Stablecoins & the Future Financial System: Crypto's Mainstream Moment

Based on insights from a16z's "Stablecoins & the Future Financial System" featuring Ali Yahya and Arianna Simpson

🎧 Listen to the original episode: Stablecoins & the Future Financial System - a16z Podcast with natural voice translation on NativePod

After 15 years of bold visions and skepticism, crypto is finally delivering on its original promise. In a compelling discussion between a16z general partners Ali Yahya and Arianna Simpson, we get a clear picture of what's working now in crypto, what's driving mainstream adoption, and why stablecoins may be the breakthrough product the industry has been waiting for.

The $16 Trillion Breakthrough: Stablecoins Come of Age

The numbers tell a remarkable story. Stablecoins are processing approximately $16 trillion in annual transaction volume, and traditional financial institutions from Stripe to Revolut to Robinhood are beginning to integrate them into their core infrastructure.

Bitcoin's Vision, Finally Realized

As Ali Yahya points out, we've come full circle to Bitcoin's original vision from 2009: "a peer-to-peer electronic payment system." But it took 15 years of infrastructure development to make this practical reality.

The breakthrough factors:

• Cost efficiency: Transactions of any amount for less than a penny
• Speed: Settlement in under a second
• Stability: Stable unit of account unlike volatile cryptocurrencies
• Regulatory clarity: Friendly policy environment enabling adoption

Why Now? The Infrastructure Finally Clicked

The technology stack has matured dramatically. Modern crypto rails can now handle the transaction volume and speed requirements that make peer-to-peer payments viable at scale. Combined with the regulatory clarity from the new administration, stablecoins are experiencing their mainstream moment.

The Inefficiency of Traditional Finance

To understand stablecoins' revolutionary potential, consider the absurdity of our current financial system:

Domestic Transactions: A Web of Intermediaries

Even buying coffee with a credit card involves:

• Point of sale system
• Payment processor
• Issuing bank
• Acquiring bank
• Credit card network

Each intermediary takes fees, adding up to multiple percentage points per transaction.

International Transfers: Even Worse

Cross-border payments are "insane in terms of inefficiency":

• Time: 3-7 days to move money between countries
• Cost: Up to 10% of transaction value
• Complexity: Duplicated intermediary stacks on both sides

The stablecoin alternative: Move any amount of money anywhere in the world for under a penny in under a second.

Real-World Applications: From Pakistan to Corporate Treasury

Stablecoins aren't just theoretical. They're solving real problems today:

Emerging Markets: Zarpay's Pakistan Network

A16z portfolio company Zarpay is building networks in Pakistan where people can:

• Deposit local currency at mobile kiosks
• Receive stablecoins in return
• Access broader financial services ecosystem

This model works especially well in countries with unstable currencies where holding dollar-equivalent stablecoins provides immediate value.

Corporate Treasury: SpaceX and Beyond

Major companies like SpaceX are already using stablecoins for treasury management and cross-border operations. Stripe's acquisition of Bridge and their focus on stablecoins at recent conferences signal broad enterprise adoption.

AI Agents: The Unexpected Crypto Driver

One of the most fascinating developments is how AI agents are creating new demand for crypto infrastructure.

The Problem with Traditional Banking for AI

You can't give an AI agent your bank account or credit card. But you can give them a crypto wallet. As Arianna Simpson explains: "If you want to dispatch your agent to go transact on your behalf, you can't really give them your bank account or your credit card, but instead you can give them your crypto wallet."

This creates an entirely new category of digital-native financial users that traditional banking simply cannot serve.

The Stablecoin Ecosystem: Who Captures Value?

Current Leaders

Major issuers dominating today:

• USDC: Created by Coinbase-Circle consortium
• Tether: Largest by volume

The Coming Commoditization

Upcoming legislation will likely set clear rules for stablecoin issuance, potentially commoditizing the issuer layer. This could shift value capture to:

Infrastructure layer: Blockchains like Solana, Ethereum, and Sui capturing gas fees from transaction volume

Interface layer: Wallets and fintech companies connecting crypto to end users

A16z portfolio company Phantom is positioned as a key wallet interface for stablecoin interactions.

Why Incumbents Can't Compete

The Innovator's Dilemma in Action

Large tech companies struggle with crypto adoption because it fundamentally threatens their business models. As Ali Yahya reflects on his Google X experience: "Google would not touch crypto with a thousand foot pole."

The core conflict: Crypto's decentralization vision directly challenges centralized companies' power and profit structures. Building a decentralized social network, for example, eliminates the monopolistic control that makes platforms like Facebook valuable.

Even "Moonshot" Labs Resist

Yahya's experience at Google X (the "moonshot factory") illustrates how even innovation-focused divisions within major companies avoid crypto due to:

• Regulatory concerns
• Reputational risks
• Fundamental business model conflicts

This creates massive opportunities for startups willing to embrace crypto-native approaches.

