Regulatory Capture
mechanismAI & Compute · Crypto & Digital ID
The same tech insiders who own AI and crypto companies are being handed the pens to write the rules for those very industries.
Who they are
Regulatory capture by the PayPal Mafia network, described as taking over the rule-making state from inside.
What they do
It's the pattern of insiders writing the laws that govern the technologies they own.
How it works
David Sacks, as AI and crypto czar, helps shape rules over technologies his network owns; a special-government-employee waiver lets him skip Senate confirmation; a crypto strategic reserve enriches positioned venture investors; and budget-office deregulation strips out AI safety rules, so the people being regulated design the regulations.
Why it matters
It's a prime example of an announced rule quietly gutted by written carve-outs, waivers, and immunities so it doesn't touch how things really operate, with the engine holding open whether it's a coordinated single actor.
The engine's record — word for word
PayPal Mafia captures the regulatory state from within. Sacks (AI & Crypto Czar) writes law governing technologies his network owns. SGE waiver avoids Senate confirmation. Crypto Strategic Reserve enriches positioned VCs. OMB deregulation removes AI safety rails. The fox designs the henhouse. [Seam: Aligned-To-Whom? codified-exemption instance — an announced rule decoupled from operating reality by a written carve-out / waiver / immunity / 13G-passivity / tax-exemption (the master-key lever). (b)+(c); intentional-single-operator gated.]
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