Money Code
The future of finance is digital. Welcome to Money Code, the show that decodes stablecoins and the evolution of programmable money for builders, investors, and decision-makers. Each week, join hosts Chuk Okpalugo, Author of Stablecoin Blueprint and Raj Parekh, Head of Payments/Stablecoins at Monad Foundation as they break down the systems and strategies of seasoned operators in the space, revealing the insights you need for better build and buy decisions.
Money Code
Global Platforms Need Global Partners w/ Farooq Malik (Rain)
Presented by Stablecon and Powered by BVNK
In episode 2 of Money Code, hosts Chuk Okpalugo and Raj Parekh sit down with Farooq Malik, co-founder and CEO of Rain, to explore how stablecoins are moving from speculation to real adoption. They discuss how Rain abstracts away complexity for users, why global platforms need global partners, and how a crypto-native company can win traditional finance clients by offering a better global solutions.
#Stablecoins, #stablecoinlinkedcards, #Rain, #Visa, #cardnetworks, #fintech, #digitalcurrencies, #globalfinancialservices
About Stablecon
Stablecon (https://stablecon.com/) is the premier gathering for those at the intersection of DeFi, economic policy, financial infrastructure, and institutional integration, and those reinventing global commerce.
By convening the brightest minds in fintech and crypto, Stablecon provides attendees with world class thought leadership and fosters unparalleled networking and strategic collaboration across the digital payments industry. Whether you’re building, advising, or navigating this new frontier, this is the room where it happens.
About BVNK
BVNK is the leading provider of stablecoin payments infrastructure, helping businesses move money faster, settle globally, and even launch their own stablecoin products. Head to https://bvnk.com/ to learn more.
Connect with the Hosts & Guest
Chuk Okpalugo: LinkedIn, X, stablecoinblueprint.com
Raj Parekh: LinkedIn, X, monad.xyz
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Most of what we've built has been built ourselves from scratch. We started off focusing on a very narrow use case, which was payment infrastructure tied to card programs and card payment networks, and then we've expanded from there so we've added additional capabilities. On the credit side, we've added more cross-chain capabilities. So everything that we designed was specifically made with the idea that what happens post-regulatory clarity specifically made with the idea that, like what happens post regulatory clarity right Like everything we've been building has been indexed on being the market leader. The day after regulatory clarity comes in, let's make sure that we're using it and stress testing it and growing it with real money, so that we have a track record that we can point to as a solution that works and has been tested. Everything that we've done here has been coming from looking at this market and opportunity from an institutional lens.
Chuk Okpalugo:This is Money Code. It's the show where we decode stablecoins and programmable money so that you can better prepare for an on-chain future. I'm Chuck Ocopalugo, your host and author of Stablecoin Blueprint, and I'm joined by my co-host here, Raj Parekh, Head of Payments and Stablecoins at Monad. How are you doing, Raj?
Raj Parekh:I'm pumped. Got a good guest here today.
Chuk Okpalugo:Super excited today because we're joined by Farouk Malik, co-founder and CEO of Rain and fellow connoisseur of the New York ramen scene. You should hit us up for recommendations and actually, whilst we're here, if anyone has good ramen recommendations outside New York I'm in London right now. I've heard Bone Daddy's is good keen to get all those recommendations and hear from you. So that's another bit of homework for folks to do.
Chuk Okpalugo:Okay, before we dive in, a quick note the views and opinions of the speakers are their own and may not represent their companies. Nothing we discuss today constitutes investment advice or any other form of advice. Money Code is brought to you by Stablecon Media and powered by BVNK. Let's dive in, I guess. Another quick disclaimer Raj, you and Farouk go way back. Actually, there's a bit of a story there. You want to tell us some more?
Raj Parekh:Yeah, I mean, you know the early days, I guess this dates back like almost a couple years ago when I was building Portal. More directly, I came across this team called Rain and fell in love with the concept of adding stablecoins to cards, and so quick disclaimer, I'm also a small early angel investor too. But, Farouk, it's exciting to have you on the pod officially, man, and hard to believe being in the trenches in the stablecoin world for as long as we've had so far too.
