Earlier this week, the Senate passed the Genius Act, the first federal framework for stablecoins. Joining us right now in an exclusive interview, I keep calling her the OG, she really is one of them, Katie Haun, founder and CEO of Haun Ventures. She was previously on the board of Facebook's stablecoin project and former board member of Coinbase when the company launched USDC. Good morning, Katie. It's been a long time. How are you?
Good morning. It has been a long time. I'm doing well. How are you? Thank you for having me.
I'm great, thanks. In terms of the Genius Act and what comes next, obviously the House is what comes next. But where do you see the fault lines in all of this, and to the extent it changes the stablecoin world? You know, we have Circle just went public obviously, what does the stablecoin world look like to you a year or two out after all this?
Well, it looks much bigger. Not just after the Genius Act, it was already growing. And you know, I debated Paul Krugman, the economist, in 2018 on stablecoins, and you can go watch it on YouTube. And I said then this made a lot of sense. And just because something's inevitable doesn't mean it's imminent. And indeed, while many people have been declaring the blockchain and digital asset space dead over the last few years, we have been investing into stablecoin infrastructure, stablecoin applications. And I think what we've seen, Andrew, is just tremendous growth. Let me give you three statistics. I know you've had Jeremy and Circle, a lot of buzz there, but let me give your viewers three stats on stablecoins. Something that didn't even exist, you know, six years ago, seven years ago. A quarter of a trillion dollars of supply, and that's up so much year-over-year. I mean, the growth has been really exponential. You're talking about just over a year ago, hundred billion dollars of stablecoin supply. So it's really growing very rapidly and we think that growth will continue particularly with the advent of the Genius Act. But it's not just that. Another statistic that I think people are surprised to learn about stablecoins is stablecoin transaction volume for the first time eclipsed the transaction volume of Visa last year. I'm not sure if you knew that. And then the third thing about stablecoins is they're now the 14th largest holder in the world of US treasuries, having surpassed the economies of Germany and Norway as the largest holders.
So Katie, but that raises to me a whole other question, and I think one that's worth delving into, which is to the extent there are risks in our economy and in our system, what is the chance that the stablecoin universe is upended in some way that we don't understand because either there are not enough treasuries that are backing the stablecoins and a player is not as compliant as you want them to be. That's on one end of it. The other end of it is if you have the concentration that we're talking about of one company or a group of companies owning so many treasuries to try to back the stablecoins, how should we think about that?
Yeah. Well, when I'm talking about stablecoins, Andrew, also let me be really clear. I'm really talking about fiat-backed, one-to-one dollar-backed or fiat currency-backed stablecoins. I'm not talking about algorithmic-backed stablecoins. Although a really interesting idea, we did see some spectacular failures in that area not too long ago. So what I'm talking about are fiat-backed, and in many ways I think one of the really great things about stablecoins, fiat-backed particularly with this legislation, is you know, for every one USDC that Circle issues, there is $1 in a, for example, JP Morgan bank account. And we all woke up to the limitations of the fractional reserve banking system with Silicon Valley Bank. So this is fully reserved and I think that's important. But you mentioned the Genius Act and I think let's come right back to that because I think the space, you said you called me an OG, I've been in the space for 10 years. One of the things I've been saying since I first came on your show, I've been asking for regulatory clarity and more rules of the road and I think the Genius Act is exactly that. And I think, you know, if you're talking about risks, let's get some legislation in. So that's why I think it was really exciting that Senate Democrats and Senate Republicans came together to pass this historic bill. But may I say, I think the really transformational crypto framework is also the market structure bill. And I know there's been a lot of talk of both. Of course the question that has stymied kind of courts and crypto founders is what's a security, what's a commodity, who's going to regulate those? And there's a perfect opportunity for the Senate and the House to also get that bill. And I think we saw 70 House Democrats last year join in support of a bill like that. So, let's get both passed.
Yeah. Katie, what do you make of just, I was focused on just the risks in the system because actually now as this business is really growing, you know, we speaking to the CEO of Tether before, obviously people have been demanding more transparency from that company for example for a long time. Where are the risks in the system to the extent there are some that we should be thinking and concerned about if at all?
Well, look, I think some of the risks exist in the same banking system, right? Let's have audits. If you talk about USDC, which is a large stablecoin, after Tether, it's the second largest market cap. I mean, you're talking about two issuers, Coinbase and Circle. Those are public companies. They're audited by big four accounting firms. So, let's see. And if companies are going to stay private, let's see the audits happen every year. And I think, I'm not sure about Tether, but I do believe they have a board. Do they have an audit and risk committee? I'm not sure. You'd have to, when you have them on next time, you'll have to ask those questions. And those are the questions I would be asking. But I know with respect to USDC, I've been familiar with Circle and with Coinbase for a long time. And you know, when I served on the board of Coinbase, I saw those audit reports and I saw the procedures and processes in place. And again, I think that's where not all stablecoins and not all stablecoins are created equal. I can really speak mostly to USDC given my history and experience. But there are other great stablecoins out there and I know that others are in the works too. You know, Paxos has one also for example. And we'll see others emerge I suspect. You know, a lot of people talk about the market opportunity, Andrew, of the just stablecoins. But as I mentioned, there's the orchestration layer also plays an important role. Kind of think of it as Grand Central Station. You know, the rails, that's a really important piece of this all too. And what kind of companies are those? I mean, we saw Stripe just acquire Bridge for a billion dollars. And Bridge is not the only game in town, right? We also have, for example, BBNK. That's another orchestrator for the stablecoin space and I think the reason that you're seeing a lot of new entrants is because the market opportunity is so big.
Hey Katie, I know just enough to be dangerous about stuff like this. So this might be a stupid question, but if you a couple of times you said, 'Hey, it's based on fiat.' If you say that to like someone who's orange-pilled, it's like, 'Based on fiat? That's the whole rationale for Bitcoin.' So, what can we do to make a stablecoin based on Bitcoin? Will Bitcoin eventually become analogous to what a stablecoin is if it finally gets to a point where it just has a very stable... I don't know, does that ever happen as we get closer to...
