David Sacks AI Framework includes ethics waivers and Executive Order 14365

DSDavid Sacks testified before the HSHouse Science Subcommittee on January 14, 2026 in his capacity as White House AI and Crypto Czar. He pledged to work with Congress on a federal AI regulatory framework but provided no timeline for when the framework would be proposed, no details about what areas of AI it would cover, and no structural specifics about how it would work. The testimony consisted entirely of general commitments without actionable substance.

Executive Order 14365, signed by President Trump on December 11, 2025, became the centerpiece of Sacks's defense before Congress. The order directs federal agencies to identify and challenge state-level AI regulations and authorizes restricting states' access to federal funds when their AI regulations conflict with federal policy preferences. The order does not create any federal AI regulations to replace the state laws it targets, creating a regulatory vacuum where neither level of government is actively regulating AI.

A 🗽New York Times investigation revealed the scale of Sacks's financial entanglement with the industry he oversees: 449 AI companies in which he remains invested through CVCraft Ventures, the Silicon Valley venture capital firm he co-founded. His policy decisions can directly affect the value of his personal investments across hundreds of companies in the industry he regulates.

Two ethics waivers from the White House ethics office now cover virtually every policy area Sacks touches. The first, granted in March 2025, covered his participation in cryptocurrency policy decisions.

The second, in June 2025, covered AI policy decisions. Ethics waivers are intended to be narrow exceptions to conflict-of-interest rules, but receiving waivers covering the full scope of his policy portfolio effectively eliminates any ethics restrictions on his participation.

The conflict between Sacks's investments and his policy role became concrete in the case of BitGo, a cryptocurrency custodian. CVCraft Ventures holds a 7.8 percent stake in BitGo. Sacks advocated for the GENIUS Act, which created a regulatory framework for stablecoins.

After the GENIUS Act passed, BitGo filed for an initial public offering.

An IPO could dramatically increase the value of CVCraft Ventures' stake. Democrats launched an ethics investigation in September 2025 based on this sequence of events.

Before Congress, the White House AI czar invoked the Commerce Clause to argue that AI constitutes interstate commerce and therefore falls under federal regulatory authority rather than state authority. Legal experts from Carnegie Endowment and other institutions responded that while AI may involve interstate commerce, an executive order cannot preempt state law. Only Congress can preempt state regulations through federal legislation.

Ethics expert KCKathleen Clark, a law professor who studies government ethics, described Sacks's ethics waivers as 'sham ethics waivers' that authorize exactly the kind of participation in conflicted decisions they are supposed to prevent. Clark argued that the waiver process was designed for narrow, specific exceptions, not for blanket authorization to participate in all policy decisions affecting one's entire investment portfolio.

The regulatory strategy emerging from Sacks's testimony and EO 14365 has a specific pattern: block state regulation while offering no federal alternative. This benefits AI companies by creating a period of minimal regulation during which they can deploy technology, build market dominance, and establish industry practices that become harder to restrict later. Each month of regulatory vacuum allows the industry Sacks is invested in to expand without oversight.