Farooq Malik:Yeah, absolutely Great to be here. Thank you both for inviting me and giving me the opportunity to join you both. No-transcript, spendable globally at scale, and we started the company in 2021. We have been growing ever since, really starting to focus on the expansion of the stablecoin ecosystem and the utility for stablecoins more broadly, for both digital asset native applications, but also as a replacement for traditional financial services and enabling different types of use cases for a variety of users and platforms around the world.
Raj Parekh:And maybe you could describe just like the quick evolution of RAIN too. So for folks that don't know, like you know, how did RAIN start? And then you know you guys are one, are one of the early, I think, movers of the card issuing space type of stable coins. But like, where did that idea even come from?
Farooq Malik:yeah, so Rain. We started in 2021 focusing on the intersection of like fundraising and like early stage companies, and as we were exploring that space, some of the folks we were interviewing were asking hey, do you know how we can raise money in stablecoins? And we ended up building a proof of concept for that and the first transaction happened kind of you know, internationally, between an investor in the United States and the company internationally, and it just instantly transmitted value between one person and another and it was on a safe note and we were just thinking, hey, this is a really different type of use case, like, the money has been already transmitted, the person has already received it, they had visibility on the transaction as I was in flight and we just realized, hey, the future of money is actually already here. It's just being called stable coins or digital currency or distributed ledger or blockchain or whatever it was. And it really made us aware of the fact that the world has already started changing. And it really led us down this rabbit hole of realizing, hey, you know, central banks everywhere are thinking about stable coins and digital distributed ledger technology and all this other stuff as a replacement or the next phase of what money technology will look like and if we get started building all of the interoperability and infrastructure today, we will be in a position to actually take advantage of this growth over time.
Farooq Malik:And so that's really what got us interested in space and we started building sort of the first primitive solution for Rain, which was on top of which was providing access to stablecoin spending for B2B use cases largely focused on teams that were using USDC or USDT or other stablecoins as like their native currency and giving them the ability to actually use that for corporate travel or equipment or web hosting or domain names and things like that. And so that was the first real use case for the infrastructure that we built at RIN. And it was just because that industry was already there. They were already using stablecoins as their traditional currency of business and it was already $100 billion or plus of corporate treasuries that were on chain of people that had been building in this ecosystem corporate treasuries that were on chain of people that had been building in this ecosystem.
Farooq Malik:And from there we started building a relationship and our reputation being a service provider for this industry vertical and then, as the market started evolving through the bear market, where speculative use cases kind of died down and more traditional use cases actually started emerging, like remittances, b2b payments, things like that, and that gave us the opportunity to kind of leverage the fact that we already had relationships with a variety of these foundations and protocols and then become the service provider for them. As they were thinking about, hey, how do we actually go out of this speculative market and focus more on payments use cases for consumers and businesses around the world? And because we'd already been there, we'd already been building the infrastructure along the way, we'd already moved people's money, we'd already been on multiple different blockchains we became kind of that default solution that a lot of folks came to and said hey, we trust you already for our company money. We would trust you to move our clients' money or support our consumer use case, and that really helped us break into what we do today.
Chuk Okpalugo:And I think it's always interesting seeing how these use cases emerge. The early stages of any startup is an exploratory journey where you're responding to customers. They have different needs and you're trying to find where they overlap and where they look the same and who your icp is. And I think it's interesting how, in the crypto landscape, you have many companies who have existed initially, potentially for speculation, right or investment or other kind of non-payment use cases. But these are businesses still, and as businesses, they have treasury. They businesses, they have treasury, they have staff, they have expenses and they need to interact with the traditional world.
Chuk Okpalugo:And so the existence of speculation actually has driven some of the more traditional financial needs of these companies, and you need companies like Rain to help bridge the gap. And so I think that's a really interesting kind of almost irony of the people who say there's no use cases in crypto other than speculation. But that is the initial wedge that begins this flow into. Okay, well, what other financial services do these firms need? And I know we can talk about cards. That's a massive one, and we can also talk about how that expands the utility of stable coins from just something that you can all use on chain to now interacting with hundreds of millions of merchants Absolutely, and speculation has really driven a lot of different things around the world.
