The stablecoin evangelist: Katie Haun’s struggle for digital {dollars} | TechCrunch

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In 2018, when Bitcoin was buying and selling round $4,000 and most Americans, a minimum of, thought cryptocurrency was a fad, Katie Haun discovered herself on a debate stage in Mexico City 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 supply the advantages of blockchain expertise with out the ups and downs of conventional cryptocurrencies.

Krugman dismissed the thought completely.

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 job drive and main investigations into the Mt. Gox hack and corrupt brokers within the Silk Road case, Haun had an uncommon background for a crypto champion. She wasn’t a libertarian ideologue or a tech founder. Coming as an alternative 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 accomplice at Andreessen Horowitz, the place she co-led their crypto funds. Founding Haun Ventures in 2022, with greater than $1.5 billion in property below administration — its crew 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. Despite her function at a16z and the trade 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 12 months, 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 stated, 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 replicate the cutthroat trade or the challenges related to leaving one in every of Silicon Valley’s most outstanding companies to compete straight with former colleagues. Whatever 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. 

Unlike 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. 

Indeed, fast-forward to immediately, and Haun’s perception in stablecoins appears to be like more and more prescient. Stablecoins — which barely existed in 2015 — now characterize 1 / 4 of a trillion {dollars} in worth. They’ve turn out to be the 14th largest holder of U.S. Treasuries globally. Reportedly, for the primary time final 12 months, stablecoin transaction quantity exceeded Visa’s.

“I think people who looked at stablecoins a few years ago thought, what is the value prop?” Haun stated 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 Americans, the present monetary system works fairly properly. We have Venmo, financial institution accounts, bank cards. But Haun, drawing on her prosecutor’s understanding of world 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 supply one thing distinctive, she argues, which is instantaneous entry to steady, dollar-denominated worth that may be despatched anyplace on the earth for pennies. “People in Turkey don’t think of Tether as a cryptocurrency,” she stated Wednesday, “They think of Tether as money.” 

The expertise has developed dramatically since these early debates, actually. Stablecoins as soon as price $12 to ship internationally. And Circle says its USDC stablecoin is absolutely backed one-to-one by {dollars} held in JP Morgan financial institution accounts and audited by Big Four accounting companies.

Little marvel the company world is taking discover in an enormous method. Walmart and Amazon are reportedly exploring stablecoins, as are different goliaths like Uber, Apple, and Airbnb. The purpose is straightforward economics. Stablecoins present a technique to transfer the worth of U.S. {dollars} utilizing cryptocurrency rails as an alternative of conventional banking infrastructure, probably saving these retail-heavy firms billions in processing charges.

But the shift has critics fearful about financial chaos. While 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 concern 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 plenty of lack the backing and oversight that firms like Circle present. While 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 susceptible to break down. (TerraUSD has had probably the most specular crash so far, wiping out $60 billion in worth when it nosedived.)

Corruption issues particularly got here into sharp focus lately when President Donald Trump’s household issued its personal stablecoin, a transfer that highlighted potential conflicts of curiosity in an trade the place political affect can straight affect market worth and regulatory outcomes.

These issues got here to a head as Congress debated the GENIUS Act, laws that might create a federal framework for stablecoin regulation. The invoice handed the Senate early final week with bipartisan help, with 14 Democrats crossing celebration traces to help it. It now awaits a House vote earlier than probably reaching the president’s desk.

But Senator Elizabeth Warren, the rating member on the Senate Banking Committee, has been significantly 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 government department officers from issuing stablecoin merchandise, it says nothing about their relations.

Asked 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 stated. “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 basically supportive of the laws, unsurprisingly. But 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 concern comes right down to who income from the curiosity earned on stablecoin reserves. Currently, that cash goes to firms like Circle and Coinbase. But 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 terms of one other Warren concern: that if the GENIUS Act is signed into legislation, stablecoins might turn out to be a automobile for cash laundering and terrorism financing.

“Criminals are great beta testers of all technologies,” stated Haun. “But this technology is highly traceable, way more traceable than cash. The largest criminal instrument is the dollar bill.” (According to Haun, the Treasury Department has testified that 99.9% of cash laundering crimes succeed utilizing conventional financial institution wires, not cryptocurrency.)

Meanwhile, she stated, the regulatory readability that laws just like the GENIUS Act supplies might truly make the system safer by distinguishing between professional, well-backed stablecoins from extra experimental or dangerous variants.

In reality, because the stablecoin ecosystem continues to mature, Haun sees even larger adjustments forward. She envisions a future the place all types of property — from cash market funds to actual property to personal credit score — get “tokenized” and made accessible 24/7 to international 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.”

According to Haun, tokenized property might democratize entry to investments in methods much like how Netflix democratized leisure. Instead 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 stated on Wednesday. But she’s assured the transformation is coming, pushed by the identical forces that made stablecoins profitable: they’re sooner, cheaper, and extra accessible than conventional alternate options.

Looking 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 expertise whereas addressing professional issues about corruption, client safety, and monetary stability.

Haun doesn’t appear involved. While critics level to the truth that stablecoins characterize simply 2% of world funds, questioning their product-market match, Haun sees this as a well-recognized tech adoption story — one which has performed out repeatedly and infrequently takes longer than individuals initially think about.

“We think it’s really early days,” she instructed the group.

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