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The 2024 Pro-Crypto Election w/ Senator Bill Hagerty (R-TN)

By Validated

Published on 2024-07-05

Senator Bill Hagerty discusses the importance of crypto-friendly policies, blockchain innovation, and the upcoming 2024 election for the future of the US economy and national security.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Senator Bill Hagerty on Crypto, National Security and the 2024 Election

In a wide-ranging discussion on the Validated podcast, Senator Bill Hagerty (R-TN) shared his views on cryptocurrency regulation, blockchain innovation, and the importance of the upcoming 2024 election for the future of the US economy and national security. As a former businessman and US Ambassador to Japan, Senator Hagerty brings a unique perspective to these issues, emphasizing the need for pro-crypto policies to maintain America's competitive edge in the global economy.

The Sentinel Action Fund Initiative

The podcast opened with an announcement about the Sentinel Action Fund, a super PAC focused on electing pro-crypto conservatives to the US Senate. In a significant development for the cryptocurrency industry, the fund is now accepting donations in SOL tokens. To demonstrate support for this cause, Multicoin Capital has pledged to match up to $1 million in SOL donations over the next 10 days.

This initiative highlights the growing importance of cryptocurrency in political fundraising and advocacy. By accepting SOL tokens, the Sentinel Action Fund is not only embracing blockchain technology but also signaling its commitment to supporting pro-crypto candidates. This move could potentially influence future campaign finance practices and further integrate cryptocurrency into the political landscape.

Senator Hagerty's Crypto Journey

Senator Hagerty's first encounter with cryptocurrency came in 2018 during his tenure as US Ambassador to Japan. The catalyst was the Coincheck hack, which resulted in the theft of over half a billion dollars worth of cryptocurrency. This incident initially raised concerns about illicit finance and national security, prompting Hagerty to delve deeper into the technology.

As he learned more about blockchain and cryptocurrency, Hagerty began to recognize its potential beyond the initial security concerns. He stated, "I dug in more and more and realized the potential of this new technology." This evolution in understanding mirrors the journey many policymakers and regulators have undergone as they grapple with the implications of this emerging technology.

Balancing Security and Innovation

One of the key themes throughout the discussion was the need to balance security concerns with the potential for innovation in the cryptocurrency space. Senator Hagerty emphasized that while addressing illicit finance is crucial, it should not come at the expense of stifling innovation and economic growth.

He criticized the approach of some colleagues who focus solely on the potential for fraud in cryptocurrency, stating, "We've got a huge education challenge ahead of us." Hagerty believes that this narrow focus on fraud is sometimes used as a pretext to push for central bank digital currencies (CBDCs), which he strongly opposes.

The Threat of Central Bank Digital Currencies

Senator Hagerty expressed deep concern about the potential adoption of CBDCs in the United States. He argued that such a move would be "very detrimental to our economy, to the dollar, and certainly to innovation in this space." This stance aligns with many in the cryptocurrency community who view CBDCs as a threat to financial privacy and decentralization.

The senator's opposition to CBDCs stems from his belief in the importance of personal liberty and limited government control. He stated, "One of the reasons I ran for the United States Senate was a desire to bring the power of government back to the people, rather than empower the government to dominate the people."

Regulatory Challenges and Overreach

A significant portion of the discussion focused on the current regulatory environment for cryptocurrencies in the United States. Senator Hagerty criticized what he sees as regulatory overreach, particularly from agencies like the Securities and Exchange Commission (SEC) under the leadership of Gary Gensler.

The senator highlighted the problem of "operation choke point 2.0," referring to the practice of regulators pressuring banks to avoid serving cryptocurrency businesses. He cited examples of debanking in the crypto industry, including the shutdown of Silvergate Bank and Signature Bank, which he believes were targeted due to their involvement in the crypto space.

The Importance of Stablecoins

Senator Hagerty emphasized the critical role that stablecoins could play in maintaining US dollar dominance in the global financial system. He sees privately-issued, dollar-denominated stablecoins as a preferable alternative to CBDCs, stating, "A decentralized privately issued dollar-denominated stablecoin is the answer."

This perspective aligns with the growing recognition of stablecoins as a potential bridge between traditional finance and the cryptocurrency ecosystem. By supporting the development of regulated stablecoins, the US could maintain its financial leadership while embracing blockchain innovation.

