In 2018, when Bitcoin was buying and selling round $4,000 and most People, no less than, thought cryptocurrency was a fad, Katie Haun discovered herself on a debate stage in Mexico Metropolis reverse Paul Krugman, the Nobel Prize-winning economist who had dismissed digital property as close to nugatory. As Krugman centered on Bitcoin’s wild worth swings, Haun steered the dialog towards one thing else — stablecoins.
“Stablecoins are really interesting and really important to this ecosystem to hedge against that volatility,” she argued on stage, explaining how digital tokens pegged to the U.S. greenback might provide the advantages of blockchain know-how with out the ups and downs of conventional cryptocurrencies.
Krugman dismissed the thought totally.
It wasn’t precisely a turning level in Haun’s profession, but it surely was one second amongst others which have helped outline it. A former federal prosecutor who spent greater than a decade investigating monetary crimes, together with creating the federal government’s first cryptocurrency activity drive and main investigations into the Mt. Gox hack and corrupt brokers within the Silk Highway case, Haun had an uncommon background for a crypto champion. She wasn’t a libertarian ideologue or a tech founder. Coming as a substitute from legislation enforcement, she understood the legal potential and bonafide makes use of of digital property.
By 2018, she had already made historical past as the primary feminine companion at Andreessen Horowitz, the place she co-led their crypto funds. Founding Haun Ventures in 2022, with greater than $1.5 billion in property underneath administration — its workforce is now investing from a brand-new set of funds which have but to formally shut — she has been much more free to pursue her particular convictions about the way forward for cash.
The leap to hanging her personal shingle hasn’t been with out its complexities. Regardless of her function at a16z and the business connections that got here with it, the 2 haven’t publicly co-invested in something since early 2022, shortly after she launched her fund, and Haun, who joined the board of Coinbase in 2017, stepped off it final yr, whereas Marc Andreessen, who took colleague Chris Dixon’s seat in 2020, stays a director.
When requested Wednesday night time at TechCrunch’s StrictlyVC occasion about her relationship with Andreessen Horowitz, she downplayed any potential friction whereas acknowledging they aren’t collaborators precisely. “There’s no gentleman’s agreement,” she mentioned, echoing this editor’s query about whether or not there’s any understanding to keep away from competing along with her former employer. “In fact, I still talk to Andreessen Horowitz. You’re right that we haven’t really done any deals together of late.”
The obvious lack of co-investment might mirror the cutthroat business or the challenges related to leaving one in all Silicon Valley’s most distinguished corporations to compete instantly with former colleagues. Regardless of the case, Haun is now charting her personal course, and on the coronary heart of it’s stablecoins, that are cryptocurrencies designed to keep up a steady worth by being pegged to conventional property just like the U.S. greenback.
Not like Bitcoin or Ethereum, which might swing wildly in worth, stablecoins like Circle’s USDC or Tether’s USDT are supposed to commerce at precisely $1, making a digital illustration of conventional foreign money that may transfer on blockchain networks.
Certainly, fast-forward to at the moment, and Haun’s perception in stablecoins appears to be like more and more prescient. Stablecoins — which barely existed in 2015 — now symbolize 1 / 4 of a trillion {dollars} in worth. They’ve develop into the 14th largest holder of U.S. Treasuries globally. Reportedly, for the primary time final yr, stablecoin transaction quantity exceeded Visa’s.
“I think people who looked at stablecoins a few years ago thought, what is the value prop?” Haun mentioned Wednesday night time. “You’ve asked me this before. You said, ‘Why do I need stablecoins?’ And I said, “I refer to this as an ‘If it works for me, it works for everyone’ problem.”
In actuality, for many People, the present monetary system works fairly properly. We now have Venmo, financial institution accounts, bank cards. However Haun, drawing on her prosecutor’s understanding of worldwide monetary methods, says she has lengthy been conscious that the U.S. expertise isn’t common.
In international locations with unstable currencies or restricted banking infrastructure, stablecoins provide one thing distinctive, she argues, which is on the spot entry to steady, dollar-denominated worth that may be despatched wherever on this planet for pennies. “People in Turkey don’t think of Tether as a cryptocurrency,” she mentioned Wednesday, “They think of Tether as money.”
The know-how has advanced dramatically since these early debates, actually. Stablecoins as soon as price $12 to ship internationally. And Circle says its USDC stablecoin is totally backed one-to-one by {dollars} held in JP Morgan financial institution accounts and audited by Massive 4 accounting corporations.
Little surprise the company world is taking discover in a giant means. Walmart and Amazon are reportedly exploring stablecoins, as are different goliaths like Uber, Apple, and Airbnb. The reason being easy economics. Stablecoins present a technique to transfer the worth of U.S. {dollars} utilizing cryptocurrency rails as a substitute of conventional banking infrastructure, probably saving these retail-heavy firms billions in processing charges.
