Fintech entrepreneurs are using stablecoins as a means of breaking into the payments industry and driving digital modernization.
Startups such as MassPay and Rain have been forging new pathways for payments that embrace stablecoins, either incorporating or bypassing aging rails. They see an expansive opportunity ahead as they begin to make inroads.
While traditional payments players, including card network giant Visa and mega processor Fiserv, have also glommed on to the stablecoin trend, their legacy infrastructures may increase the difficulty of adapting to digital schemes.
Meanwhile, younger companies are amassing capital from venture investors and hiring employees to build stablecoin networks and accessories. The appeal for investors has been a simple one, according to Alex Witt, general partner at Verda Ventures.
“The basic premise behind our fund is: sending payments should be as easy, fast, and cheap as sending a text message,” Witt said in an interview this month. “We fundamentally believe with blockchain, mobile phones, and the internet, that is completely possible.”
Witt and his business partner, Amit Chu, created a venture fund two years ago to invest in stablecoin startups and it has since drawn $40 million, he said, allowing the fund to purchase minority stakes in about two dozen companies globally.
It’s a real change from when Witt first started to raise money for the fund in 2024 and people thought he was “completely crazy,” he said.
The Verda portfolio includes the fintech Yellow Card, which focuses on payments in Africa, as well as the blockchain infrastructure services company Capa, which operates in Latin America.
Two other companies the fund invested in, Kulipa and Beam, have already been sold. Additionally, digital processor Stripe is circling another possible purchase, Witt said, declining to name it.
Rain evolves into stablecoin services
Rain’s holding company, Signify, began as a different business and then morphed into the one branded as Rain today. It has collected about $338 million in equity investments along the way, according to a company spokesperson.
Among the company’s investors are San Francisco investment firm Iconiq Capital, Sapphire Ventures and Coinbase’s former chief technology officer, Balaji Srinivasan, with a quarter of a billion dollars raised in the most recent round disclosed in January.
Rain provides stablecoin infrastructure services that enable corporate customers to bridge stablecoin payments so that money can move from the digital assets to traditional payment rails. Corporate clients embed the technology in their services for consumer use, letting consumers tap stablecoins in a way that’s less invisible to users.
Early clients were crypto firms, fintechs and neobanks, sometimes in countries such as Argentina, where the digital assets acted as a hedge against inflation. But then Rain began attracting bigger names, landing remittance provider Western Union as its first major customer last year. MoneyGram and ticketing company Live Nation followed this year.
This week, Rain said it’s making a digital wallet available to consumers that will enable them to save, spend and send from a stablecoin balance that is backed by cards the company issues. For now, consumers will still custody their funds with the noncustodial wallets, but the company plans to offer custodial wallets by year-end.
Rain expands following Genius Act
Rain has grown by acquisition too. In August, it purchased the California payments and technology firm Ansa for an undisclosed sum.
Now, the business employs about 150 people around the world, with many located in its New York headquarters, the company’s CEO, Farooq Malik, said in an interview last month.
The brand name Rain dawned on the founders because they saw how fast and fluid funds could be transferred using stablecoins. The same could be said for how quickly startup businesses are reacting to stablecoin developments, like the signing of the Genius Act, which created a regulatory framework for the digital assets.
The new law has been pivotal in pushing the business forward, Malik said, calling the legislaton a “tipping point.”
“A lot of people had been waiting on the sidelines for clarity before proceeding,” Malik said. “That gave companies and people the confidence to proceed. Consumers also have to believe this is viable.”
Now, the company aims to take another step in its evolution. It applied with the Office of the Comptroller of the Currency for a national trust charter this month, seeking the ability to offer asset custody and other related services, though they could still accept deposits or make loans.
MassPay embraces stablecoins
Another startup growing in the stablecoin arena is Las Vegas-based MassPay, which is using the digital-asset technology to streamline payments for gig workers, contractors and marketplace sellers, as well as providing payout services for gaming and sports betting. It connects to local payment rails, real-time payment systems and mobile wallets.
“We’ve seen growing demand for stablecoins, primarily by large-scale institutions that feel comfortable due to some clearance in the regulation,” the company’s CEO, Ran Grushkowsky, said in an interview last month. Stablecoins are becoming particularly useful for speed and payments over the weekends, he said.
The majority of MassPay’s 300 corporate clients are in North America, Grushkowsky said. They include Los Angeles-based online social platform Passes and New York-based marketplace Whop.
Last week, MassPay said it had forged a new integration with Block’s Cash App digital wallet.
MassPay’s services are offered in some 230 countries, the company said last December. MassPay has grown to process tens of billions of dollars annually, with about half of those payments moving across borders, and about 10% in stablecoins, he said.
The company is privately funded, and now employs about 54 workers, mainly in the U.S., Grushkowsky said, declining to say how much money the owners have raised.
As startups nudge stablecoins forward, the digital currency is slowly becoming a real possibility for payments in everyday life, Witt explained.
“The biggest challenge, though, is that last mile of friction and localizing to consumer preferences,” Witt said. “We wanted to invest in the leaders around the world that are bridging the gap.”
