Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. Today is April 16th, and you get a double header. We're going to talk about a topic near and dear to all of our hearts, regardless of where you live, if you're in the crypto space: the true cost of regulation.
Recently, Commissioner Hester Pierce of the Securities Exchange Commission tweeted, "We at the SEC need to do our part to ensure that the U.S. is a 'why not' kind of place where people are free to pursue their dreams." She delivered a nice long speech, and I’ll summarize it for you. In her speech, Commissioner Pierce discussed the importance of sensible securities regulation and fostering an environment that encourages innovation and entrepreneurship in the United States. She emphasized that the SEC should strive to create a regulatory framework that supports the American spirit of freedom and opportunity.
Key points from her speech include:
1. The SEC's mission is to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets. We can all agree on that.
2. In recent years, the SEC has become increasingly prescriptive in its rule-making, which can discourage innovation and create barriers to entry.
3. The SEC should use its exemptive authority to accommodate new products, technologies, and business models rather than rejecting them outright.
4. The SEC should focus on fostering regulatory predictability, taking a prudent and iterative approach to regulation, and exploring ways to use new technologies to enhance its regulatory capabilities.
5. The SEC's approach to regulating cryptocurrency and blockchain technology has been inconsistent, creating uncertainty for market participants.
I'm going to give you an example in just a moment. The SEC should educate its staff about new technologies like artificial intelligence and embrace their use to enhance its mission. It's a great speech if you have time to read it, but it is what it is—just a speech.
Let me tell you about the real cost of regulation in the United States. I received a letter from the government of Switzerland, and I’ll read it to you:
"Personal invitation, Mr. Charles Hoskinson, Wheatland, Wyoming. Dear Charles, this autumn marks the 10th anniversary of the Crypto Valley, a milestone we are eager to celebrate. Over the past decade, Crypto Valley has expanded across Switzerland and is now home to 1,300 active companies generating immense value, employment opportunities, and innovation. When you and your co-founders chose Switzerland as the birthplace of pioneering the Ethereum blockchain, nobody could foresee our nation becoming renowned as a global leader in crypto only five years later. It was originally a group of visionary foreigners, foremost among them yourselves, who were attracted to Switzerland, perhaps because the nation embodies so much of what blockchain is all about, especially decentralization and consensus.
By the way, Switzerland doesn’t have a leader; it has a board of seven, and the leader of that is the president. It’s a confederacy, not a federal bureaucracy. The establishment of Ethereum a decade ago is widely regarded as the Big Bang of Crypto Valley. We were the second crypto company; the first was Bitcoin Suisse, which is run by my good friend, Nikolas. Therefore, we wish to spotlight Ethereum and its founders at the center of this anniversary celebration. Looking back at the genesis of Crypto Valley is not only a source of pride for the Canton of Zug but is also a nationwide success story.
It is our distinct pleasure that the future president of the Swiss Confederation and finance minister has graciously agreed to take over the patronage of this anniversary celebration. The Jubilee will take place as part of the CV Summit on the evening of October 2nd in Zug. We would like to extend a warm personal invitation to you to join us and celebrate. This invitation comes from the Canton of Zug, the city of Zug, as well as the Swiss Blockchain Federation. The SBF will also extend the invitation on behalf of the federal council.
As a politician, I must say I am proud and happy because each of the 1,290 companies reflects Switzerland's innovative heritage and strengthens the local and global economy. Blockchain is a solution providing stability, efficiency, and resiliency—factors that our turbulent world urgently needs and much of which originates from Switzerland.
This is the part of the letter that made me incredibly bittersweet: we can observe now that Blockchain and Crypto Valley have evolved into a distinct, highly innovative industry. The figures speak for themselves. The Crypto Valley is home to 1,290 companies, making a 13.6% increase from the previous year. Of the 1,290 companies, the majority—512—are located in Zug, followed by Zurich and Geneva. The valuation of the top 50 Crypto Valley companies has seen a remarkable surge of 106% to a total of $382.92 billion.
Think about that: $382.92 billion. The Jubilee is not just a celebration; it is a statement on how the combination of a strategic location and innovative pioneers like the founders of Ethereum can collaborate to launch a success story. We would be delighted to welcome you personally to Zug."
This is the price of regulation. People went to Switzerland because the United States shut its door. When the United States made a decision to become a hostile jurisdiction to crypto, the real-life consequences were that over 1,000 businesses went to Switzerland, one of the most expensive countries in the world to incorporate in, and not known for being a startup hub. A third of a trillion dollars of value left the United States.
You have a commissioner of the SEC saying we’re not doing a good job and that inconsistent rule-making is creating real problems. From Switzerland's perspective, this is evident. Switzerland, Dubai, Abu Dhabi, and Singapore are jurisdictions that have similar success stories, with hundreds, if not thousands, of businesses and cumulative values in the trillions of dollars.
Today, one of the fastest-growing industries in human history is being stifled by the current regulatory regime in the United States, which is shutting the doors to trillions of dollars of value and thousands, eventually tens of thousands, of businesses. When you hear Elizabeth Warren say we’re all criminals and that we just want to launder money, or when you hear the Treasury Department say something outrageous, it doesn’t help us as a nation; it hurts us.
