Haun’s Journey and the Rise of Stablecoins

Back in 2018, when Bitcoin was hovering around $4,000 and many Americans viewed cryptocurrency as just a passing fad, Katie Haun found herself on stage in Mexico City. She was debating with Paul Krugman, a Nobel laureate who dismissed digital assets as almost trivial. While Krugman highlighted the volatile nature of Bitcoin, Haun redirected the discussion, emphasizing Stablecoins.

On stage, she articulated how these digital tokens, linked to the US dollar, could offer the advantages of blockchain technology without the erratic fluctuations associated with traditional cryptocurrencies.

Krugman, however, didn’t take her argument seriously.

Though this moment didn’t define Haun’s career, it certainly contributed to shaping it. With over a decade spent as a federal prosecutor focused on financial crimes—including establishing the government’s first cryptocurrency task force—her unique perspective on digital assets didn’t stem from high-tech backgrounds or libertarian views. Rather, she came from law enforcement, with a clear understanding of both the legal implications and criminal misuse of these technologies.

By 2018, Haun had already made history as the first female partner at Andreessen Horowitz, where she co-led their crypto fund. In 2022, she founded Haun Ventures, now managing over $1.5 billion in assets, and her team is still actively investing from newly formed funds yet to close officially.

Making the leap into her own venture wasn’t necessarily straightforward. Even with her background at A16Z and a rich web of industry connections, specifics about those ties are not publicly detailed. After joining the Coinbase Committee in 2017, she stepped down last year, whereas Mark Andreessen, who took Chris Dixon’s place in 2020, continues as part of the team.

When she was asked about her relationship with Andreessen Horowitz at a StrictlyVC event, she played down any potential issues. “There’s no gentleman’s agreement,” she stated, adding, “In fact, I’m still in conversation with Andreessen Horowitz. Admittedly, we haven’t collaborated much lately.”

This lack of co-investment might reflect the complications of competing in such a ruthless industry against former colleagues. Regardless, Haun is carving out her path, primarily revolving around Stablecoins. These are cryptocurrencies aimed at maintaining a stable value by being tied to traditional financial assets like the US dollar.

Unlike Bitcoin or Ethereum—which can see dramatic value fluctuations—Stablecoins such as Circle’s USDC and Tether’s USDT aim to hold a consistent value of one dollar, effectively creating a digital analog of traditional currencies operable through blockchain networks.

Fast forward to today, and Haun’s faith in Stablecoins appears increasingly prescient. These assets, which were almost nonexistent in 2015, have ballooned to a valuation of $1 trillion, making them the 14th largest holder of US Treasury securities globally. Notably, their transaction volume recently eclipsed even Visa.

“Did anyone envision the value proposition for Stablecoins a few years back?” Haun queried at the event. “You asked me earlier about their necessity, and I described it as a scenario where if it works for one, it should serve everyone.”

To be fair, many Americans find the current financial systems adequate—think Venmo, bank accounts, and credit cards. But Haun emphasizes that this perspective is not universal, shaped by her background in prosecution and understanding of global finance.

In areas with weak currencies or limited banking infrastructure, Stablecoins present a unique solution. “In Turkey, people see Tether not as cryptocurrency but as money,” she pointed out.

The technology has indeed come a long way. Once, sending Stablecoins internationally was costly at about $12 per transaction. Now, Circle highlights that its USDC is backed by real dollars held in a JP Morgan Bank account, fully supported and audited by major accounting firms.

Naturally, corporate giants are taking notice. Companies like Walmart and Amazon are reportedly looking into Stablecoins, alongside other major players such as Uber and Apple. The appeal? Using cryptocurrency infrastructure to transport US dollar value could save retailers significant costs.

However, this shift raises concerns about economic stability. Unlike standard banks, companies like Circle and Tether promise sufficient reserves to back their tokens, but there’s no governmental insurance protecting these reserves. Plus, the implications for monetary policy and banking regulations are profound if big corporations start issuing their own currencies.

Concerns extend beyond economic stability. Not all Stablecoins are equal; many lack the oversight found with companies like Circle. Well-regulated options such as USDC are backed by tangible dollars, while others may rely on opaque systems prone to failure—a notable example being TerraUSD, which suffered a significant collapse having wiped out billions in value.

In recent discussions, particularly as Congress considers regulation frameworks for Stablecoins, these issues are increasingly contentious. A bipartisan crypto regulation bill recently passed the Senate, but critics like Senator Elizabeth Warren have raised alarms, dubbing it a “super highway for corruption.” Her objections stem from notable gaps in the legislation, especially concerning family members of lawmakers and executives involved in token offerings.

Responding to Warren’s stance, Haun expressed skepticism. “It’s ironic how people like her criticize yet aren’t leading the charge for proper cryptographic regulations,” she noted. “Rules and frameworks were needed long ago for consumer protection and clarity on security products.”

Despite her backing of regulatory efforts, Haun did voice some hesitancies. Asked about certain aspects of the proposed laws, she expressed uncertainty about whether Stablecoins that yield returns would benefit American consumers or not. She pondered why the profits from interest accumulation should not be passed down to consumers as one would expect from traditional savings accounts.

While not overly nuanced about Warren’s assertions, Haun acknowledged that if legislation is enacted, it could inadvertently become a tool for money laundering or financing terrorism.

“Criminals often make for excellent beta testers,” she remarked, “but this technology is more traceable than cash. In fact, the Treasury states that around 99.9% of money laundering is done through traditional banking methods, not cryptocurrencies.”

On a positive note, she suggested that clearer regulations could enhance safety by distinguishing well-backed Stablecoins from more experimental varieties.

As the Stablecoin ecosystem matures, Haun envisions a future where diverse assets—including money market funds and real estate—will be “tokenized” for a global marketplace operating around the clock.

“It’s simply a digital representation of a physical asset,” she explained, citing examples like Franklin Templeton and BlackRock already tokenizing money market funds as reality.

According to Haun, tokenized assets could democratize investments just as Netflix did for entertainment. Instead of needing substantial capital, individuals with even modest amounts, like $25, could invest in fractions of shares from companies like Apple or Amazon.

“Being inevitable doesn’t equate to being imminent,” Haun remarked. However, she confidently predicts transformation is on the horizon, fueled by the same dynamics that have driven Stability’s success—speed, affordability, and accessibility compared to traditional forms.

Reflecting on her discussion with Krugman back in 2018, Haun’s determination seems to have paid off. The pressing question now isn’t just whether digital dollars will reshape the financial landscape but whether regulators can effectively respond to these technological advancements while addressing genuine concerns about corruption, consumer safety, and financial stability.

However, Haun seems unfazed. Although critics highlight that Stablecoins account for merely 2% of global payments, she counters that it’s too soon to view this as an issue. In her eyes, this narrative mirrors many technology adoption cycles that often unfold slower than initially expected.

“We’re still in the early stages,” she told her audience.

If you’re curious about more of what Haun shared recently, the full conversation is available below.