The whirlwind continues in Washington, DC, with President Trump making more changes in policy since our review of his executive orders, last week. Topics include abortion, an Indian tribe and three famous assassinations – as well as a few things of likely concern to the sporting goods industry.
Trump on tech
AI
President Trump seeks to “sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security.”
This EO gives AI its definition in law: “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments.”
A number of officials – among them the Assistant to the President for Science and Technology (APST), the Special Advisor for AI and Crypto, and the Assistant to the President for National Security Affairs (APNSA) – have 180 days to devise a plan to carry out the policy.
Stargate
On Jan. 21 Trump announced the founding of Stargate, an AI project whose ties, if any, to the government are unclear. According to both Trump and the statement from participant OpenAI, it is a private company that will set up in Texas and later scout other sites in the US. As Trump said, “We want to keep it in this country.” OpenAI writes: “This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world.”
OpenAI will have “operational responsibility.” SoftBank’s founder, Chairman and CEO, Masayoshi Son, will serve as Stargate’s Chairman.
The project’s $500 billion in funding, spread over four years, is to come from SoftBank, OpenAI, Oracle and MGX, with SoftBank and OpenAI in the lead. Arm, Microsoft, NVIDIA, Oracle, and OpenAI will be providing the tech.
Elon Musk, who has championed Trump, is no fan of OpenAI’s CEO, Sam Altman, and has criticized Stargate. Musk notes on X, “SoftBank has well under $10B secured. I have that on good authority.” One of his compaints against OpenAI is that it has reversed course: “OpenAI was funded as an open source, nonprofit, but has become a closed source, profit-maximizer.”
CBDCs
In a reversal of US policy, the Trump administration has prohibited “the establishment, issuance, circulation, and use of a CBDC [central bank digital currency] within the jurisdiction of the United States.”
The same executive order, however, seeks to develop and expand the use of “lawful and legitimate dollar-backed stablecoins worldwide.” (A stablecoin is a cryptocurrency whose value is pegged to that of a reference currency – in this case the US dollar.)
President Trump has therefore revoked the Treasury Department’s “Framework for International Engagement on Digital Assets” (issued July 2022), which supported the development of CBDCs and the analysis and surveillance of digital assets in tandem with a several international bodies, such as the G7, the G20, the Financial Stability Board (FSB), the Financial Asset Task Force (FATF), the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF) and the World Bank.
The reversal is at odds with the policy of the EU, which is developing its own CBDC, the digital euro, through the European Central Bank (ECB) and the European Commission. The project, says the ECB, reflects the public’s increasing preference for electronic payments over cash. “We remain committed, its website reads, “to ensuring that cash continues to be accepted everywhere in the euro area too.”
This assurance sidesteps some of the objections: First, unlike cash, a CBDC operates at the government’s pleasure. It can be shut off like any other centralized computer system. (Hence the attraction of blockchain’s distributed ledger, implemented most famously in Bitcoin.) Second, cash needn’t be banned to fall out of use. Make it inconvenient, and the people themselves will shunt it aside.
According to the EBC itself, cash is increasingly rare. Total non-cash payments saw a year-on-year increase of 10.1 percent in 2023 to 67.0 billion. In H1 2023 card payments accounted for 54 percent of all payments, credit transfers for 22 percent, direct debt for 15 percent and e-money payments for 7 percent.
Also, there are already limits on cash payments. For instance, the EU parliament has adopted a union-wide limit of €10,000 on cash payments “except between private individuals in a non-professional context.” France limits payments from an individual to a trader or between traders to €1,000 and cash payments of tax to €300. The EU has been working on an initiative to limit cash payments since at least 2016. The US, meanwhile, requires payments of $10,000 or more in cash to be reported to the Internal Revenue Service (IRS). It is also generally illegal to fly internationally with more than $10,000 or €10,000 in cash unless you declare it to customs.
The EU’s CBDC seems likely to end up working in tandem with the EU’s digital wallet, and therefore with the EU’s digital ID. This will enable the government to monitor every purchase an individual makes. The legality of this is unclear. Americans are protected against “unreasonable searches and seizures” by the Fourth Amendment to the Constitution, but so-called FISA warrants have – to some controversy – enabled the Federal government to get around it.
Now, suppose a CBDC became the only means of payment for, say, mortgages, loans or medical services. Could a government shut off the tap to curb dissent?
According to the ECB’s progress report, the Governing Council will be deciding when to launch the next phase of the EU’s CBDC development this coming October.
Crypto
The new administration has established a President’s Working Group on Digital Asset Markets. This is to exist within the National Economic Council and have as its chairman the Special Advisor for AI and Crypto, David Sacks.
Sacks is the former COO of Confinity (which later became PayPal), producer of the films Thank You for Smoking and Dalíland, founder of the enterprise social-networking platform Yammer (acquired by Microsoft) and co-founder of the venture-capital firm Craft Ventures.
The council will include the Secretary of the Treasury, the Attorney General (head of the Department of Justice), the Secretary of Homeland Security (the just-confirmed Kristi Noem, former governor of South Dakota) and the Chairman of the Securities and Exchange Commission (SEC).
Science Council
President Trump has established the President’s Council of Advisors on Science and Technology (PCAST), to consist of no more than 24 members – among them the Assistant to the President for Science and Technology (APST) and the Special Advisor for AI & Crypto.
Some clarifications
Foreign aid
NBC News says it has seen an internal cable sent out by the new US Secretary of State, Marco Rubio, that puts into execution President’s Trump’s 90-day halt to foreign aid. Rubio has issued a waiver for Israel and Egypt.
For Politico, Rubio’s order “appears to apply to funding for military assistance to Ukraine.” According to the Financial Times, “US officials” are pushing to exempt Ukraine from the halt. Democratic Congressmen Gregory W. Meeks and Lois Frankel, respectively of the Foreign Affairs Committee and the Appropriations Subcommittee on National Security, have sent Rubio a letter to express their “deep concern over the lives placed at risk.”
NATO
According to department spokesman Tammy Bruce, Rubio has spoken with NATO’s Secretary General, Mark Rutte, and “reinforced the U.S. commitment to NATO and the continued importance of the Alliance to international security.”
“They discussed the importance of ending Russia’s war against Ukraine and the need for a peaceful solution. They also agreed that the Euro-Atlantic and the Indo-Pacific are inextricably linked […].”
Read on: This is how Trump’s executive orders will affect the Sporting Goods Industry