It certainly helps those who are clever and smart. I know there are certain authors out there who like to diminish my role in the founding of Ethereum, but I was only there for six months, so I couldn’t do much. However, I did negotiate with the Swiss. I was the guy who pushed for us to be there. I sat with Luka Müller and others at MME Partners, and we talked directly to the Swiss government every single day in negotiations. They kept asking, "What’s in it for Switzerland? What are you doing for the Swiss people? How many Swiss are you going to hire? How will this benefit Switzerland?"
I looked them straight in the face and said, "If you give us a chance, this is going to create an industry in your nation." You know what they did? They said, "Welcome to Switzerland; don’t make it our problem." They signed a tax ruling within just a matter of weeks, and we had absolute regulatory clarity. We were able to incorporate there, and over a thousand businesses followed suit, creating a third of a trillion dollars of business value and probably 10,000 Swiss jobs. It replaced industries; it was that big.
They negotiated and put controls in place. It wasn’t like it was an unregulated activity. There were lawyers, businesses, auditors, rule of law, and consumer protections. But it was a negotiation for the good. In Wyoming, we’ve passed 31 laws in cooperation with the state. We have all this amazing stuff that, if made into national policy, would make the United States an even better jurisdiction than Switzerland to incorporate a crypto business.
All they have to do is make it law. You have speedy banks for stablecoin registration, token taxonomy, and even a law for DAOs and how to represent DAOs and create legal character for them. Think about that. Why don’t we make this the law of the land? I don’t know. I know the consequences of it. I know the impact this has.
When you go to vote in 2024 and talk to your government officials, understand that this is not an abstract concept. This is about the economy as a whole. Where are the jobs going to come from? How do we pay down the debt? Where do high-value things come from? How does America maintain its status as a dominant country in the world? It’s all economics at the end of the rainbow.
You have a choice to make: do you destroy jobs or do you create them? Do you embrace the future or ignore it? The future is coming regardless of whether we want it or not, and somebody’s going to get this done. The people who do will win.
It’s why we saw Spain collapse, England rise, and then later, the arrogance of the UK and their empire allowed the United States to rise and dominate the 20th century. The 21st century is unwritten, and the winners will be those who embrace exponential technologies and win those games.
I’m here to tell you directly that we’re not doing it right in the U.S. Everybody knows it deep down in their bones. In 2024, we get to make a choice at the ballot box. I encourage you, if you’re an American, to vote pro-crypto. I don’t care about the political party. I don’t care if you’re third party, left, or right. If they’re anti-crypto, vote no. If they’re pro-crypto, vote yes.
It’s bittersweet to receive a letter from the president of another country inviting me to a jubilee celebrating the fact that my country was so bad that it lost a third of a trillion dollars worth of business. This is not a dig on Switzerland; I love Switzerland. It’s one of my favorite countries, with amazing people and some of the best engineers. It’s one of the most beautiful countries in the world.
On the other hand, I am an American. I was born in America, grew up in Hawaii, have a ranch in Wyoming, and live in Colorado. I’m getting real tired every year of watching the decline. I’m tired of everyone being so cynical and pessimistic. Snap out of it! We own this country—the American people—and ultimately, it’s our decision what to do, where to go, and how to get there.
These should be wake-up calls that we’re not winning. They should be wake-up calls that the way we’re doing things is hurting our ability to get where we need to go in the future. I’ve been around the world enough to know who the winners and losers are. I can tell you right now we will not win in five years or ten years.
The only group of people that can change it is us. If we make this an issue, if people understand there are political consequences for being anti-crypto, then they’ll suddenly get pro-crypto. That will open the door and allow this industry to take the risks it needs to take, creating hundreds of thousands of jobs and trillions of dollars of wealth.
Or we can allow the current state of affairs to continue to fester. We will continue to grow in hostility, and eventually, 100% of this industry will get offshored, except for a small group of cronyistic businesses that are already nepotistic and embedded with a legacy. We will lose the future.
What would America be if Google, Microsoft, IBM, Apple, HP, Facebook, and Amazon were incorporated in Germany instead of the United States or the UK? Tell me how many jobs we would have, how much wealth we would have, and how much geopolitical influence we would have.
The integrity of our nation, our national security, and the sanctity of the economic union we’ve forged are at stake. Not to mention the profound implications of handing over our cybersecurity capabilities to our adversaries. Our industry is the number one employer, trainer, and producer of information security experts, cryptographers, and cybersecurity experts by volume.
If we throw this industry away, we throw that talent away too. How are we going to win the cyber war then? These are the consequences of the Elizabeth Warren types of the world. These are the consequences of the language coming out and how people are doing things.
I commend those in government who recognize this and make statements that we ought to be better and work with people. It’s not about rolling over and letting an industry do what it wants to do. Switzerland certainly didn’t do that. It is one of the most rule-of-law countries you’ll ever go to in your life. There’s a strict social order; you do not violate the law in Switzerland.
That’s why they said, "Don’t make it our problem." You can do business, but you have to do business right, ethically, and with integrity. All we ask for is negotiation, clear regulations, and fair rule-making that allows people to operate when they’re innovating and doing great things.
The consequences of that innovation are economic identity, self-sovereign identity, banking the unbanked, connecting the unconnected, and ultimately making the world a more prosperous and equal place for us all instead of just for the few.
So, my friends, that is the price of regulation. Talk to you soon.
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