Sacks vs. SEC: His Plan to Fix Crypto Regulation Without Killing Innovation

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David Sacks isn’t your typical crypto VC.

He doesn’t wear laser eyes on Twitter.

But when it comes to regulation, he’s one of the few voices in tech calling out the SEC—while offering a plan to fix it.

In this post, I’ll break down:

Why David Sacks believes the SEC is killing innovation
What he proposes as a better framework
What it means for crypto founders, investors, and U.S. competitiveness

Let’s get into it.

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Sacks vs. SEC: His Plan to Fix Crypto Regulation Without Killing Innovation

1. What’s Sacks’ Problem With the SEC?

Sacks believes the SEC is overreaching, inconsistent, and anti-innovation.

In his words:

“Regulation should protect consumers, not punish entrepreneurs.”

He sees the SEC’s current enforcement style as:

❌ Regulation by lawsuit
❌ Vague token guidance
❌ Chilling innovation with fear
❌ Pushing startups offshore

2. Why This Matters for Founders

If you’re building a crypto or Web3 startup, the SEC’s stance affects:

Your fundraising strategy
Whether you can launch a token
How you handle compliance and custody
Your valuation, because risk = discount

And most importantly: Where you incorporate and build.

3. Sacks' Key Criticism: Lack of Clear Rules

Sacks doesn’t want zero regulation.

He wants clarity.

Right now, crypto founders have to guess:

Is my token a security?
Can I airdrop to users?
Will I get subpoenaed for an L2 staking product?

Sacks calls this “regulatory chaos by design.”

4. How the SEC Is Hurting U.S. Crypto Innovation

Sacks highlights 3 key outcomes of SEC overreach:

Capital flight – VCs and founders set up in Dubai, Singapore, or Europe
Brain drain – Top engineers avoid U.S. projects
Loss of leadership – U.S. falls behind in on-chain innovation

Ironically, the SEC’s protectionism is creating more risk, not less.

5. What Sacks Wants Instead

Sacks proposes a safe harbor framework:

3-year window for crypto startups to prove decentralization
Clear token classification rules (utility vs. security)
On-chain transparency + open-source as compliance
Protect users, not stifle protocol growth

Think: Stripe for token launches.

6. He Supports Hester Peirce’s Safe Harbor Plan

Sacks has publicly supported SEC Commissioner Hester Peirce and her Safe Harbor 2.0 proposal.

The idea?

Give startups time to decentralize
Require disclosures, not enforcement
Prevent another Ethereum-style retroactive crackdown

This is Sacks’ North Star for sane crypto policy.

7. The Sacks Playbook for Founders Navigating the SEC

Here’s his advice:

✅ Focus on real use cases, not financial engineering
✅ Avoid Ponzinomics, inflationary tokens, or fake TVL
✅ Build with transparency — open-source, audit trails
✅ Consider international entities with U.S.-compliant wrappers
✅ Use SAFTs, not airdrops, for early fundraising

8. Sacks Doesn’t Hate the SEC — He Wants to Modernize It

He believes:

We need a new digital asset classification body
The SEC should be limited to securities
The CFTC or a new agency should handle crypto
Regulation should be risk-adjusted, not punitive

This is not deregulation—it’s smart, scoped modernization.

9. His Allies in the Fight

Sacks is aligned with:

Brian Armstrong (Coinbase)
Katie Haun (Haun Ventures)
Balaji Srinivasan (ex-Coinbase CTO)
Hester Peirce (SEC Commissioner)
Jake Chervinsky (Blockchain Association)

He’s part of a growing pro-crypto governance coalition.

10. The All-In Effect: Media as Policy Pressure

Sacks uses the All-In Podcast to:

Break down legal overreach
Pressure regulators through media
Mobilize LPs and founders behind policy reform
Normalize political participation by tech VCs

He’s turning narrative into policy leverage.

11. What This Means for VCs

Sacks is signaling that VCs should:

Push for legal clarity
Help startups structure tokens properly
Advocate alongside their founders
Be ready to back regulated infra, not hype coins

VCs can’t stay passive anymore.

12. Is Sacks Anti-SEC or Pro-Founder?

He’s not anti-SEC.

He’s anti-hostility toward founders.

Sacks wants collaborative regulation that promotes:

Capital formation
U.S. technological leadership
Consumer protection via transparency, not red tape

13. Will He Have Real Influence?

Yes—and growing.

As Trump’s unofficial AI & Crypto policy czar, Sacks may:

Influence the next SEC chair
Help reshape the CFTC/SEC jurisdiction lines
Accelerate crypto-friendly policy if Trump wins 2026

14. What Crypto Startups Should Do Right Now

Separate protocol and foundation entities
Work with crypto-savvy legal teams
Document token utility and decentralization milestones
Build community and governance transparency
Get ahead of regulation instead of dodging it

15. The Future: Tokenization of Everything

Sacks believes:

“Crypto will do to the financial system what the internet did to media.”

Expect Craft Ventures to back more projects in:

Tokenized assets
Decentralized infra
Web3-native productivity tools
Legaltech and compliance-as-a-service for crypto

16. Related Capitaly Posts

17. Capitaly’s Advice: Don’t Wait for the Rules

Founders who win in crypto don’t wait for permission.

They:

✅ Get great legal counsel
✅ Stay agile across jurisdictions
✅ Prioritize trust and transparency
✅ Work with aligned VCs who understand the risk

And yes—they listen to people like Sacks, not just the suits in D.C.

18. FAQs

1. What does David Sacks propose instead of the SEC’s approach?
A safe harbor for token projects, clearer classification, and pro-growth guidance.

2. Is he pro-crypto or just anti-regulation?
He’s pro-crypto, pro-regulation—but anti-hostility and vagueness.

3. Has he invested in crypto startups?
Yes—FalconX, Blockdaemon, Zapper, and others via Craft Ventures.

4. What’s his view on CBDCs?
Skeptical—he sees them as surveillance risks.

5. What agency should regulate crypto?
He supports either a revamped CFTC or a new crypto-specific agency.

6. What’s the biggest problem with the SEC today?
Unclear enforcement and retroactive punishment.

7. Can founders still launch tokens in the U.S.?
Yes—but only with extremely careful structuring and legal advice.

8. What kind of legal frameworks does he like?
Safe harbors, open disclosures, token maturity models.

9. Is the All-In podcast influencing policy?
Yes—many founders, regulators, and politicians listen to it weekly.

10. What should founders read or follow to stay current?
Follow Sacks, Hester Peirce, Jake Chervinsky, and the Blockchain Association.

19. Conclusion

David Sacks isn’t fighting the SEC to score points.

He’s fighting to save crypto innovation in the U.S.

And he’s giving founders a voice in a policy debate that too often ignores them.

Sacks vs. SEC isn’t just a battle over tokens—it’s a fight for the future of permissionless innovation.

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