The stablecoin evangelist: Katie Haun’s struggle for virtual greenbacks through NewsFlicks

In 2018, when Bitcoin was once buying and selling round $4,000 and maximum American citizens, a minimum of, idea cryptocurrency was once a fad, Katie Haun discovered herself on a debate degree in Mexico Town reverse Paul Krugman, the Nobel Prize-winning economist who had pushed aside virtual property as close to nugatory. As Krugman curious about Bitcoin’s wild worth swings, Haun urged the dialog towards one thing else — stablecoins.

“Stablecoins are truly fascinating and truly essential to this ecosystem to hedge in opposition to that volatility,” she argued on degree, explaining how virtual tokens pegged to the U.S. greenback may just be offering some great benefits of blockchain generation with out the ups and downs of conventional cryptocurrencies.

Krugman pushed aside the theory solely.

It wasn’t precisely a turning level in Haun’s occupation, nevertheless it was once one second amongst others that experience helped outline it. A former federal prosecutor who spent greater than a decade investigating monetary crimes, together with developing the federal government’s first cryptocurrency job power and main investigations into the Mt. Gox hack and corrupt brokers within the Silk Highway case, Haun had an extraordinary background for a crypto champion. She wasn’t a libertarian ideologue or a tech founder. Coming as a substitute from regulation enforcement, she understood the legal attainable and legit makes use of of virtual property.

Through 2018, she had already made historical past as the primary feminine spouse at Andreessen Horowitz, the place she co-led their crypto budget. Founding Haun Ventures in 2022, with greater than $1.5 billion in property beneath control — its staff is now making an investment from a brand-new set of budget that experience but to formally shut — she has been much more loose to pursue her particular convictions about the way forward for cash.

The soar to striking her personal shingle hasn’t been with out its complexities. Regardless of her position at a16z and the trade connections that got here with it, the 2 haven’t publicly co-invested in the rest since early 2022, in a while after she introduced her fund, and Haun, who joined the board of Coinbase in 2017, stepped off it ultimate 12 months, whilst Marc Andreessen, who took colleague Chris Dixon’s seat in 2020, stays a director. 

When requested Wednesday evening at TechCrunch’s StrictlyVC tournament about her courting with Andreessen Horowitz, she downplayed any attainable friction whilst acknowledging they aren’t collaborators precisely. “There’s no gentleman’s settlement,” she mentioned, echoing this editor’s query about whether or not there’s any figuring out to keep away from competing along with her former employer. “If truth be told, I nonetheless communicate to Andreessen Horowitz. You’re proper that we haven’t truly completed any offers in combination of past due.” 

The obvious loss of co-investment may just mirror the cutthroat trade or the demanding situations related to leaving one among Silicon Valley’s maximum distinguished companies to compete without delay with former colleagues. Regardless of the case, Haun is now charting her personal path, and on the middle of it’s stablecoins, which can be cryptocurrencies designed to handle a solid worth through being pegged to conventional property just like the U.S. greenback. 

Not like Bitcoin or Ethereum, which will swing wildly in worth, stablecoins like Circle’s USDC or Tether’s USDT are supposed to industry at precisely $1, making a virtual illustration of conventional forex that may transfer on blockchain networks. 

Certainly, fast-forward to these days, and Haun’s trust in stablecoins appears to be like increasingly more prescient. Stablecoins — which slightly existed in 2015 — now constitute 1 / 4 of one trillion greenbacks in worth. They’ve grow to be the 14th greatest holder of U.S. Treasuries globally. Reportedly, for the primary time ultimate 12 months, stablecoin transaction quantity exceeded Visa’s.

“I believe individuals who checked out stablecoins a couple of years in the past idea, what’s the worth prop?” Haun mentioned Wednesday evening. “You’ve requested me this sooner than. You mentioned, ‘Why do I would like stablecoins?’ And I mentioned, “I seek advice from this as an ‘If it really works for me, it really works for everybody’ downside.”

In truth, for many American citizens, the prevailing monetary device works slightly effectively. We now have Venmo, financial institution accounts, bank cards. However Haun, drawing on her prosecutor’s figuring out of world monetary programs, says she has lengthy been conscious that the U.S. enjoy isn’t common.

In nations with risky currencies or restricted banking infrastructure, stablecoins be offering one thing distinctive, she argues, which is fast get entry to to solid, dollar-denominated worth that may be despatched any place on the earth for pennies. “Other folks in Turkey don’t call to mind Tether as a cryptocurrency,” she mentioned Wednesday, “They call to mind Tether as cash.” 

The generation has advanced dramatically since the ones early debates, undoubtedly. Stablecoins as soon as price $12 to ship the world over. And Circle says its USDC stablecoin is absolutely sponsored one-to-one through greenbacks held in JP Morgan financial institution accounts and audited through Large 4 accounting companies.

It’s essential to notice that whilst Circle and Tether are dedicated to having sufficient reserves to enhance their tokens, in contrast to conventional banks, there’s no insured executive coverage in the back of those reserves. Nonetheless, the company international is taking understand in a large method. 

Walmart and Amazon are reportedly exploring stablecoins, as are different goliaths like Uber, Apple, and Airbnb. The reason being easy economics. Stablecoins supply a technique to transfer the worth of U.S. greenbacks the usage of cryptocurrency rails as a substitute of conventional banking infrastructure, probably saving those retail-heavy firms billions in processing charges.

