The Breakdown - Senator Bill Hagerty on the Stakes of the Election for Bitcoin

Episode Date: July 26, 2024

A reading and discussion inspired by https://bitcoinmagazine.com/politics/the-future-of-bitcoin-in-america-will-be-decided-at-the-ballot-box Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

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 Friday, July 26th, and today we are doing an early LRS. 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 in the show notes or go to bit.L.Y. slash breakdown pod. Hello friends, welcome to something of a three-day weekend. So many of you are at the Bitcoin conference this week and I happen to be traveling for something totally unrelated and family

specific. And so there won't be an episode this weekend. And so I wanted to move the Long Read Sunday up to Friday. We should be back with our normal Friday 5 next week. But for now, the big theme this week, of course, really the big theme for this summer, has been the increasing political relevance of Bitcoin and crypto. In some ways, this started back around the collapse of FtX, when the response was in part every pro-crypto and neutral crypto politician getting out of the way of the anti-crypto army and letting them for a time run roughshod over us. This is Operation Chokepoint 2.0, Gensler's aggressive SEC. And for a while, it seemed like that would be the story. Things started to shift a little when BlackRock decided to wave in and plant their flag

in the Bitcoin-Spot-E-T-F race. Things changed a little more, when court decisions went against the SEC and forced their hand in many ways leading to that spot ETF launch. Things changed even more when former President Donald Trump shifted his perspective on crypto, waiting into it slowly at first, but then embracing it fully with both arms. A big question has been whether Democrats would follow suit. There has been a strong hope, at least, if nothing else, on the part of the left side of the crypto aisle, that because this was getting increasing traction as an election issue, it would force a rethink of Democrats when it came to their crypto strategy. This, took a supercharge turn this week when President Biden withdrew from the presidential race

and Vice President Kamala Harris stepped into the role of heir apparent. For about 24 hours, David Bailey, the organizer of the Bitcoin Conference and the CEO of Bitcoin Magazine, indicated that they were in chats with the Harris folks about Kamala showing up at the event. That ended up not happening, with much predictable rancor to follow. But there is still more optimism at the end of this week than there was at the beginning of this week for what the future of crypto and progressives could look like. Until today's read comes from the right side of the aisle from Senator Bill Hagerty. This piece was published on Bitcoin magazine and shows the extent to which Republicans are seeing

this as an important electoral issue. The piece is called The Future of Bitcoin in America will be decided at the battlebox. Hegarty writes, as Americans head to the polls this fall, their decision regarding who will lead our country will also determine the fate of crypto here in the United States, and our security, prosperity, and freedom are at stake. This week, I will join President Trump and thousands of crypto market participants in Nashville for Bitcoin 24, the world's largest Bitcoin conference. This year, the conference is held in my home state at a time that is clearly the tipping

point for the future of crypto technology in the U.S. This fall, the future of crypto in America is on the ballot as our nation decides who will lead the executive and legislative branches of our nation. The contrast between Democrat and Republican approaches to crypto is stark. The Biden administration has repeatedly demonstrated its hostility to crypto by refusing to provide a basic regulatory framework for the industry, while simultaneously taking enforcement actions against firms for allegedly violating non-existent rules. This combination of legal uncertainty and brass-knuckled enforcement has pushed many crypto-innovators to the brink, leaving them little choice but to move their businesses overseas.

Meanwhile, Democrats have also taken extreme measures to stifle the adoption of crypto in the traditional financial system. Biden's regulators have forced crypto-engaged banks like signature bank into receivership while imposing crypto-hostile policies like the SEC's Staff Accounting Bulletin 121, which makes it prohibitively expensive for financial institutions to hold customers' crypto assets. Altogether, the Biden administration's record makes clear what another four years of Democrat political control would bring. More political persecution of the industry on a scale reminiscent of Obama's Operation Chokepoint. In contrast, Republicans have taken concrete steps to develop constructive crypto policies that exemplify the party's longstanding commitment to the principles

of innovation, free enterprise, and individual liberty. House Republicans have passed promising bills that would provide legislative clarity for crypto market structure and for U.S. dollar-denominated private stablecoins. Republicans in both chambers have worked together to try to overturn Biden's most egregious policies, addressing concerns about illicit finance, promote private sector innovation and stable coins, and prevent the development of a central bank digital currency. Republican control of Congress and the White House would enable the GOP to expand and implement these efforts, finally delivering constructive rules of the road for crypto and ending Biden's oppressive regime of regulation by enforcement.

Hello friends. Before we get back to the rest of the show, I want to implore you to join me at Permissionless. Permissionless is the conference for crypto-natives by crypto-natives, 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 importantly, I will be there. The location is Salt Lake City, the dates are October 9th to the 11th, and tickets are just $499. If you want to get 10% off, use code Breakdown 10. Go to the Blockworks website, blockworks.co. There will be links to register for the conference, and again, you can use Code Breakdown 10 to get 10% off.