Farooq Malik:Discovering the near world was a speculative endeavor. Sailing around the oceans and all these East India companies or the West Indies companies and all these other things were all speculative in nature and so if you think about like modern society, a lot of it was driven by speculation. And you know even railroads. People built railroads before they figured out what to do with them. Right, they were just like, oh, building railroads is a way to make money. And then a bunch of people were like, oh, we can build industries around all this stuff and create wealth and things like that. So speculation isn't necessarily bad. It's just always been that first piece of a lot of global development around the world.
Raj Parekh:And I mean just to touch on that, I mean the original. During the gold rush they were called the 49ers. Then you have the wildcat banks and it was called the wildcatters back then. Now we call them degens. And so, to your point, farouk, speculation has actually breeded new markets. We just call them different names back in history, but now it's called degen and sometimes has a negative connotation to it, but it is actually the original foundation for new markets. That's what we're seeing with crypto and blockchains, and stablecoins kind of come about as well.
Chuk Okpalugo:I love that. That's how they're going to look at history in 50 years. They'll say, yeah, it was initially the 49ers, the Wildcats and the DJs of the 2010s and the 2020s. It makes a lot of sense and it drives a lot of the adoption and being on the infrastructure side and listening to the customers and trying to figure out what they do and what they need and building all this up from scratch. It's clear that this card spend element has just been such a key utility and has grown so rapidly and I think it's one of the fastest growing elements of Infra. For obvious reasons. You're able to create all this utility.
Chuk Okpalugo:But from the other side, the perspective of your customer, how are your infrastructure type or the financial services thinking about incorporating these services? So, for example, if I'm out in the market and building a consumer neobank or a B2B or S&B financial services and I need an expense card, what do I need to think about when thinking through choosing a stablecoin linked to card products? How do I go to think about when thinking through choosing a kind of card stablecoin linked to card products? Like, how do I go about the selection process? How much money can I make from interchange? Kind of? Let's talk through that.
Farooq Malik:A lot of that depends on the program structure, right who you're actually working with. I think, with a lot of these industry verticals, there's different use cases, right? Like, if you have a program which is based specifically on spend you want to start focusing on, okay, how do I actually use the highest interchange product available if you're focusing on, you know, monetizing the customer in a lot of different ways. Cards are a real interesting way to actually bridge back into existing payment rails so that your user doesn't have to feel the friction of being in stable coins. I think the challenge with stablecoin most broadly is that it is a different type of financial role. It is interfacing with money in a different way than you would normally, and not having the ability to spend your transfer rate is going to impact the trust that you'll be able to engender with your consumer, and so payment cards are really a way to make people feel the reality that, hey, this is money and I can use it the way that I would normally expect to use money. Customers around the world they, you know we all spend the same way, right? Like we are using the financial instrument to buy things or goods or services. We're transmitting value between one person and another or business, and so the enabling technology has changed, but that doesn't necessarily mean that everything has to change as well. Right, and so a lot of our clients. They come to us and say, hey, I have an existing program where I want to include, I want to build a product where it lets my customers hold dollars and spend dollars. And how do I do that? And so we can connect into any type of custodial or non-custodial wallet. A lot of our customers use portal products or other products where wallet agnostic. But being able to connect into the Visa network globally is a sign of trust. Is being able to say, hey, you know, I can actually use the money that's in here I'm not having to come back in or out through the same partner that I'm working with or out through the same partner that I'm working with. And stable coins in a fintech use case that we're powering, for example, is essentially providing immediate access to like an open banking type infrastructure. Right, because the money that you have is now instantly interoperable with any other app that also supports USB-C or USB-T or USB-G or any of the other tokens we support, and so you can actually, you know, if you lose trust in that partner or that user experience is bad, you can actually withdraw the money and send that over to a different payment app directly. Potentially you might be able to even take your wallet that's plugged into customer app A and plug the wallet into customer app B, keep your tokens in there the whole time. Like there's a lot of different use cases that are emerging where you know, regulatorily and society wise, like we've tried to solve a lot of these individual problems in different ways. And stable coins are this like new format of capital and you can use it the same way that you would use normal money, but it's a lot more flexible and interoperable than you know.