Crypto as a National Security Issue

One of the most intriguing aspects of the discussion was Senator Hagerty's view of blockchain and cryptocurrency development as a national security issue. When asked directly about this, he responded, "Absolutely I do. And if we don't create the environment where it happens here and it happens elsewhere, I think it fundamentally weakens America."

This perspective underscores the strategic importance of maintaining US leadership in emerging technologies. By fostering a supportive environment for blockchain and crypto innovation, the United States can ensure it remains at the forefront of technological advancement and economic competitiveness.

The 2024 Election and Crypto Policy

Senator Hagerty emphasized the significance of the upcoming 2024 election for the future of cryptocurrency policy in the United States. He noted that crypto has become an election issue, with candidates like Donald Trump expressing pro-crypto stances.

The senator framed the crypto debate as a fundamental choice between liberty and government control, stating, "In its simplest form, you're talking about whether you favor liberty and freedom or whether you more favor government control and centralization." This framing could resonate with voters who prioritize personal freedom and limited government intervention.

Addressing the Talent Shortage

A crucial aspect of maintaining US competitiveness in the blockchain and crypto space is addressing the shortage of skilled developers and workers. Senator Hagerty acknowledged this challenge, drawing parallels to the semiconductor industry's struggles to repatriate manufacturing.

He highlighted the need for education and training programs, citing Tennessee's College of Applied Technology as a model for developing the necessary workforce. The senator emphasized the importance of inspiring students from a young age and providing accessible pathways for technical education.

Ideal Regulation for Crypto

When discussing the ideal regulatory framework for cryptocurrency, Senator Hagerty emphasized the need for a balanced approach that addresses security concerns without stifling innovation. He praised the FIT-21 structure, which proposes a transition from SEC regulation for initial issuance to CFTC oversight once a cryptocurrency becomes decentralized.

The senator stressed the importance of tailoring regulations to the unique characteristics of blockchain technology, rather than applying a one-size-fits-all approach. He stated, "We can't come back in and just utilize old rules that don't fit the technology or try some typical Washington one size fits all."

The Polarization Problem

Senator Hagerty expressed concern about the increasing polarization of crypto policy along party lines. He noted that while he sees crypto as fundamentally pro-American, its association with one political party could be problematic for the industry's long-term success.

To address this issue, the senator emphasized the need for bipartisan engagement and education on cryptocurrency and blockchain technology. He encouraged industry participants to reach out to their representatives and help foster a better understanding of the technology's potential.

Capital Repatriation and Economic Growth

The discussion touched on the potential for capital repatriation programs to encourage US-based crypto founders to return from abroad. While Senator Hagerty hadn't examined specific proposals, he expressed general support for measures that would bring more capital back to the United States.

He highlighted the success of the 2017 tax cuts in repatriating capital and suggested that similar approaches could be effective for the crypto industry. This openness to exploring repatriation incentives could be a positive sign for US-based crypto entrepreneurs looking to return home.

Addressing the National Debt

The podcast also delved into the connection between cryptocurrency and concerns about the national debt. Senator Hagerty acknowledged the bipartisan nature of spending increases but criticized the current administration's approach to monetary policy.

He advocated for a multi-pronged approach to addressing the debt, including spending cuts, addressing waste and fraud, and most importantly, stimulating economic growth. The senator sees crypto and blockchain technology as potential drivers of this growth, further underscoring the importance of supportive policies for the industry.

The Future of Blockchain in America

Throughout the discussion, Senator Hagerty consistently emphasized the potential for blockchain and cryptocurrency to drive innovation and economic growth in the United States. He sees these technologies as crucial for maintaining America's competitive edge in the global economy.

The senator's vision for the future includes a regulatory environment that fosters innovation while addressing legitimate security concerns. He believes that with the right policies in place, the United States can become the most attractive destination for blockchain and crypto development, reversing the current trend of talent and capital flowing overseas.

Conclusion: A Call to Action

Senator Hagerty concluded the discussion with a call to action for listeners and industry participants. He encouraged engagement with legislators to help educate them on the potential of blockchain and cryptocurrency technology.

The senator's message was clear: the 2024 election represents a critical juncture for the future of crypto policy in the United States. By supporting pro-crypto candidates and initiatives like the Sentinel Action Fund, voters have the opportunity to shape the regulatory landscape and ensure that America remains at the forefront of technological innovation.

