October 10, 2024 | Read Online

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"I see good things coming no matter what."

— Representative Tom Emmer

Permissionless III, Day 1

The final stretch of the first Mormons' long journey west was undertaken in desperation: In 1838, the governor of Missouri issued an order calling for Latter-day Saints to be "exterminated or expelled from the State."

Having optimistically set out from New York on instructions from God, Joseph Smith's outcasts arrived in Utah fleeing persecution.

This week, crypto natives arrive in Utah fleeing SEC persecution.

Ok, not really — if so, we'd be gathering in Wyoming, Tennessee or Vermont, the only states where DAOs are legally welcomed.

(Maybe next year, though. Let's see how the election goes.)

But the financial persecution of the US crypto industry is real, as several speakers attested on Day 1 of Permissionless.

Representative Tom Emmer described it as an "unlawful and un-American attack on crypto," citing Operation Choke Point 2.0, Gary Genlser, regulation by enforcement, and the prosecution of mixers — "this is big-government at its worst," he told us.

(He even put "Gary Gensler" in air quotes, suggesting the SEC Chair has become less a person and more a symbol of dysfunctional government.)

Chris Dixon of a16z believes that US regulators have deliberately sowed confusion and chaos in the industry by prosecuting crypto's good actors and not its bad ones: "They go after Coinbase but not FTX," he noted — "a deliberate strategy to chill the space."

The result is that a16z portfolio companies "can't build what they want to build because they're afraid they'll be in court."

Kristin Smith of the Blockchain Association understatedly noted that, "This is not how new industries are supposed to be treated in the United States."

Less diplomatically, Coinbase's Paul Grewal asserted that what we need from the next US president is "a commitment to put people of integrity in charge of the agencies."

Grewal pointed to the SEC staffers recently caught lying in court during the DEBTBox case here in Salt Lake City as evidence of widespread misconduct within the agency and said that the problem starts at the top — his hope is that the next president will commit to appointing "a chair of the SEC who will stop lying to the American people."

Similarly, Dixon is hoping that a new administration will stop the regulatory crackdown "on people trying to build useful things" (while leaving memecoins unchallenged) and set "bright-line rules" so that crypto builders know exactly what they can build without risking jail time.

Dixon believes these policy issues are "by far the most important thing we have to solve" for the crypto industry to move forward.

All of the speakers seemed confident that policy will change for the better.

Dixon noted that crypto now has "a lot of support in both parties" and that he's therefore "optimistic this will get resolved in the near future."

Representative Emmer, who introduced himself as "a customer service representative from the US government," agreed that political change was coming, mostly because he sees crypto as a "non-partisan issue" and that the "dinosaurs" aligned against it are slowly dying out.

Jake Chervinsky of the Variant Fund struck a cautionary note, describing the US presidential election as a "singularity event" for US-based crypto.

But Emmer reassured us that he sees "good things coming" for the US crypto industry, no matter what the outcome in November.

I'm not sure he entirely believes that because he did get sharply partisan later on — but he was fired up, which was fun to see.

He seemed genuinely enthused, for example, that crypto can be part of a movement to "enable people to make their own choices instead of some centralized authority."

Once crypto legislation is in place, he said, the industry will be freed up to create "the innovation that this country needs."

He thinks it could happen soon: "Watch next year, you're going to see this thing take off."

The "thing" he was referring to is the passage of pro-crypto legislation, but, had he been asked, he might have said the same about token prices: "The decentralized internet I believe will drive our economy even better than what we saw in the '90s."

I hope he's right — I'm old enough to have been trading stocks in the 1990s dotcom boom and would love nothing more than the opportunity to trade tokens in a 2020s crypto boom.

But it's not really about prices, as many of the rest of the day's panels made clear.

Instead, it's about building an alternative, permissionless financial system.

Emmer noted that most people in crypto are there because they believe they can "change the world" — and that (not token prices) is the real reason to end the SEC's financial persecution of the industry.

Regulatory clarity would be great for US crypto but it might also be great for genuinely oppressed groups around the world, such as Russian dissidents, Afghani women, refugee communities, and the un- and under-banked everywhere.

That's because, at its best, crypto is on the side of these societal outcasts.

When outcast Mormons first arrived in the Salt Lake Valley, the largely unpopulated region was still part of Mexico and that was no coincidence — Mormons had to leave the United States to find a place where they'd be free to build their community.

The sentiment at Permissionless remains hopeful that the crypto industry won't have to follow suit — but also realistic that it will take change in Washington DC to make it happen.

When Chris Dixon visits DC to lobby for the cause, the most common question he gets about crypto from lawmakers is, "Isn't it dead? I heard it was dead."

So here's my TLDR of Day 1 at Permissionless: It's not dead!

— Byron Gilliam

P.S. Join us on Friday at 5 PM for Karate Combat at the Salt Palace Convention Center, Hall E! Get ready for an action-packed night as your favorite crypto influencers David Hoffman and Kain Warwick face off in an epic battle.

Don't wait, grab your ticket now! Just click "Have an access key?" and enter Permissionless50 to secure yours.

Get your ticket!

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L1 & L2 Token Value Capture

In this episode, we're joined by Jon Charbonneau, co-founder of DBA to discuss L1 & L2 token value capture! We discussed measuring profitability of tokens, PoS vs PoW value accrual, and whether or not issuance is a cost. Additionally, we unpacked the economics of L2s, and compared them to L1 economics. Finally, we asked ourselves — can anything flip BTC as money?

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