The theme of last week’s Money20/20 finance-tech conference in Las Vegas was “the money revolution,” and I had the pleasure of interviewing two of the industry’s leading insurgents for one of the keynote sessions.
My panelists were Asiff Hirji, president and chief operating officer of cryptocurrency exchange Coinbase, and Katie Haun, Coinbase board member and general partner at Silicon Valley venture capital firm Andreessen Horowitz. A remix of “Sound of da Police” by rapper KRS-One blared as we strode on stage at the Venetian Hotel—an on-the-nose selection for this cryptocurrency-focused talk. (Even today, Bitcoin retains criminal connotations, a reputation that has trailed it since its early associations with the since-shuttered online drug marketplace Silk Road.)
Despite the shady origins of Bitcoin, Haun and Hirji see great potential for cryptocurrency in the near future. During the panel, Hirji shared a bullish prediction, which he prefaced with a brief history of computing-based businesses. Microsoft dominated in the personal computer era. “Dot coms” held sway during the consumer Internet’s early boom. Then rose the mobile kings, like Uber, Lyft, and others. The champions of the next era, Hirji said, are bound to be blockchain-based. The new crop of winners will not include incumbents, nor will it include companies that have merely tweaked their names, adding the word “blockchain” for a temporary stock price bump; rather, the biggest successes will be built natively atop this new technology, he said.
For all its promise, cryptocurrency has made little in the way of progress toward real utility since its development a decade ago. Bitcoin and its brethren’s biggest selling point to date has been speculative investment, a far cry from the peer-to-peer electronic cash system originally envisioned by Bitcoin’s creator(s), the mysterious entity known only as Satoshi Nakamoto. But that may be about to change. “Fintech before crypto, and specifically a stablecoin”—a price-fixed cryptocurrency—”is like mobile before the iPhone came along,” Hirji said. “Now that we’ve got programmable, real, stable currency, you will see the innovation take off in crypto.”
Hirji was talking his own book: Coinbase had just that morning announced its involvement with USD Coin, a stablecoin project it is collaborating on with Circle, another cryptocurrency exchange. The new U.S. dollar-pegged asset will enable people to exchange virtual money without fearing sudden price spikes or plummets. Along with a host of recently debuted stablecoin entrants, such as the Paxos Standard, the Gemini Dollar, and MakerDAO’s Dai, USD Coin aims to reawaken Nakamoto’s pioneering dream for an Internet-native payments system.
Hirji’s remarks weren’t all optimistic though. The former Hewlett-Packard and TD Ameritrade boss also offered a warning, saying that U.S. regulators are not keeping pace with their peers around the globe. By failing to provide clarity about the legal status of various crypto assets, U.S. policy makers are pushing entrepreneurs to seek their fortunes elsewhere. Coinbase isn’t going to wait around for the regulators to make up their mind, Hirji said. Instead, the company plans to start aggressively moving into new markets worldwide on a country-by-country basis, listing digital assets on its exchange in the jurisdictions where they have been green-lit. The move is no doubt motivated by the encroachment of competition from the likes of more laissez-faire exchanges, like Malta-based Binance.
Haun shared some advice for U.S. regulators, too. She proposed that they implement an innovation “sandbox” program, sort of like what financial regulators have done in the UK. Such a program would grant entrepreneurs the freedom to innovate and experiment without an ever-present fear of running afoul of the law: Cooperation over stagnation.