Later today, President Donald Trump will be sworn back into office, the culmination of a comeback that seemed impossible just a few short years ago. Almost as improbable is the inner circle Trump has cultivated in his second tour of office: a coterie of Silicon Valley powerbrokers that seem ready to upend the longstanding balance of power in Washington, D.C.
Firebrand iconoclasts like Steve Bannon may have served as the face of Trump’s first term (or at least his ascent into office), but he still surrounded himself with members of the old guard. Figures like Gary Cohn and Steve Mnuchin kept the longstanding and bipartisan tradition of “Government Sachs”—top government officials coming from the venerated world of investment banking—alive.
That may be changing. Trump still has titans of traditional finance in top positions of power, albeit from institutions that are a little rougher around the edges than the big banks—people like Commerce Secretary nominee Howard Lutnick, the CEO of the Tether-affiliated Cantor Fitzgerald, and Treasury Secretary nominee Scott Bessent, a hedge fund manager who previously worked for George Soros.
And then there are the VCs. No one from Sand Hill Road has been elevated to the level of the cabinet, but you still have David Sacks as the nebulous crypto and AI czar, along with two fresh a16z alum—Scott Kupor and Sriram Krishnan—in senior positions. That’s not to mention the informal role that a score of VCs have taken on, including Marc Andreessen, who the Washington Post reported is “helping shape the Trump administration.”
I spoke with a policy head at a leading fintech company, who told me that the incoming regime is going to be deregulatory but not in the way that people expect. The essence of “Government Sachs” is that bankers shaped policy, whether it was tax cuts or deep financial reform—even Gary Gensler, an architect of Dodd-Frank and President Barack Obama’s Commodity Futures Trading Commission chair, had an illustrious career at Goldman before leaving for Washington.
But now, Goldman’s disruptors are at the reins. While it may be lost in wonky rule-making debates, fintechs and banks often spar on proposals at regulatory agencies like the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. Bank lobbyists have even stepped in to ask the CFPB to regulate more when it comes to fintechs, such as the American Bankers Association writing a letter earlier in January that it was “pleased” that the CFPB was establishing supervisory authority over certain digital payment apps. The ABA even worked with progressive Massachusetts Sen. Elizabeth Warren on a controversial anti-money laundering bill targeted at the crypto industry in late 2023.
If the VCs and Trump maintain their unlikely alliance, expect deregulation from all corners of government that will benefit the fintech sector, often at the expense of traditional banks—longstanding proposals like the OCC fintech charter, which circumvents the tricky state-by-state money transmitter license system for aspiring payment platforms. A16z, after all, is one of the top fintech boosters in Silicon Valley, from its crypto investment arm to bets on startups like Stripe and Jeeves.
I try to avoid this trope, but I was at a loss to come up with the equivalent of Government Sachs for this new era, and the best that ChatGPT could come up with was Gov-reessen Horowitz. Readers, let me know if you have anything better.
The czar and his ball...After securing a last-minute ticket, I scrambled to find a tux so I could attend Friday's inaugural Crypto Ball in Washington. The glitzy black-tie affair, hosted just blocks from the White House, featured performances by Snoop Dogg and Rick Ross and appearances from figures like Speaker of the House Mike Johnson, Treasury nominee Scott Bessent, and Commerce nominee Howard Lutnick, along with crypto titans from Coinbase’s Brian Armstrong to the Winklevoss twins. The gala was presided over by David Sacks, who declared that the “reign of terror” against crypto was over.
Amid the celebration, Trump announced the launch of his memecoin on Truth Social and X. The move even confounded many in the audience with its naked attempt at self-enrichment—not to mention its ethics concerns. The cryptocurrency soared to a fully diluted market cap of over $70 billion by Sunday morning, though it has since dropped, with a Trump-owned entity owning 80% of the supply. You can read my full dispatch here.
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
Submit a deal for the Term Sheet newsletter here.
Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.
