speaker 2>losing its leadership versus China.

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

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<v Speaker 3>complacent about it. I mean, it's very clear that China

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<v Speaker 3>is going to be very, very competitive. Something like roughly

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<v Speaker 3>half of the AI researchers in the world are from China.

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<v Speaker 3>They are very good at math and science, and you've

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

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<v Speaker 3>They're very good AI software companies. So this is going

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<v Speaker 3>to be a very competitive race, and we have to

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<v Speaker 3>win that race. But we can't be complacent about that

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<v Speaker 3>in any way. It's going to be a very tough

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<v Speaker 3>competition here.

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<v Speaker 2>There's actually reporting from other news sources that maybe deep

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<v Speaker 2>seat would be bad from apps here in the United States.

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<v Speaker 1>Do you think that's appropriate.

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

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<v Speaker 3>If the administration announces a policy on that, then I'll

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<v Speaker 3>comment on it.

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<v Speaker 5>Then let's talk about some of the other voices inside

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<v Speaker 5>the White House as of late that could potentially.

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<v Speaker 1>Chime in on AI policy.

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<v Speaker 5>Elon Musk is he involved in any capacity.

0:11:05.320 --> 0:11:06.480
<v Speaker 4>Not in what we're doing.

0:11:06.880 --> 0:11:09.679
<v Speaker 3>So you know, again, we have an office within the

0:11:09.720 --> 0:11:12.120
<v Speaker 3>White House and we deal with crypto and AI policy.

0:11:12.520 --> 0:11:15.520
<v Speaker 3>Elon's doing doge and these are two totally separate initiatives.

0:11:16.960 --> 0:11:18.640
<v Speaker 5>But let's talk a little bit more about what the

0:11:18.640 --> 0:11:22.280
<v Speaker 5>contours of the AI policy could look like. I realize

0:11:22.280 --> 0:11:24.640
<v Speaker 5>you can't share too much at the moment, but what

0:11:24.679 --> 0:11:27.280
<v Speaker 5>will be your priority areas? A lot of the talk

0:11:27.320 --> 0:11:30.760
<v Speaker 5>has been around AI competitiveness and what we've seen coming

0:11:30.760 --> 0:11:34.640
<v Speaker 5>out of Trump's President Trump's comments around the Chips Act

0:11:34.880 --> 0:11:38.880
<v Speaker 5>and then National Science Foundation layoffs. There is some concern

0:11:39.440 --> 0:11:43.080
<v Speaker 5>that this could undermine competitiveness if there's not enough federal

0:11:43.080 --> 0:11:45.160
<v Speaker 5>funding going to research.

0:11:45.679 --> 0:11:46.600
<v Speaker 1>What are your thoughts on that?

0:11:48.280 --> 0:11:50.680
<v Speaker 3>Well, I think there are some items that are policy

0:11:50.720 --> 0:11:52.880
<v Speaker 3>items that are coming up very quickly. So, for example,

0:11:52.960 --> 0:11:55.760
<v Speaker 3>there was this eleventh hour policy that was announced by

0:11:55.840 --> 0:11:58.480
<v Speaker 3>or rule that was now called the Diffusion Rule, that

0:11:58.480 --> 0:12:01.800
<v Speaker 3>was announced by the Biden administration, and that governs the

0:12:01.840 --> 0:12:06.320
<v Speaker 3>sale of advanced AI chips or GPUs to countries all

0:12:06.360 --> 0:12:09.960
<v Speaker 3>across the world. They're basically an international version of the

0:12:09.960 --> 0:12:13.120
<v Speaker 3>Export Controls. There's one hundred and twenty day clock on

0:12:13.200 --> 0:12:16.280
<v Speaker 3>that in order for the Trump administration to weigh in

0:12:16.880 --> 0:12:19.439
<v Speaker 3>and make whatever modifications we want to make. So, for example,

0:12:19.440 --> 0:12:20.800
<v Speaker 3>I think that's probably going to be one of the

0:12:20.800 --> 0:12:23.200
<v Speaker 3>first policy items on our plate that we have to

0:12:23.240 --> 0:12:25.920
<v Speaker 3>address because there's a clock on it. So I think

0:12:25.920 --> 0:12:28.959
<v Speaker 3>that you export controls are a big area. Diffusion is

0:12:29.000 --> 0:12:33.079
<v Speaker 3>a big area. Just the you know, how we govern

0:12:34.840 --> 0:12:40.840
<v Speaker 3>the licensing of the most sophisticated chips and semiconductor manufacturing

0:12:40.880 --> 0:12:43.319
<v Speaker 3>equipment is sort of at the heart of the policy

0:12:43.880 --> 0:12:45.800
<v Speaker 3>discussion right now.

0:12:46.000 --> 0:12:49.240
<v Speaker 2>Would you ultimately be supporting an end to the Chips Act.

0:12:51.480 --> 0:12:53.440
<v Speaker 3>I don't think that anyone in the administration has said

0:12:53.440 --> 0:12:55.160
<v Speaker 3>we want to end it, but the President has been

0:12:55.240 --> 0:12:57.320
<v Speaker 3>very critical of it, and I think with good reason.

0:12:57.440 --> 0:12:59.120
<v Speaker 3>I mean, I think the intent of the Chips Act

0:12:59.200 --> 0:13:03.200
<v Speaker 3>was good. We were trying to get semiconductor manufacturing to

0:13:03.280 --> 0:13:03.840
<v Speaker 3>occur in the.