If Republicans don't stop Democrats from trying to crush crypto in America, the consequences could be dire. Four more years of hostility will force even more crypto innovators offshore. Prominent U.S. exchanges have already started opening businesses in other countries, seeking licenses in foreign jurisdictions, and shuddering their U.S. operations. In recent years, lawmakers in Washington have realized how allowing another critical industry, semiconductors, to go offshore, has weakened our nation's competitive edge and geopolitical leverage. We would be foolish to allow crypto this generation's new cutting-edge technology to follow the same path.

Republicans understand that keeping innovation onshore is essential for our global competitiveness and for the creation of wealth and jobs for Americans. All too often, voters dismayed with Washington's dysfunction feel that their vote and national politics more broadly does not matter. That's not true here. No matter how much the status quo may frustrate us, the truth is that elections offer us the best opportunity to change course and get our country's policies back on track. In the case of crypto, the vote at the ballot box this year could quite literally decide

its fate. This November, Americans must make their voices heard and send their elected representatives to Washington with a mandate, secure a future for crypto in America. All right, back to NLW here. I share this not to fully endorse the point that there's no hope or that Democrats are irredeemable when it comes to crypto, but more to make the meta point of how far Republicans are leaning into this issue. This is literally them showing up on our turf, both in the terms of the conference as well as in terms of this publication. What's more, crypto is not presented here as a fringe issue or even a narrow specific issue, but as endemic and reflective of much broader and more fundamental issues. And there are some in the crypto industry who feel very strongly that trying to keep up the

idea of engaging with both parties is just wasted effort. Nick Carter, for example, writes, the people who relentlessly bleed crypto as nonpartisan have been lying to you. They want to maintain relationships with the tiny handful of pro-crypto Dems, but energy is much better spent helping our allies win than trying to placate our enemies. The other side of the argument was articulated by Jake Chervinsky, the CLO at Variant Fund. He wrote a post, crypto is nonpartisan. Jake writes, this doesn't mean R's and Ds are equivalent on crypto policy, of course they're not. It means you can't know what someone thinks about crypto based solely on the R or D next to their name. It means the toxicity of U.S. politics hasn't taken over yet, as it has for so many other issues where party affiliation

dictates blind adherence to ignorant doctrine. It means there's still a chance for bipartisanship to win out in Congress, which will need to achieve anything meaningful and durable in Washington. It means a younger generation of Democrats can and will support crypto when their time comes to lead. To be clear, it is undeniable that Republicans have been better on average for crypto than Democrats. Since President Biden took office, D's have primarily sought to destroy crypto, while ours have stood up to defend it. For three years, Biden appointed regulators at the SEC and elsewhere have waged an unjust campaign of litigation and rulemaking against crypto. Those regulators came from the war on wing of the party, which has pushed legislation that

essentially bans the technology entirely. Meanwhile, ours in both the House and Senate have called out administrative malfeasance, stopped crypto ban bills, and advanced productive ideas about stablecoin and market structure regulation. These are the facts, but they don't tell you the whole story. Crypto has supporters and opponents in both parties. For the D's, Biden and other party leaders made the mistake of putting the Warren Wing in charge of financial regulation. But there's a significant and growing and younger group of pro-business, pro-innovation moderates, who take a totally different view on crypto. The best thing for crypto long term is to elevate those Ds, not alienate them. No matter what happens this November, whether you like it or not,

D's will hold power again someday. That's how the pendulum swings. For the R's, the party's overall embrace of crypto and strong opposition to administrative overreach has covered up for Republican National Security Hawks who view crypto as merely a tool for criminals and support exactly the same crypto ban bills and the guise of anti-money laundering as the Warren camp does. Of course, we should reward Republican allies who have fought valiantly for crypto, but their support shouldn't excuse the hostility of others who prefer big banks to Bitcoin. The point is, Republicans are currently better than Democrats doesn't mean we should abandon Democrats and align entirely with Republicans. The nonpartisan nature of crypto is a rare and valuable asset that we should protect at all costs.

With nonpartisan issues, substance wins out. Crypto is a revolutionary technology that should and does appeal to both sides of the aisle. This means crypto can succeed in Washington no matter who's in charge, as long as we do our jobs well. With partisan issue, substance is irrelevant. One party is in favor, the other party is against, end of discussion. If crypto becomes partisan, its fate will turn on who wins elections and nothing else. a terrible outcome for any industry that seeks clarity and stability under the law. Also, to be clear, I'm not telling anyone how to vote.

I'm not predicting that Kamala Harris would be any better on crypto than Joe Biden. I'm not diminishing the good work of Republicans or making excuses for the antagonism of Democrats over the last few years. I'm just saying crypto is nonpartisan and it should stay that way. And so, friends, I turn it over to you. Which of these arguments are you more convinced by? This is going to be the conversation for the next few months. And of course, we'll get more information about how whoever the Democrat nominee

thinks about these issues, whether Kamala, if it is her, moves more towards the middle when it comes to technology and economics. But this is ultimately the debate. It's an interesting one and one we will keep covering here, but for now, that is going to do it for the breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.