Farooq Malik:A bank deposit in a prepaid card program, right. And so there's a lot of different types of programs that you can build. The last generation of financial products for stablecoins was really built on the veneer of stablecoins, where it was really just every time you loaded value, it would go off-chain, it would get burned into a fiat balance, it would be loaded into an omnibus account at a bank and you generally lost access to any type of auditability, because omnibus balance are kind of held on the balance sheet of the issuer and that's what it was. It wasn't really if you wanted to withdraw, you really couldn't, even today if you want to withdraw, for, like any of these prepaid programs, it's kind of difficult to do and the balance is just, you know, it's kind of an ethereal balance which is relying on our intermediary financial institution, whereas with all the products that we support, we don't issue the tokens right. So you can bring whatever token we support and we support all of the major tokens that are issued by credible financial institutions on the stablecoin side today and we expect that to continue increasing right, so as that increases we can provide utility to every new token that comes in the door.
Farooq Malik:Like the state of Wyoming launched the frontier token a few I guess a few weeks ago, and on day one you could spend that frontier token globally anywhere Visa is accepted.
Farooq Malik:And so we eliminated that initial problem of any new stable coin where you'd have to figure out okay, where can I trade for this, where can I redeem this, where can I swap this, where can I use this, who's going to accept this?
Farooq Malik:And so now you don't have to worry about any of that because we've abstracted that away for the consumer, right. So, like I always say, you know if you look at coins in your pocket. Each one of those coins is issued or has been minted by a different us mint, but they all stem the same. And so does it really matter that denver has a better mint than san francisco? Does it? Like it really doesn't matter right, as long as you, as a consumer, can go and buy whatever you want and you're not having to be forced with I'm on USDC and base and my merchant only accepts USDT on Tron Like that's just not something that you, as a consumer, really should have to think about. Yeah, that's really everything. I mean everything we've built has been built so that we handle all of that. Nobody really has to figure that out.
Chuk Okpalugo:That is a really interesting point, I think, to make. There's a lot of stablecoin issuers' chains right. There's so much interoperability friction that potentially could occur if not handled properly, and I think one thing you mentioned there that I know people are thinking about but here's a really elegant solution is don't worry about what stablecoin, don't worry about what chain, as long as I can get it in my account, I can spend it at all these different merchants, and so I think there's going to be lots of different areas of infrastructure. Maybe that's at the settlement layer, the clearing layer, the card spend layer and others where they manage the complexity of this interoperability. Maybe that's where some value will accrue also.
Raj Parekh:but the end goal for the user is I don't want to worry about all these different things, I just want to spend my dollar, and I think that's a really important point I think one thing I'll just call out I mean, that's interesting about Rain here is that you guys a lot of traditional fintech folks are familiar with a lot of the banking as a service stack or the card issuing stack.
Raj Parekh:I think what's unique of what you said, Farouk, about stablecoins being composable and programmable and even global and borderless in nature, is that what traditional card issuers like maybe think of Marketo that's doing just in the US or Pomelo just doing it in LATAM, like you're doing across many different markets, and you guys have been able to scale pretty globally also, and so the reach that you guys have, leveraging new type of infrastructure with stable coins actually makes you guys a lot bigger than a lot of the card issuing partners that actually existed historically but also allows you guys to expand into like more you know more use cases Also. I guess like break down, just like how you think about you know customers coming over to you guys, but also like maybe let's go into like a few specific and like your favorite use cases, right, that has emerged from like this borderless nature of what Rain has really been able to build for the last many years now.
Farooq Malik:Yeah, one of the biggest things that we realized right when we started building Rain was that there's so many global platforms, so many global platforms, so many global marketplaces and so many global businesses out there. You look at Airbnb, you look at Deal, you look at even Rippling or a lot of these different platforms that have customers from all over the world Fiverr, upwork, toptel, et cetera and the challenge has been that there's global businesses but there's no global partner, and so that's really what we started building in to take advantage of, which was there's an opening in the market. Where global businesses want are global money. These are mastercard global networks. Why don't we just build a global partner? And so that's what we've been really focusing on and that's been a big key to our growth where we can go to a global player and say, hey, with one integration you can service a global customer base, and we can do that with global dollars, which are universally acceptable, they're self-custodial, they're instantly transferable, there's open markets where users can redeem for them or from them into local currency, and we're able to take advantage of a lot of the underlying infrastructure that has already been built by a lot of other players, where, you know, there's P2P exchanges, there's regulated exchanges, there's lots of different markets where people can come in and out.