0:13:03.880 --> 0:13:05.359
<v Speaker 4>United States, but it's so strategic.

0:13:05.840 --> 0:13:08.079
<v Speaker 3>The problem is that the money went to, frankly, a

0:13:08.120 --> 0:13:12.360
<v Speaker 3>lot of companies who are losing in that very competitive market.

0:13:12.480 --> 0:13:14.440
<v Speaker 3>And some of those companies haven't even used the money

0:13:14.440 --> 0:13:16.319
<v Speaker 3>that they were granted because they're not doing very well.

0:13:16.640 --> 0:13:19.920
<v Speaker 3>So the Chips Act is had, I think, mixed results

0:13:19.920 --> 0:13:22.080
<v Speaker 3>at a high cost, and the question is just whether

0:13:22.120 --> 0:13:23.560
<v Speaker 3>we can do something much better. And I think what

0:13:23.600 --> 0:13:25.679
<v Speaker 3>the President has said is that he would like to

0:13:25.760 --> 0:13:29.440
<v Speaker 3>use terrorists as an incentive to get companies to onshore

0:13:29.480 --> 0:13:33.240
<v Speaker 3>their semiconductor manufacturing here. And the advantage of that approach

0:13:33.400 --> 0:13:35.240
<v Speaker 3>is that the best companies have to do it too.

0:13:35.320 --> 0:13:37.560
<v Speaker 3>They can't kind of drag their feet or they're going

0:13:37.600 --> 0:13:39.640
<v Speaker 3>to be hit with terrifts. So I think the President

0:13:39.640 --> 0:13:42.120
<v Speaker 3>has figured out a very powerful weapon, a very powerful

0:13:42.120 --> 0:13:46.280
<v Speaker 3>incentive to get the best companies to want to onshore

0:13:46.320 --> 0:13:50.560
<v Speaker 3>their manufacturing, including for semiconductors, and that is very strategic

0:13:50.559 --> 0:13:51.360
<v Speaker 3>for the United States.

0:13:52.040 --> 0:13:55.480
<v Speaker 2>TSMC putting money where its mouth is and potentially in

0:13:55.520 --> 0:13:57.640
<v Speaker 2>response to tariff concerns.

0:13:57.960 --> 0:14:01.480
<v Speaker 3>For you, right, you saw that. Yeah, sorry you mentioned

0:14:01.480 --> 0:14:02.839
<v Speaker 3>the SMC. I think it's a very good point. We

0:14:02.880 --> 0:14:05.000
<v Speaker 3>did a press conference with them just earlier in the

0:14:05.000 --> 0:14:07.440
<v Speaker 3>week and they announced over one hundred billion dollar investment

0:14:07.520 --> 0:14:09.640
<v Speaker 3>in the US and a big part of the reason

0:14:09.679 --> 0:14:12.840
<v Speaker 3>why is because of the President's Tariff's policies give them

0:14:12.840 --> 0:14:15.920
<v Speaker 3>a strong incentive to want to move some manufacturing here

0:14:16.080 --> 0:14:17.960
<v Speaker 3>because they know that if they don't do that, they're

0:14:17.960 --> 0:14:19.400
<v Speaker 3>going to be here with the tariff.

0:14:20.200 --> 0:14:22.440
<v Speaker 2>With forty five seconds. They've got to ask you, therefore,

0:14:22.440 --> 0:14:24.080
<v Speaker 2>should Intel not be getting the money? Is that the

0:14:24.080 --> 0:14:25.040
<v Speaker 2>company you're hinting at.

0:14:26.680 --> 0:14:28.680
<v Speaker 3>I'm not saying they shouldn't get it, but I think

0:14:28.680 --> 0:14:31.400
<v Speaker 3>that everyone knows that Intel's a very challenged company right now,

0:14:31.600 --> 0:14:33.880
<v Speaker 3>and I think that it's unfortunately.

0:14:33.880 --> 0:14:34.920
<v Speaker 4>We want Intel to do well.

0:14:34.960 --> 0:14:38.160
<v Speaker 3>We want domestic chip manufacturing, and Intel is a legendary

0:14:38.200 --> 0:14:41.240
<v Speaker 3>company and it is one of the few companies in

0:14:41.240 --> 0:14:44.840
<v Speaker 3>the United States that's capable of doing advanced chip manufacturing.

0:14:45.240 --> 0:14:47.040
<v Speaker 3>So we want them to do well, and I think

0:14:47.080 --> 0:14:48.800
<v Speaker 3>we will try to do whatever we can to help

0:14:48.840 --> 0:14:50.200
<v Speaker 3>them do well well.

0:14:50.200 --> 0:14:52.040
<v Speaker 2>You're going to be speaking with lots of leaders from

0:14:52.080 --> 0:14:54.160
<v Speaker 2>other companies today. Of course, over at the White House

0:14:54.240 --> 0:14:56.560
<v Speaker 2>leaders of crypto exchanges.

0:14:56.200 --> 0:14:57.640
<v Speaker 1>Across the ball We thank you so much.

0:14:57.760 --> 0:15:00.240
<v Speaker 2>The White House AI and cryptos are David Sachs, head

0:15:00.280 --> 0:15:02.920
<v Speaker 2>of that unimportant White House crypto meeting,