The Breakdown - Bitcoin's Incontrovertible Political Winning

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, October 6th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link of the show notes or go to bit.ly slash breakdown pod. Hello, friends. When the history books look back on 2024, obviously the story of crypto will be a story of the increased political relevance of this industry and this asset class in the lead-up to the November elections. The piece that we're reading today is by Blockchain Association CEO Kristen Smith

Starting point is 00:00:57 and perfectly encapsulates where we are and how this has evolved in a way that, frankly, I don't think many people would have guessed. The piece is called political candidates can no longer ignore crypto voters. Both parties now embrace pro-crypto policies to win voters. So let's read it and then we will do a discussion at the end. Kristen starts off with two quotes, the first from former President Donald Trump. Instead of attacking industries of the future, we will embrace them, including making America the world capital for crypto. The second quote is from VP Kamala Harris. We're going to remain dominant in AI and quantum computing, blockchain, and other emerging technologies.

Starting point is 00:01:32 Then Kristen writes, following the collapse of FTX, the crypto industry's reputation was at its lowest in the eyes of our country's elected officials, hampering efforts in Washington. Yet as we approach the 2024 election, this tide is shifting. With the crypto voter now emerging as a political force, especially among younger tech-savvy generations, candidates face a clear choice, embrace the industry or risk alienating a critical voting bloc in an election expected to be fiercely competitive. It's common knowledge that the industry went through a challenging past few years in Washington. And even in the more recent good times, quote-unquote, a hostile marauding Securities and Exchange Commission under the leadership of Chair Gary Gensler has continued to

Starting point is 00:02:08 regulate through enforcement, bogging down the industry's most successful companies in a mire of legal challenges and court battles. At times, the industry and its users have felt backed into a corner, desperately asking for clear rules of the road, but instead have been met with disparaging rhetoric, misleading news headlines, and, in Gensler's case, vaguely condescending office hours. Social media videos explaining crypto's many dangers. Despite this array of challenges industry champions held firm in Washington, and tireless engagement by trade groups and individual companies is finally bearing positive results. From my view as head of blockchain association, the leading trade association for the digital asset industry in Washington, I see four vectors

Starting point is 00:02:46 that point to crypto's near-term political future. The perspective of the voter, the work of advocacy organizations, and industry coordination and collaboration, and shifting political wins at the highest levels. One, the crypto voter is real. This year the crypto voter emerged as a a force, helping to shape the platforms of each presidential candidate. A year ago, this wouldn't have been possible. According to polling from DCG and the Harris poll, one in five swing state voters voters consider crypto to be an important issue in the upcoming election. And now, both the Republican and Democratic candidates for president include pro-crypto messaging in their campaign platforms. Importantly, digital assets are popular with voters of all political stripes,

Starting point is 00:03:23 supporting the fact that crypto is an inherently nonpartisan technology. In a race where razor-thin margins matter, candidates realize they can no longer ignore this critical voting block. Importantly, campaigns are realizing there's no political advantage to being anti-crypto. Two, the crypto advocate is active. The grassroots organization stand with crypto counts more than 1.5 million advocates across the country who are actively engaging in conversation in Washington, D.C., and who are pushing their elected representatives for common-sense legislation. It's working. This week, Crypto's harshest critic, Senator Elizabeth Warren, softened her tone on the industry, stating, I have no problem with people buying and selling crypto. Similarly, Representative

Starting point is 00:04:01 Maxine Waters called crypto inevitable, and earlier this week called for comprehensive stablecoin legislation during a House Financial Services Committee hearing. This episode of The Breakdown is brought to you by XAT Network. As regular listeners know, one of the things that I think is really exciting right now is all of the new builder energy around Bitcoin, and XAT Network is a great example of that. XAT Network utilizes a combined consensus mechanism of P.O. and POS, enabling miners to earn revenue and stakers to earn Bitcoin yield. Their state data index mirrors Bitcoin UTXO data, creating a venue for BTCFi to flourish and a platform to trade Bitcoin assets. ExSat Network partners with Matrixport committing

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Starting point is 00:05:17 Permissionless is the conference for Crypto-Natives by CryptoNatives, and the reason it's so important this year is that despite regulators' best attempts to push industry founders, devs, and executives out of the U.S., the United States, remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it. Literally now we are in a major political party's platform, which will lead ultimately to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is the conference for those using and building on-chain products. It's home to the power users, the devs, and the builders, and perhaps more