As the crypto industry continues to evolve and mature, the insights and perspectives shared by Senator Hagerty provide a valuable roadmap for navigating the complex intersection of technology, policy, and national security. With the right approach, the United States can harness the power of blockchain and cryptocurrency to drive economic growth, enhance national security, and maintain its position as a global leader in innovation.

Facts + Figures

  • The Sentinel Action Fund, a super PAC focused on electing pro-crypto conservatives to the US Senate, is now accepting donations in SOL tokens.
  • Multicoin Capital has pledged to match up to $1 million in SOL donations to the Sentinel Action Fund over the next 10 days.
  • Senator Hagerty's first encounter with cryptocurrency was in 2018 during the Coincheck hack, which resulted in the theft of over half a billion dollars worth of cryptocurrency.
  • In 2018, there were 39 wallet shops operating in Japan, with 19 in an applied force status and 20 approved.
  • Senator Hagerty serves on the Banking Committee and is the ranking Republican on the Financial Services Subcommittee of the Appropriations Committee.
  • The percentage of crypto and blockchain developers and executives based in the United States has decreased from 40% in 2017 to about 29% in recent years, dropping at a rate of about 2% per year.
  • 19 of the 20 largest economies have active CBDC pilots, while the United States does not.
  • According to Pew Research, about 23.5 million Americans have self-reported exposure to crypto.
  • Coinbase reports around 50 million Americans have exposure to cryptocurrency.
  • The 2017 tax cut resulted in the repatriation of a significant amount of capital back to the United States.
  • It currently takes approximately five years to permit a semiconductor fabrication plant in America.
  • Senator Hagerty's legislation aims to reduce the permitting process for semiconductor fabs from five years to 18 months.

Questions Answered

How did Senator Hagerty first encounter cryptocurrency?

Senator Hagerty's first engagement with cryptocurrency was in 2018 during his tenure as US Ambassador to Japan. The catalyst was the Coincheck hack, which resulted in the theft of over half a billion dollars worth of cryptocurrency. This incident initially raised concerns about illicit finance and national security, prompting Hagerty to investigate the technology further. As he learned more, he began to recognize the potential of blockchain and cryptocurrency beyond the initial security concerns.

What is Senator Hagerty's stance on Central Bank Digital Currencies (CBDCs)?

Senator Hagerty strongly opposes the adoption of Central Bank Digital Currencies in the United States. He believes that CBDCs would be "very detrimental to our economy, to the dollar, and certainly to innovation in this space." The senator views CBDCs as a threat to financial privacy and personal liberty, arguing that they would give the government too much control over individuals' financial transactions. Instead, he favors privately-issued, dollar-denominated stablecoins as a preferable alternative.

How does Senator Hagerty view cryptocurrency in relation to national security?

Senator Hagerty considers blockchain and cryptocurrency development as a critical national security issue. He firmly believes that if the United States doesn't create an environment conducive to crypto innovation, it will fundamentally weaken America. The senator emphasizes the importance of maintaining US leadership in emerging technologies to ensure economic competitiveness and strategic advantage. By fostering a supportive environment for blockchain and crypto innovation, Hagerty argues that the United States can secure its position at the forefront of technological advancement.

What regulatory approach does Senator Hagerty recommend for the cryptocurrency industry?

Senator Hagerty advocates for a balanced regulatory approach that addresses security concerns without stifling innovation. He praises the FIT-21 structure, which proposes a transition from SEC regulation for initial issuance to CFTC oversight once a cryptocurrency becomes decentralized. The senator emphasizes the need for tailored regulations that fit the unique characteristics of blockchain technology, rather than applying a one-size-fits-all approach. He stresses the importance of creating certainty in the regulatory environment to make the United States the most competitive place for crypto technology development.

How does Senator Hagerty propose addressing the talent shortage in the blockchain and crypto industry?

To address the shortage of skilled developers and workers in the blockchain and crypto space, Senator Hagerty emphasizes the need for education and training programs. He cites Tennessee's College of Applied Technology as a model for developing the necessary workforce. The senator stresses the importance of inspiring students from a young age and providing accessible pathways for technical education. He also suggests that states should take the lead in creating programs that marry capital investment with workforce development initiatives to build the human capital needed for these emerging industries.

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