The AI-Crypto Convergence: "Communist vs. Libertarian"

Peter Thiel's observation that "AI is communist and crypto is libertarian" highlights how these technologies serve as counterweights to each other.

Crypto as AI's Counterbalance

Proof of Humanity: Companies like Worldcoin (using biometric orbs and zero-knowledge proofs) enable people to prove they're human in an AI-saturated world.

Decentralized Compute: Platforms like Jansen create marketplaces for GPU capacity, allowing decentralized AI training and inference without relying on centralized cloud providers.

New Internet Economics: Crypto could enable new business models for the internet when AI eliminates traditional ad-based revenue streams.

The Attribution Problem

When AI provides direct answers instead of linking to sources, the entire web economics model breaks down. Crypto could enable:

• Attribution tracking for AI training data
• Automatic compensation for content creators
• New revenue models for the post-search internet

Smart Contract Platforms: The Competition Heats Up

Bitcoin: Digital Gold Success

Bitcoin has succeeded as digital gold rather than a payment system. Its resistance to change and simplicity are features, not bugs, for store-of-value use cases.

Ethereum: The Decentralized Computer

Ethereum optimization for decentralization makes it ideal for:

• High-stakes DeFi applications
• Asset issuance requiring maximum trust
• Applications where decentralization trumps performance

Solana & Sui: Performance Optimized

Higher-performance blockchains excel at:

• Payment processing
• High-frequency applications
• Consumer-facing experiences requiring speed

The future likely involves specialization rather than winner-take-all, with different platforms serving different use cases.

Regulatory Revolution: From Hostility to Support

The Policy Transformation

The regulatory landscape has shifted dramatically. Previous administration hostility that killed projects like Facebook's Libra has been replaced by crypto-friendly policies.

This creates new opportunities for entrepreneurs who previously pulled back due to regulatory uncertainty.

The Libra Lessons

Facebook's Libra (later Diem) could have been transformative with its massive distribution network. While regulators killed the project, the talent diaspora led to successful projects like Aptos and Sui.

The takeaway: Good ideas and strong teams find ways to succeed, even when specific projects face regulatory challenges.

Common Misconceptions About Crypto

Beyond Digital Money

The biggest misconception is viewing crypto as just "digital money." As Ali Yahya emphasizes, Ethereum is fundamentally different from Bitcoin - it's "a computer where you can build all sorts of different applications."

Unique properties of blockchain computers:

• Programs with "a life of their own"
• Trustless commitments requiring no intermediaries
• Software free from interference, even from creators
• Inversion of hardware-software power relationships

The Expanding Possibility Space

Understanding Ethereum as a computer platform, not just a ledger, opens possibilities for:

• Sophisticated DeFi primitives
• Decentralized AI applications
• Consumer applications with unique trust properties
• Novel coordination mechanisms

Investment Implications: Recognizing vs. Envisioning

As Arianna Simpson notes: "It's not necessarily our job to envision what is possible, but rather to recognize it when we see it."

Key sectors to watch:

• Stablecoin infrastructure and applications
• AI-crypto intersection tools
• Consumer crypto applications solving real problems
• Cross-border payment solutions
• Decentralized social and creator economy platforms

Looking Forward: The Cascading Adoption Effect

The Stablecoin-First Strategy

Stablecoins serve as crypto's "baby step" for traditional institutions because:

• Clear, non-speculative value proposition
• Obvious efficiency gains over traditional systems
• Regulatory clarity enabling confident adoption

The Multiplier Effect

Once stablecoins become mainstream financial infrastructure, they create pathways for more advanced crypto applications:

• DeFi protocols building on stablecoin base layer
• Consumer applications leveraging crypto rails
• New business models enabled by programmable money

The Broader Transformation

We're witnessing the early stages of a fundamental shift in how money and value transfer work. Stablecoins represent more than just digital dollars - they're the foundation for a new financial operating system.

Key advantages driving adoption:

• Dramatic cost reduction for payments
• Near-instant settlement globally
• Programmable money enabling new applications
• Inclusion of previously underserved populations
• Infrastructure for AI-native financial interactions

Conclusion: Crypto's Mainstream Moment

After years of hype cycles and disappointments, crypto is delivering on its core promises. Stablecoins provide the clear value proposition and practical utility that drive mainstream adoption.

The convergence of mature infrastructure, regulatory clarity, and real-world use cases creates unprecedented opportunities for entrepreneurs building the next generation of financial applications.

Whether it's enabling global workers to receive payments instantly, powering AI agent transactions, or simply making cross-border commerce as easy as domestic payments, stablecoins are transforming how value moves through the global economy.

Want to experience this conversation in its original form? Listen to the full a16z podcast episode with natural voice translation through NativePod—because sometimes, hearing the nuanced discussion between industry experts provides insights that text alone cannot capture.