Farooq Malik:For us, that was a big part of Haste, saying we have the aptitude and the technology and the infrastructure and the time is right to be able to build a global partner for all these global businesses.
Farooq Malik:And those are the most interesting use cases that we are powering today.
Farooq Malik:So we have remittances companies that use us, we have global broker-dealer programs where it's not even stable coins or crypto. Really it's just powered by our settlement stack and our global footprint on the issuing side, where we're able to onboard customers and face them directly without having to worry about, you know, our partner having to go into each country and get licensed themselves. So there's a lot of the utility that we provide, which is an element of the global element of stablecoins, but also it's a big part of we're spending the time and energy to get local licensing. We're spending the time and energy and connect it all to a single settlement layer and we're connecting all of the different blockchains that users support. So, you know, in some countries, avalanche is the number one blockchain, in other countries Solana is, in other countries Tron is, and so for us, our thinking has been like look, ultimately there may be a thousand blockchains that everybody wants to use, but ultimately, like consumers, shouldn't have to deal with the complexity of what that means.
Raj Parekh:Yeah, no, it makes a little sense fully abstracting everything away, and I think what that does is it allows you guys to then serve a lot of different corridors, a lot of different backgrounds, countries, I guess, like, maybe walk me through like a use case that you're surprised by, that you didn't really expect, like folks to like come to Rain to use and you kind of mentioned a few interesting ones right away. But any use case or company or project that you're like, hey, I didn't expect that, but it's really cool that you guys are able to serve them as being that global partner too.
Farooq Malik:One of the things we didn't expect is that very large registered investment advisors or broker dealer platforms would want to service a global customer base with us. Right, but we're working with somebody today where they're the broker dealer for like a network of global registered investment advisors and they're custodian for stocks and bonds domestically in the US. They face an international customer. They're holding funds for international customers and we're providing them a credit card based on the value of their assets that are held in institutional custody. What's really interesting there is that we're actually borrowing the money in stablecoins from our capital partners on the blockchain, right, and then we are lending that money out using stablecoins to international users around the world, but the collateral for that loan is actually held onshore in the US, at a regulated custodian in the United States, and that is a true credit card product, where it's not a charge card, it's not a secured card, it's not an overnight card, it's a real revolving credit card, and so there's a lot of these types of use cases where the stable coin element is included in the backend.
Farooq Malik:The fact that we're international, we're comfortable with servicing an international customer base, is a big part of why they're able to work with them on this. And then the use case is totally traditional and this player could use anyone Like they could go to anyone and everybody should fall over themselves to service them. But they're choosing us because we have the solution to get them to market the fastest, it's the most broadly available globally and it's the most flexible from a credit perspective. And so it's, you know, a use case which is very difficult to have thought about in advance, but it's something that we're always surprised about today.
Farooq Malik:And similarly, like you know, we have an on-wage access card in the domestic market that we support. We have other programs that are emerging, like fleet spending and things like that, where a lot of people are just, you know, they want seven day money, right, they want to be able to earn yield from partnering with stable coin issuers on, like, the reward side, and so they want to be able to access a more flexible type of program structure that doesn't exist today. Like they just can't do that, right, right, like you would. We're talking with another player where they want to work with stable coins because right now, their program has balances that are far in excess of the total capitalization of the bank, and so they're being put into an overnight intrafi pool, whatever it is, but they're just like I don't.
Farooq Malik:I would much rather make sure that this is one-to-one backed with institutional custodians held in us treasury bills and overnight repos and things like that, and I don't necessarily want to take the risk of leaving all my clients money at a $2 billion financial institution if I can help them. And so there's a lot of these things where people have been thinking about how do we reduce some of the risk in our existing programs, and we're always humbled and honored when they come to us and say, hey, is this something that we could potentially work with Rain on, and we can move some of our assets to a stablecoin issuer, and then we're in a slightly better risk profile setup than we currently are today. Right, and we're able to do a little bit more because Rain's able to do a little bit more than our existing solution. So we're seeing all sorts of different stuff coming our way.
