How Stablecoins Are Reconfiguring the Financial System | ft. Eddy Lazzarin and Sonal Chokshi

Stablecoins are crypto's first killer app, and their adoption is now spreading into traditional finance, international players, and conventional fintech rather than remaining confined to crypto insiders. Eddy Lazzarin is precise about what stablecoins actually fix: they solve one specific piece of the financial chain, moving a balance from one address to another very fast, cheaply, and securely, but they do not repair the entire intermediary chain end to end. His central claim is that the entire financial system is now reconfiguring itself around that one high-performance component, the way a circuit reorganizes around a single superior part. A bank that adds stablecoin send and receive capability gains collateral visibility, new lending possibilities, and the ability to connect with other stablecoin-speaking banks without the bespoke one-by-one integrations previously required. He characterizes this as a change in degree rather than kind, but argues the degree is so profound it produces a qualitative difference, while acknowledging the reconfiguration cannot happen in one shot and requires many small pieces to shift over time.

On the legislative side, Lazzarin draws a sharp distinction between the GENIUS Act and the CLARITY Act. The GENIUS Act created specific and concrete conditions for financial institutions to connect real capital and money use cases to the crypto world through stablecoins. The CLARITY Act, which runs over 300 pages, would do the same for crypto-native capital formation by distinguishing between network tokens and company-related tokens. A network token is the natural ownership asset for a decentralized marketplace that can capture and distribute value in an automated way, with the key legal distinction being the absence of a single controller rather than whether contributors continue to make efforts. Founders historically avoided building real business models around tokens because doing so risked SEC classification as a security, and CLARITY would allow founders to identify milestones to qualify as a network token and experiment openly with value capture. If CLARITY passes, Lazzarin predicts many people will design entirely new projects from the ground up to exploit the new legal foundation.

Lazzarin identifies buy and burn and mint and spend as two distinct token mechanics with no direct equity equivalent. Buy and burn takes in revenue and uses it to purchase and retire native tokens, reducing supply and potentially driving price appreciation. Mint and spend issues new tokens to fund growth or network activities, decoupled from fees collected. These two levers can operate independently in a way stocks cannot replicate, giving token-based projects a monetary-policy-style capability unavailable to conventional companies, which must sell equity in private rounds to raise growth capital. He acknowledges a reasonable critique of buy and burn, that it slows growth by charging fees and diverts capital toward token appreciation rather than reinvestment, and notes that another GP at the firm expressed skepticism about the mechanism. He also argues that the resurgence of interest in revenue among crypto projects is genuine, and that arguments against revenue often reflect cope from projects that lack it, with indefinite revenue deferral more likely signaling an absence of pricing power than a deliberate growth strategy.

Crypto has been largely walled off from the rest of the economy, which explains why it has failed to reach its full potential for productivity improvement. Lazzarin cites a 2004 paper by William Nordhaus finding that 97.8 percent of the value created by productivity improvements is externalized rather than captured by the producing company, driven primarily by price competition that routes benefits to consumers. He uses this to argue that value capture is genuinely difficult and rare, and that obsession with it among entrepreneurs reflects that difficulty rather than greed. He acknowledges the Nordhaus figure may vary by sector and has likely shifted somewhat over time.

Many technical constraints in crypto have been alleviated, with blockchain consensus ordering capacity potentially reaching hundreds of megabytes per second and zero knowledge applications improving by orders of magnitude. The remaining constraints are now primarily product design and regulatory rather than technical. Lazzarin acknowledges that lifting technical constraints has not unleashed the innovation that was anticipated, attributing the shortfall to regulatory blockers, a lack of imagination among builders, and the rise of AI raising the bar for what founders are willing to risk building in crypto.

Lazzarin argues that crypto and AI are complementary rather than competing systems. AI agents will create intense demands on capital allocation that necessarily touch finance, money, and crypto, and cryptography is his proposed answer for constraining those agents, covering identity, authentication, money via blockchains, and verification of compute and programs. He notes that as AI becomes more powerful it becomes better at circumventing constraints, making cryptographic constraints more rather than less necessary. When a user holds assets in self-custody and also has an AI agent, the agent can directly control those assets without a human intermediary, which he considers a significant development. He describes the current AI adoption phase as an attract phase in which companies subsidize usage to acquire users, and argues the extract phase that follows is where crypto becomes a no-brainer.