#297—What we learned at Consensus 2024

The politics era has arrived

Jun 10, 2024

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.

Many thanks to Hard Yaka partner Jun Hiraga, who was on the ground in Austin, for his contributions to this week’s newsletter.

This week:

Crypto becomes partisan
An American opportunity
The Great Debate
Final thoughts from Jun
Stuff happens

1. Crypto becomes partisan

Here’s Jun:

It’s really amazing what’s happened in one year. It’d be interesting to check last year’s agenda. I can’t remember many political sessions. Maybe Caitlin from Custodia was up there talking about Operation Chokepoint 2.0. Maybe Hester Pierce was criticizing the SEC. But this year, the sessions were dominated by politicians, lawyers—all discussing policy.
What’s striking is that most of the politicians were Republicans. They’ve been quick to recognize that crypto is a lightning rod.

As Jun noted, Democrats did have a presence at the conference, such as Raja Krishnamoorthi (D-IL) and Brian Nelson, Under Secretary, Office of Terrorism and Financial Intelligence

U.S. Department of the Treasury. And while those talks were earnest and thoughtful, much of their focus revolved around scams, terrorist financing, the potential dangers of NFTs, etc.

In a sense, it felt like the Democrats were still in 2021.

“All of this is to say that the Democrats we saw (and perhaps we missed some) were talking about the dark side of crypto while the Republicans focused on themes of freedom, liberty, innovation, and anti-top down,” Jun said.

2. An American opportunity

One such Republican on stage was Senator Bill Hagerty from Tennessee, who’s session focused on the need to nurture innovation and provide clarity for assets such as stablecoins.

Here’s Senator Hagerty:

My evolution on it—and I’d have to take you back to my time serving as U.S. ambassador to Japan—back to the time of the Coincheck hack.
Japan’s been an interesting market for crypto. That’s where the Mt. Gox hack happened. Bitcoin Jesus [Roger Ver] is there. It’s been an interesting environment, and the Japanese wanted to rush quickly into new financial innovations and crypto being one of those. That hack happened—we were working tirelessly to try to prevent North Korea from getting access revenues that they could use to further advance their weapons program. The efforts that they were using to basically harass everybody in the region. I can’t tell you for certain who was behind the hack. But I can tell you they took over half a billion dollars in one night.
When I first saw that happen, I was deeply concerned about what could be done with cryptocurrency. But that forced me to start digging into it a great deal more.
And while I hear some of my colleagues still stuck in first gear where I was, reading a headline, what I’ve realized is that cryptocurrency has tremendous appeal and creates tremendous opportunity for us.
My viewpoint is quite simple as well. We’ve got to have a constructive relationship with the crypto marketplace if we’re going to properly legislate and regulate it in the arena. You get terrible outcomes in Washington when you have people putting together regulations and legislation on industries they don’t understand. And more of my colleagues need to get with me and understand the industry better because it possesses—and this is my second point—it possesses tremendous potential in terms of how it allows us to have decentralized governance. It allows true individual ownership. And frankly, looking at the underlying technology, this is the future of the internet. It needs to happen here in America. We need not regulate it in a manner that pushes it offshore.
So, we’ve got, in my view, an opportunity before us. We’ve got an incumbent administration that’s decided to wage war on cryptocurrency. Donald Trump is public enemy one, two, and three, but if you ask some of my colleagues in the banking committee, anybody in the crypto business would be in the top ten. They really have a very negative view toward the industry and toward the industry participants. That has got to change because the potential here is enormous. The United States has been the hotbed of innovation. There’s no reason for us to give that up.

3. The Great Debate

One panel Jun highlighted was a debate between Messari’s Ryan Selkis and Marvin Ammori Uniswap Labs’ Marvin Ammori. Selkis, notably, was invited to speak to Trump Supporters at a Mar-a-Lago dinner back in May.

We’ve long been fans of both Selkis and his platform Messari, but as Jun noted, he promoted what could be described as a “scorched earth approach” that Jun worried could alienate some developers.

Here’s Jun:

It feels like crypto has become a Republican state, and that’s not good or right. If Democrats feel awkward or unwelcome working in this space, then crypto loses.

The fear is that Consensus could become a guised MAGA convention.

Meanwhile, Ammori, a lifelong progressive, provided a more balanced take.