However the shift has critics anxious about financial chaos. Whereas Circle and Tether are dedicated to having sufficient reserves to help their tokens, not like conventional banks, there’s no insured authorities safety behind these reserves. Relatedly, if main firms can situation their very own currencies, what occurs to financial coverage and banking regulation?
The issues run deeper than simply financial disruption. Not all stablecoins are created equal, and lots of lack the backing and oversight that firms like Circle present. Whereas well-regulated stablecoins like USDC are backed by precise {dollars} in U.S. Treasury securities, others function with much less transparency or depend on complicated algorithmic mechanisms which have confirmed weak to break down. (TerraUSD has had probably the most specular crash up to now, wiping out $60 billion in worth when it nosedived.)
Corruption issues specifically got here into sharp focus not too long ago when President Donald Trump’s household issued its personal stablecoin, a transfer that highlighted potential conflicts of curiosity in an business the place political affect can instantly affect market worth and regulatory outcomes.
These issues got here to a head as Congress debated the GENIUS Act, laws that will create a federal framework for stablecoin regulation. The invoice handed the Senate early final week with bipartisan help, with 14 Democrats crossing occasion strains to help it. It now awaits a Home vote earlier than probably reaching the president’s desk.
However Senator Elizabeth Warren, the rating member on the Senate Banking Committee, has been notably vocal in her opposition, calling the laws a “superhighway for Donald Trump’s corruption.” Her criticism facilities on a notable hole within the invoice: whereas it prohibits members of Congress and senior govt department officers from issuing stablecoin merchandise, it says nothing about their members of the family.
Requested about Warren’s issues on Wednesday night time, Haun virtually rolled her eyes. “I think it’s really ironic that Elizabeth Warren or other Democrats who do call this corruption are not running to pass crypto legislation,” she mentioned. “Had there been rules of the road in place [already], there would have been a framework, there would have been clear rules for what’s a security, what’s a commodity, and what are the consumer protections around that.”
Haun, whose enterprise capital agency has made quite a few stablecoin investments together with Bridge (acquired by Stripe for reportedly 10 instances ahead income), is essentially supportive of the laws, unsurprisingly. However she has one notable criticism: the invoice’s prohibition on yield-bearing stablecoins.
“I’m not sure that yield-bearing stablecoins are a good idea for consumers in the U.S., but I’m not sure that a prohibition is a good idea,” she instructed StrictlyVC attendees. The difficulty comes all the way down to who earnings from the curiosity earned on stablecoin reserves. Presently, that cash goes 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 had a savings account or checking account and you’re getting yield on that, you’re getting interest,” she defined. “What if you just said, ‘No, the bank gets interest, not you,’ and they’re lending out your money?”
Haun was much less nuanced in the case of one other Warren concern: that if the GENIUS Act is signed into legislation, stablecoins might develop into a car for cash laundering and terrorism financing.
“Criminals are great beta testers of all technologies,” mentioned Haun. “But this technology is highly traceable, way more traceable than cash. The largest criminal instrument is the dollar bill.” (In keeping with Haun, the Treasury Division has testified that 99.9% of cash laundering crimes succeed utilizing conventional financial institution wires, not cryptocurrency.)
In the meantime, she mentioned, the regulatory readability that laws just like the GENIUS Act offers might truly make the system safer by distinguishing between authentic, well-backed stablecoins from extra experimental or dangerous variants.
In actual fact, because the stablecoin ecosystem continues to mature, Haun sees even greater adjustments forward. She envisions a future the place every kind of property — from cash market funds to actual property to personal credit score — get “tokenized” and made out there 24/7 to world markets.
“It’s just a digital representation of a physical asset,” she explains. “BlackRock, Franklin Templeton, they’ve already tokenized their money market funds. That’s already happened.”
In keeping with Haun, tokenized property might democratize entry to investments in methods much like how Netflix democratized leisure. As an alternative of getting to be rich sufficient to fulfill minimal funding thresholds, somebody with $25 and a smartphone might purchase fractional possession in a share of Apple or Amazon, for instance.
“Just because something’s inevitable doesn’t mean it’s imminent,” Haun mentioned on Wednesday. However she’s assured the transformation is coming, pushed by the identical forces that made stablecoins profitable: they’re quicker, cheaper, and, she insists, extra accessible than conventional options.
Trying again at that 2018 debate with Krugman, Haun’s persistence appears to have paid off. A serious query now isn’t whether or not digital {dollars} will reshape the monetary system however maybe extra importantly, whether or not regulators can preserve tempo with the know-how whereas addressing authentic issues about corruption, shopper safety, and monetary stability.
Haun doesn’t appear involved. Whereas critics level to the truth that stablecoins symbolize simply 2% of worldwide funds, questioning their product-market match, Haun bats away that concern, too. As an alternative, she sees this as a well-recognized tech adoption story — one which has performed out repeatedly and sometimes takes longer than individuals initially think about.
“We think it’s really early days,” she instructed the group.
