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The Ledger: Crypto’s ‘iPhone Moment,’ ‘Stablecoin’ Mania, Bitcoin in Politics

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.

Let’s hope Hirji and Haun’s recommendations, which were made in Vegas, don’t stay in Vegas.

GOT TIPS?

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Robert Hackett
@rhhackett
robert.hackett@fortune.com

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DECENTRALIZED NEWS

To the Moon… Stablecoins are hot, hot, hot. Circle and Coinbase team up. Bitcoin isn’t so volatile. If only you had invested earlier. Would you like that Bitcoin with a side of goat meat? Meet “wrapped Bitcoin.” Ethereum cofounder talks up Web 3.0. Japan okays crypto self-regulation. Singaporean venture capital backs Binance. Big Four accounting firms cope with crypto. Bitcoin could become a dominant currency—or not. Brock Pierce interview. Price predictions. Cryptocurrency has invaded pop culture.

…Rekt. Bitcoin hits 2-week low. Bitcoin futures are a small market. Alibaba fights Alibabacoin. Bitcoin mining contributes to climate change. IBM-Maersk joint blockchain venture sets sail in rough seas. Secret Service helps seize Bitcoin in Delaware. UK blocks Royal Mint gold-backed crypto. 80% of banks will be made irrelevant by 2030. Canadian exchange hacked, or was it an exit scam? Xapo CEO says crypto could fail.

BALANCING THE LEDGER

In lieu of Balancing The Ledger, here are some clips from Money20/20, where I interviewed Coinbase’s Asiff Hirji (pictured above) alongside Andreessen Horowitz’s Katie Haun. During the keynote session, I asked Hirji when cryptocurrency will have its “iPhone moment,” meaning a mainstream breakout with real utility for consumers. He said stablecoins are paving the way. I also asked Haun what’s wrong with plain old fiat currency. She said it represents the traditional financial system, which has excluded nearly 2 billion people who are considered “unbanked.”

BUBBLE-O-METER

Holy payola. Breaker Magazine published an undercover investigation exposing pay-for-play in the cryptocurrency industry. Reporter Corin Faife asked 28 crypto outlets how much money he had to pay to place a sponsored post on their sites without disclosing the sponsorship. Out of the 22 outlets that replied, a dozen provided a quote. Below is a chart Breaker published featuring the names of the outlets and the price tags they presented.

Crypto payola. Chart by Breaker Magazine.

For what it’s worth, The Ledger has received numerous shady requests like this before. We, obviously, declined them all.

MEMES AND MUMBLES

Don’t go toward the light. So-called stablecoins, or price-fixed cryptocurrencies, remain the hottest topic in crypto land. Circle, Coinbase, Paxos, Tether, Gemini, and MakerDAO are just some of the companies and projects catching everyone’s attention in recent weeks. Desiree Dickerson, head of operations at Lightning Labs, a startup that builds blockchain tech, knocked the industry’s newfound explosion of interest in stablecoins in a tweet.

Tell you what’s not stable: the mercurial interests of crypto enthusiasts.

FOMO NO MO’

Don’t miss out: With U.S. midterm elections fast approaching, Politico Magazine dove into the influence of cryptocurrencies on campaign finances. As the piece notes, while the Federal Election Commission has permitted Bitcoin contributions since 2014, seven states have banned them entirely. Critics blast these virtual coins for enabling money laundering, yet advocates praise them for offering publicly inspectable blockchain ledgers. Do cryptocurrencies improve or obstruct election transparency? Cast your vote.

In an era of Russian hackers, super PACs and shell corporations being used by foreign entities to influence voting, officials tasked with maintaining the integrity of state and local elections have one more thing to worry about: crypto-candidates. The Center for Public Integrity found 20 crypto-candidates of various political stripes, seeking all levels of office, who have been requesting or have received cryptocurrency to support their efforts. At least three were candidates in a state that has since banned such donations. Another was accepting cryptocurrencies marketed as untraceable. The confusion over campaign cryptocurrency is widespread, and the implications are far from isolated. But the effort to establish uniform rules is lagging behind.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.