Here’s Ammori:

Thank you to Ryan for agreeing to debate. We are longtime allies, and it’s fun to disagree on exactly one thing. As I understand it is, should the crypto community exclusively support Trump and the Republicans in this election? That is the debate topic.
My point of view is that the crypto community should remain nonpartisan or bipartisan, and that is the only way we will have the political power that we need in the short term and the long term so that we have the certainty from government that we need
…
Ryan’s done great work on the Republican side, but I think it’s pretty hard to convince Democrats in our community to vote for Trump. It’s really hard. It’s surprisingly hard to get people to vote for only their economic self-interests. And Democrats learn this all the time. Democrats always wonder why unions sometimes vote for Trump and Republicans, why lower and middle-class people sometimes vote for Republicans when this recovery has been primarily led by Biden in those demographics.
And when you talk to people, they’ll say, money is not everything, right? They’re not going to vote just based on money. They also care about issues like abortion or gun rights or something else. So if you want to convince the Democrats in our community to support Trump, they’re going to say, well, maybe my bags will go up, but I really care about democracy, and I think Trump is a threat to democracy. Or I really care about Roe v. Wade and Trump appointed people who got rid of Roe v. Wade.
And so there are a bunch of people who are not going to side with this single issue because they’re just Democrats. And then what we’re doing is we’re pushing those people out of our community, saying they’re not welcome. And the long-term ramifications of that is we have a smaller tent, not a bigger tent. We have a politics of subtraction, not addition. And what that leads to is if it becomes purely partisan, every four years, we’ll have a massive pendulum swing one way or another. We won’t have the certainty we want.
We’ve seen this in issue after issue. We’ve seen this in financial issues. We’ve seen this in technology issues. What happens is that you don’t get certainty. You get this political football way back in one direction, way back in another. And then it’s possible that in this election, the Democrats win the House, right? We might need more Democrats. And so in the short term, we do need other allies.
Yesterday, Ryan and I were at dinner, and Tom Emmer spoke, and Tom Emmer is the Republican Whip. He’s the guy who gets all the Republicans to vote for Republican things. And he said, we should keep this nonpartisan. It’ll make my job easier. So if the Republicans in Congress are telling us, keep it nonpartisan, I tend to listen to them.
And finally, I’ve spent 20 years doing policy and working mainly on the Democratic side, but Donald Trump has made a campaign promise, kind of a vague campaign promise in favor of crypto. And campaign promises are aspiration, right? They’re not worth the paper they’re written on really.
Because what ends up happening is they have a whole bunch of different campaign promises. And they show up and they’ve got to use political will to prioritize those campaign promises and see what they can get done. And even if Donald Trump is elected, and even if Ryan Selkis is the SEC Chairman, the people who are still there, who will try to slow down this community, are the banks. The banks are the real enemy, not Gary Gensler, not Elizabeth Warren. The banks, we know they’re lobbying against us.
We know all of their lobbying organizations that spend millions and millions of dollars. The banks don't like self custody because they want all of us custodying our assets with them. It's how they make money. They then lend it out, fractional reserve banking. They don't want us to have cheap, fast payments because they make money with expensive payments that are slow because they make money on the day-to-day float. We know the lobbying organizations that spend tens of millions, 30 million dollars. We can name them. We know what their arguments are.
And even if the Republicans win, we know they have, you know, imagine all of you are bank lobbyists. You will find a way, right? To stop right, right? Even today, Elizabeth Warren’s bill that everyone hates on AML has two Republican co-sponsors, right? Graham and Marshall, she’s not alone. If you look at the press release on that bill, you have the Bank Policy Institute, you know, a multimillion dollar organization headed by Jamie Dimon that’s massively supporting Elizabeth Warren. So they will do what they can. And even when the Republicans were in power, Steve Mnuchin, very senior in the Trump administration, very anti-crypto, tried to do some of the worst things against crypto. Jay Clayton was the SEC Chairman, did a terrible job, and the banks will simply adapt and change.
So the real solution is not just bipartisan power. The real solution is we as an industry have to dramatically up-level our game. The Blockchain Association is doing great work, massively underfunded. DeFi Education Fund, massively underfunded.
When you think about who our opponents are and the kind of long-term strategy we need to win, we need to make sure that we up-level across everything.

Check out the full debate, which was published by Messari for the public last week:

4. Final thoughts from Jun

Here’s Jun:

Overall the energy was upbeat at Consensus, a combination of “we’re seemingly out of the bear market,” Washington thaw (lots of talk of SAB121 and FIT21), the apparent imminent launch of ETH ETFs, etc.
We went to a Fidelity crypto party, it was jammed with Wall Street types, hedge fund guys, everyone was cheering the FIDO BTC ETC.

Naturally, at a time when the crypto narrative is dominated by partisan politics and meme coins, Jun was ever the purist:

Frankly, I kinda liked the build vibe of past conferences.

Yaka Stuff

#297—What we learned at Consensus 2024

The politics era has arrived

1. Crypto becomes partisan

2. An American opportunity

3. The Great Debate

4. Final thoughts from Jun

5. Stuff happens

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