However the shift has critics nervous about financial chaos. If main companies can factor their very own currencies, what occurs to financial coverage and banking legislation?

The troubles run deeper than simply financial disruption. No longer all stablecoins are created equivalent, and lots of lack the backing and oversight that businesses like Circle supply. Whilst well-regulated stablecoins like USDC are sponsored through precise greenbacks in U.S. Treasury securities, others function with much less transparency or depend on complicated algorithmic mechanisms that experience confirmed prone to cave in. (TerraUSD has had essentially the most specular crash to this point, wiping out $60 billion in worth when it nosedived.)

Corruption issues particularly got here into sharp center of attention lately when President Donald Trump’s circle of relatives issued its personal stablecoin, a transfer that highlighted attainable conflicts of pastime in an trade the place political affect can without delay have an effect on marketplace worth and regulatory results.

Those issues got here to a head as Congress debated the GENIUS Act, regulation that will create a federal framework for stablecoin legislation. The invoice handed the Senate early ultimate week with bipartisan enhance, with 14 Democrats crossing birthday party traces to enhance it. It now awaits a Space vote sooner than probably achieving the president’s table.

However Senator Elizabeth Warren, the score member at the Senate Banking Committee, has been in particular vocal in her opposition, calling the regulation a “superhighway for Donald Trump’s corruption.” Her grievance facilities on a notable hole within the invoice: whilst it prohibits individuals of Congress and senior government department officers from issuing stablecoin merchandise, it says not anything about their members of the family.

Requested about Warren’s issues on Wednesday evening, Haun almost rolled her eyes. “I believe it’s truly ironic that Elizabeth Warren or different Democrats who do name this corruption aren’t operating to cross crypto regulation,” she mentioned. “Had there been laws of the street in position [already], there would had been a framework, there would had been transparent laws for what’s a safety, what’s a commodity, and what are the patron protections round that.”

Haun, whose undertaking capital company has made a large number of stablecoin investments together with Bridge (received through Stripe for reportedly 10 instances ahead earnings), is in large part supportive of the regulation, unsurprisingly. However she has one notable grievance: the invoice’s prohibition on yield-bearing stablecoins.

“I’m now not certain that yield-bearing stablecoins are a good suggestion for customers within the U.S., however I’m now not certain {that a} prohibition is a good suggestion,” she instructed StrictlyVC attendees. The problem comes right down to who income from the pastime earned on stablecoin reserves. These days, that cash is going to firms like Circle and Coinbase. However Haun wonders why customers shouldn’t get that yield, similar to they’d with a financial savings account.

“If you happen to had a financial savings account or bank account and also you’re getting yield on that, you’re getting pastime,” she defined. “What for those who simply mentioned, ‘No, the financial institution will get pastime, now not you,’ they usually’re lending out your cash?”

Haun was once much less nuanced relating to some other Warren fear: that if the GENIUS Act is signed into regulation, stablecoins may just grow to be a automobile for cash laundering and terrorism financing.

“Criminals are nice beta testers of all applied sciences,” mentioned Haun. “However this generation is extremely traceable, far more traceable than money. The biggest legal tool is the greenback invoice.” (In step with Haun, the Treasury Division has testified that 99.9% of cash laundering crimes be successful the usage of conventional financial institution wires, now not cryptocurrency.)

In the meantime, she mentioned, the regulatory readability that regulation just like the GENIUS Act supplies may just in truth make the device more secure through distinguishing between reliable, well-backed stablecoins from extra experimental or dangerous variants.

If truth be told, because the stablecoin ecosystem continues to mature, Haun sees even larger adjustments forward. She envisions a long run the place a wide variety of property — from cash marketplace budget to actual property to non-public credit score — get “tokenized” and made to be had 24/7 to world markets.

“It’s only a virtual illustration of a bodily asset,” she explains. “BlackRock, Franklin Templeton, they’ve already tokenized their cash marketplace budget. That’s already came about.”

In step with Haun, tokenized property may just democratize get entry to to investments in tactics very similar to how Netflix democratized leisure. As an alternative of getting to be rich sufficient to fulfill minimal funding thresholds, anyone with $25 and a smartphone may just purchase fractional possession in a percentage of Apple or Amazon, as an example. 

“Simply because one thing’s inevitable doesn’t imply it’s coming near near,” Haun mentioned on Wednesday. However she’s assured the transformation is coming, pushed through the similar forces that made stablecoins a success: they’re quicker, less expensive, and extra out there than conventional possible choices.

Taking a look again at that 2018 debate with Krugman, Haun’s endurance turns out to have paid off. A big query now isn’t whether or not virtual greenbacks will reshape the monetary device however possibly extra importantly, whether or not regulators can stay tempo with the generation whilst addressing reliable issues about corruption, client coverage, and monetary balance.

Haun doesn’t appear involved. Whilst critics level to the truth that stablecoins constitute simply 2% of world bills, wondering their product-market are compatible, Haun sees this as a well-known tech adoption tale — person who has performed out many times and regularly takes longer than other people to start with consider.

“We predict it’s truly early days,” she instructed the gang.