Starting point is 00:05:50 importantly, I will be there. The location is Salt Lake City, the dates are October 9th to the 11th, And tickets are just $499.99. If you want to get 10% off, use code breakdown 10. Go to the Blockworks website, blockworks.com. There will be links to register for the conference, and again, you can use code Breakdown 10 to get 10% off. Number three, the crypto industry is mature, organized, and effective. Despite the industry's relatively short time in Washington, the policy infrastructure we have in place is well organized in creating an impact. Crypto advocacy is the natural evolution of a growing industry. We need to be able to make the case for crypto as other industries have traditionally done for

Starting point is 00:06:30 their respective technologies and businesses. In addition to groups such as blockchain association, individual company CEOs are engaging with policymakers to encourage clear rules for the crypto industry and consumer protection for crypto users. The industry is now a sophisticated, mature, and effective force in Washington. Number four, momentum is on our side. This momentum is what the industry has been working so hard to achieve and momentum is in our favor. Indeed, this week marks one of those key turning points. Both presidential candidates are publicly voicing support for digital assets. Both the House and Senate have pro-crypto blocks. Vocal dissenting voices are now the minority. The industry has emerged from a low point in late 2022. It's been a long path traveled,

Starting point is 00:07:10 but the resilience of the industry is clear. The crypto voter is mobilized, active, and vocal. Candidates up and down the ballot would be wise to listen. All right, back to NLW here. one of the big questions, perhaps the big lingering political question around crypto, was in the wake of Biden dropping out and Vice President Kamala Harris becoming the presumptive and then actual Democratic nominee, would Democrats lean into their anti-crypto stance, the anti-cryptop position that had unfortunately characterized the party, at least in terms of its policies for the last couple of years. For those paying attention before that post-FTX period, there was no a priori reason that Democrats had to be anti-crypto. In fact, when you look back at the previous pre-FTX collapse, pre-Luna collapse,

Starting point is 00:07:54 crypto battles in Washington, they did not split along partisan lines. When some weird provisions were stuck into a critical infrastructure bill, there were Republicans and Democrats on the side trying to remove the language, and Democrats and Republicans on the side trying to get it through. Of course, these positions hardened over the course of the Biden administration for reasons that were both, one, about what was happening in the industry, yes, and the advocates for our industry being less willing to expend political capital in the wake of FTX, but also because of the decisions the Democratic Party had made in terms of who they put in power when it came to economic policy, which was clearly the war and wing of the party. Of course, this was personified in Crypto's

Starting point is 00:08:32 arch enemy of SEC Chair Gary Gensler, but it was clearly bigger than that as well. Now again, I think when we look back, there will be a few key inflection point moments where things started to shift. The first, in my estimation, was when BlackRock filed for a Bitcoin ETF. That was the world's biggest asset manager throwing its body in front of the idea that crypto was going away, and it really stopped a big part of the momentum of Operation Chokepoint 2.0. This got more pronounced and profound over the course of the ETF process, culminating, of course, in the launch of the incredibly successful Bitcoin spot ETFs. Now, the other big moment was undeniably the conversion process of candidate Donald Trump

Starting point is 00:09:11 going from anti-crypto during his presidency to open to it to the loudest political proponent for crypto. I don't think that there's any way to draw equivalence between even the most optimistic reading of Democrat positions on crypto now and the way that former President Trump is talking about it. Now, one is welcome to be skeptical about the sincerity of any position of any given politician, but when it comes to just the statements alone, Trump and the Republicans who follow him are clearly very all in on this space. The question then, of course, was what was going to happen with the Democrats? Were they going to reflexively double down on their anti-cryptoposition? Or was it going to be something different? It is very clear at this point that the decision in Democratic circles,

Starting point is 00:09:53 at least from the Kamala campaign, has been to not double down on the previous antagonistic stance. Now, of course, not doubling down on the previous antagonistic stance is a far cry from fully embracing crypto. And the skepticism you hear quite frequently from people who point out that the Democrats have been in power for the last four years as these policies have been in place are, of course, well taken. However, the state of play is that right now we are heading into an election where both parties are nominally pro-crypto and see it as part of the future. One might be much louder about it than the other, but the overall net is that the pro-crypto forces in DC in our political system are much, much bigger than the antis. Hold aside all the details that is a

Starting point is 00:10:33 powerful, powerful state of affairs, and one that is going to serve us well heading into the next year. Anyways, once again, really great stuff from Kristen Smith. Thanks, not only for this op-ed, but also for all the tireless work and advocacy in D.C. And until next time, be safe and take care of each other. Peace.

The Breakdown - Bitcoin's Incontrovertible Political Winning

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