Markets Daily Crypto Roundup Episode: Privacy Is Crypto's 'Number 1 Demon': Charles Hoskinson Release Date: May 28, 2025 Host/Author: CoinDesk

Introduction and Guest Introduction

In this episode of Markets Daily Crypto Roundup, hosted by CoinDesk, the spotlight is on Charles Hoskinson, the CEO and founder of Input Output (IOHK), the driving force behind Cardano, and a co-founder of Ethereum. Known for his bold ideas and technical acumen, Hoskinson delves deep into the current state and future of the cryptocurrency market.

Market Cycles and Current State of Crypto ([02:13] - [03:41])

Hoskinson begins by addressing the cyclical nature of cryptocurrency markets, highlighting the recurring bull and bear phases every four years. He reflects on previous cycles:

“I remember the first one I experienced was 2013... during the Mount Gox burn up.” ([02:13])

He emphasizes that despite the industry's efforts to mitigate these cycles, the inherent market dynamics persist. Currently, he observes a bullish trend, albeit with lingering macroeconomic challenges such as tariff issues that may cause "another month or two of heartburn" before the cycle fully unfolds.

US Government's Evolving Stance on Crypto ([03:41] - [07:05])

Hoskinson notes a significant shift in the US government's approach to cryptocurrency, moving from a restrictive stance under regulators like Gary Gensler to a more supportive posture. He mentions initiatives like the creation of a strategic reserve and the possibility of the government procuring crypto for operations, which he views positively.

“Having the US Government say, hey, we're going to have a strategic reserve... that's a good thing.” ([02:13])

This change is not limited to the US; it also affects global attitudes, with regions like the Middle East and Europe becoming more accommodating towards crypto. Hoskinson is optimistic about the Genius Act, a stablecoin legislation, predicting its passage despite initial political friction. He attributes this optimism to the political calculus where opposing crypto could alienate a significant voter base.

“55 million Americans own crypto... why would you as a politician go and burn down 10, 20 million people of your own base?” ([03:59])

Stablecoin Legislation and the Genius Act ([03:59] - [07:05])

Hoskinson discusses the importance of regulating stablecoins, which he describes as a "huge sector" with over $243 billion in stablecoins minted and approximately 120 million transactions monthly. He highlights the necessity of international standardization, involving bodies like NIST, to ensure stablecoins operate seamlessly across different jurisdictions.

He anticipates the Genius Act will pass after "another month or two of squabbling" and identifies the forthcoming Market Structure Bill as another critical piece of legislation. This bill aims to address securities regulation, taxation, and the potential memorialization of reserves.

Additionally, Hoskinson advocates for modernizing securities laws to accommodate global trading and real-world asset tokenization, envisioning a future where assets like real estate and equities are traded on token markets with lightweight securities.

“If we could open up securities regulation a little bit... it would open up the real world asset space.” ([05:15])

Privacy Challenges and the Midnight Project ([07:12] - [11:03])

Privacy emerges as the foremost challenge in achieving mainstream crypto adoption. Hoskinson critiques the current state of public ledgers, where all transactions are immutable, time-stamped, and irrevocable, leading to potential privacy invasions.

“The number one demon is this concept of privacy.” ([07:37])

To address this, Hoskinson introduces Midnight, a project focused on integrating privacy into the crypto ecosystem. Midnight aims to create a private side to the public blockchain, enabling selective disclosure and protecting sensitive information while maintaining the integrity of the public ledger. This dual-layer approach seeks to balance transparency with privacy, crucial for applications like stablecoins, supply chain management, and secure voting systems.

Midnight collaborates with major smart contract platforms such as Solana, Ethereum, Avalanche, Cardano, BNB, and XRP, facilitating interoperability and allowing developers to utilize their native currencies for transaction fees. This strategy promotes a cooperative economic model, moving away from adversarial competition among blockchains.

“Instead of doing an ICO or venture capital, I'll just spend my own money, build it, release it, finish, and do an airdrop to these eight different chains.” ([11:03])

Cooperative Economics and Blockchain Interoperability ([07:37] - [11:03])

Hoskinson emphasizes the importance of cooperative economics and interoperability between different blockchain ecosystems. By enabling seamless interaction and transaction fee payments across various platforms, Midnight fosters a unified and collaborative crypto environment. This approach mirrors how developers utilize APIs in the AI industry, promoting efficiency and innovation without the need to build redundant systems.

“Developers there could extend their infrastructure and pay transaction fees with their underlying currency.” ([09:20])

He illustrates this concept by comparing it to developers using OpenAI's APIs instead of creating their own language models, thereby focusing on their core business while leveraging existing technology for specialized functions like privacy.

Community Building and Philosophy in Crypto Projects ([12:23] - [14:35])

Hoskinson underscores that the longevity and success of cryptocurrency projects hinge on strong community building and a robust philosophical foundation. He reflects on the high failure rate in the crypto space, noting that 1.4 million cryptocurrencies have been launched with 94% now defunct. Successful projects like Bitcoin, Dogecoin, Ethereum, and Cardano survive due to dedicated communities and clear, inspiring philosophies.

“Community building is the core of it. The other is philosophy.” ([12:43])

Hoskinson highlights Cardano's on-chain governance, treasury system, and commitment to societal change as key factors that inspire and sustain its community, especially during bear markets. He contrasts this with projects that lack genuine community engagement, which often fade when initial excitement wanes.

Conclusions and Insights

Charles Hoskinson concludes by reiterating the critical issues and proposed solutions for the future of cryptocurrency:

1. Privacy: Implementing robust privacy measures to protect user data while maintaining transparency where necessary.
2. Cooperative Economics: Fostering interoperability and collaboration among different blockchain ecosystems to enhance efficiency and innovation.
3. Community and Philosophy: Building strong, engaged communities grounded in clear, meaningful philosophies to ensure long-term project sustainability.

Hoskinson is optimistic about the industry's direction, believing that addressing these core areas will propel crypto towards broader adoption and integration into mainstream financial systems.

“It's really exciting.” ([11:03])

Final Remarks

The episode wraps up with Host's appreciation for Hoskinson's insights, highlighting the transformative potential of his initiatives in shaping the future of crypto.

Notable Quotes:

• Charles Hoskinson ([02:13]): “We as an industry are trying to do everything in our power to get rid of the bull market. But it's still coming whether we like it or not.”

• Charles Hoskinson ([03:59]): “55 million Americans own crypto... why would you as a politician go and burn down 10, 20 million people of your own base?”

• Charles Hoskinson ([07:37]): “The number one demon is this concept of privacy.”

• Charles Hoskinson ([09:20]): “Developers there could extend their infrastructure and pay transaction fees with their underlying currency.”

• Charles Hoskinson ([12:43]): “Community building is the core of it. The other is philosophy.”

This comprehensive discussion with Charles Hoskinson offers valuable insights into the evolving landscape of cryptocurrency, emphasizing the need for privacy, regulatory clarity, interoperability, and strong community foundations to drive the industry forward.