David Sacks, the appointed “AI and Crypto Czar” by U.S. President Donald Trump, engages with Trump as he signs several executive orders in the Oval Office on January 23, 2025, in Washington, DC.
Anna Moneymaker | Getty Images
The alliance between Trump and the tech sector is encountering notable challenges, largely due to cryptocurrency.
During his 2024 campaign, President Trump depended significantly on contributions from crypto executives and investors. He pledged to reward their support by easing regulations and establishing the U.S. as “the crypto capital of the planet and the bitcoin superpower of the world.”
He began quickly, signing an executive order to form a working group on digital assets and granting a pardon to Silk Road founder Ross Ulbricht. The SEC also ended its long-standing investigation into Coinbase.
While these actions were celebrated by enthusiastic tech supporters of Trump’s campaign, the president’s latest move over the weekend raised concerns. On Truth Social, he declared the formation of a strategic U.S. crypto reserve that would encompass not just bitcoin, but several other digital currencies—namely ether, XRP, Solana’s SOL, and Cardano’s ADA.
Most of Trump’s crypto supporters had anticipated a plan focused solely on a strategic bitcoin reserve. This would involve utilizing cash to acquire bitcoin, widely regarded by crypto enthusiasts as a prudent method of investing in a decentralized alternative to traditional money. Coinbase CEO Brian Armstrong noted on X that bitcoin provides a “clear story as successor to gold.”
Critics, however, argue that by expanding beyond bitcoin, Trump risks employing taxpayer funds to invest in much more speculative assets that lack proven value, potentially enriching a small group of investors. This raises significant concerns among those advocating for substantial cuts in government expenditure, supporting Elon Musk’s mission for cost reduction at the newly formed Department of Government Efficiency.
“Taxation is theft,” asserted Joe Lonsdale, founder of venture capital firm 8VC and a prominent Trump supporter, in a post on X. “It should be minimized. It’s unacceptable to seize my money for leftist schemes; it’s also wrong to tax me for crypto initiatives.”
David Sacks, the venture capitalist appointed by Trump as the “White House AI and crypto czar,” countered Lonsdale’s remarks, suggesting it was hasty to leap to conclusions. Both Sacks and Lonsdale belong to the same conservative tech circle, along with Musk and Peter Thiel.
“No tax or spending proposal has been revealed,” Sacks responded to Lonsdale. “Perhaps you should wait to discover what’s actually being planned.”
The White House did not reply to a request for comment.
However, Lonsdale was not alone in his critique.
Naval Ravikant, a veteran tech investor and early crypto advocate, remarked following the announcement that, “The U.S. taxpayer should not be exit liquidity for cryptocurrencies that are decentralized in name only.” Moreover, Vinny Lingham, founder of the blockchain startup Civic and a prominent crypto voice, stated, “I may be old-fashioned, but I don’t believe the government should be utilizing taxpayer dollars to boost our crypto assets while we’re facing a nearly $2 trillion deficit.”
Consensus within the industry
A significant Trump supporter and notable figure in the crypto space voiced dissent on Monday. Billionaire bitcoin investor Tyler Winklevoss, who had encouraged voters to support Trump for the sake of crypto and civil liberties in the lead-up to the November election, opposed the president’s crypto reserve proposal.
“I’m not against XRP, SOL, or ADA, but I don’t feel they’re suitable for a Strategic Reserve,” Winklevoss commented. “Currently, only one digital asset meets this standard, and that is bitcoin.”
David Marcus, the former leader of Facebook’s ill-fated crypto initiative, indicated that many of his colleagues in the crypto sector share this perspective.
“The majority—if not all—of the unconflicted leaders in the industry seem to agree on this,” Marcus remarked, reposting Winklevoss’ statement.
Marcus, who now heads up payments infrastructure firm Lightspark, declared in July that he was “crossing the Rubicon” by switching his allegiance from Democrats to Trump.
Anthony Pompliano, a strong pro-Trump figure in crypto investing, dedicated over 1,500 words in his newsletter on Monday to this topic. He argued that Trump’s inclination to buy speculative tokens on behalf of the United States resulted from misinformed advisors.
“We witnessed how crypto projects, lobbyists, and special interest groups swayed the President of the United States,” Pompliano expressed. “They convinced him that any crypto reserve should consist of tokens ‘made in America.’ This proposal was a perfect trap for a President whose agenda is America First.”
Some criticism emerged online particularly targeting Sacks, who had previously endorsed various cryptocurrencies as a venture capitalist before joining the Trump administration, and whose firm, Craft Ventures, invests in crypto index fund manager Bitwise.
A cartoon depicting U.S. President-elect Donald Trump with cryptocurrency tokens in front of the White House to celebrate his inauguration, displayed at a Coinhero store in Hong Kong, China, on January 20, 2025.
Paul Yeung | Bloomberg | Getty Images
Sacks shared on X that he divested all of his crypto holdings, including bitcoin, ether, and SOL, before assuming his new role, mentioning he “will provide an update at the conclusion of the ethics process.”
By late Monday afternoon, cryptocurrency values had significantly dropped after their weekend increase that followed Trump’s announcement. Bitcoin plummeted approximately 9%, while ether dropped 15%. XRP and SOL suffered even greater declines.
This decline seemed connected to President Trump’s announcement regarding upcoming tariffs, which negatively impacted risk-sensitive assets across the board, with the Nasdaq falling nearly 3% by market close.
Despite the skepticism, some individuals in the crypto space were hesitant to openly criticize Trump’s reserve proposal.
Michael Saylor, chairman of Strategy, which has essentially become a bitcoin proxy due to its substantial $43 billion bitcoin holdings, expressed on CNBC that he was not surprised by Trump’s decision to encompass additional cryptocurrencies.
“This can only be interpreted as bullish for bitcoin and favorable for the entire U.S. crypto landscape,” stated Saylor. “I believe the best course for the nation is to pursue enlightened and progressive digital asset policies.”
Jonathan Jachym, global head of policy and government relations at Kraken, told CNBC that they were “pleased to see that announcement,” which indicates that the president is “staying true to his commitments.”
Even among the critics, Trump’s broader support for his initiatives does not seem to be wavering due to this single announcement. Supporters like Lonsdale have swiftly shared their thoughts on other subjects, praising actions taken by Defense Secretary Pete Hegseth and Trump for his stance against Mexican drug cartels.
However, given that this response came just six weeks into Trump’s second term, it illustrates how quickly reactions can mobilize when a proposal affects a vital segment of his supporter base. This discussion adds intrigue to Trump’s upcoming Crypto Summit on Friday, where investors will be keenly awaiting further details.
As Sacks noted on March 2 in his initial post about the strategic reserve announcement, “More details will be revealed at the Summit.”
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