Chuk Okpalugo:I find it fascinating because the use case is a traditional use case. The customer is not a crypto or stablecoin or blockchain native customer. They have a job to be done and they want to. It sounds like credit cards where the credit collateral, or really what's enabling the credit to be provisioned, is the assets that are in the RIA account, which completely makes sense, and they've got lots of different traditional fintech providers who can do that. But you win because you have a broader coverage, and so there's one of the many use cases of stablecoins that are emerging. One of them is being able to go global on day one, and in your case it's just being global and having that global coverage.
Chuk Okpalugo:But now you're winning traditional deals, and I think that's just something that, if you're not close to the space, you may not necessarily see it's like. Is it payments? Is it a new payment rail? Is it faster, cheaper, it's more competitive financial services. This is the end game here, and I think this is a great example of, and I think this is a great example of hey, we won a traditional client, we were better, we were literally the best. That's why we won, not because of faster, cheaper, it's because, well, actually, those embedded benefits improve the efficiency of your business and you actually have better products overall, so I think that's super interesting.
Raj Parekh:One thing that I'll quickly add is that I think this is a really good example where a lot of folks talk about product market fit, but not enough folks talk about product pool or market pool, and I feel like this is an excellent example where Rain you guys started off with an insight of how do you connect these two worlds together and, as a byproduct of that being at that intersection, you're now getting pulled into different use cases that you never imagined before as well, but you're still able to unlock the efficiency, the liquidity or the global nature of it as well. So I think this is, in my opinion, Rain is a really good example of product-market fit, but actually came. The prerequisite was actually the market pull and then building out the product to then even accelerate that pull even further as well.
Farooq Malik:So that's awesome to see. We've been very fortunate to be in a position where we can take advantage of a lot of the changes that are happening, a lot of the regulatory clarity that's coming in. And then also, you know, we're building a global business and one of the use cases for crypto or digital money or stablecoins is like treasury management. It's like ephemeral use case of this magical customer that has treasury management needs globally, but the reality is we are that right. Because we have local licenses in global markets, we can move our cash around everywhere at the speed of the internet and we can actually be a lot more efficient than anybody else in the market because we're not having to pre-position capital around the world. We can actually pre-position capital at the moment of the transaction taking place, which is something that no one else that is in our category can really do.
Chuk Okpalugo:Right, and speaking of that expansion, congratulations first of all on the Series B 58 million Series B led by Sapphire Ventures, with participation from existing and new investors, including heavy hitters such as Dragonfly and so on. I guess that is to Raj's point. This market pull, where you have this infrastructure, you started to serve some initial use cases, saw some traction. Obviously, the market, the entire market, is growing really well, but you're very well positioned and I see that the expansion here is way beyond cards. Right, there's, hey, we've built this multi-jurisdictional, regulated platform. How do you see these enterprises starting to look at RAIN now differently and what do they come to you for now? Is it kind of on-off ramps here or is it as you mentioned? Hey, I just want cards, but global in more places than just one particular location. What are they particularly starting with?
Farooq Malik:Enterprises want to work with partners that they can rely on and grow with. They have a variety of different use cases. They want to work with somebody where they can say I want to start with this use case and then I want to expand to these two use cases if the initial use case bears out. And so that's really what we've been seeing in the market and that's what we've been optimizing for right. How do we become the partner? How do we grow into more pieces that our customers already asked us for? And, more importantly, like growing to the pieces that our customers are paying, like for standalone services where the economics really don't make any sense, right, Like for that.
Farooq Malik:And so there's a lot of pieces of this where, you know, on and off ramping, a lot of this stuff was created at a time when the industry was outside of the regulatory scope, and so prices for these products are set up in a way where it doesn't actually take into consideration the fact that we're now moving into more of a regulatory clear market, and so this isn't like high risk flow as much anymore if you're in specific market segments.
Farooq Malik:So for us, a lot of this has been about how do we expand the services to our existing client base where they want to be able to get money in to a self-consolidated wallet that's powered by RAIN infrastructure. They want to be able to get that money out into a local payout because that user may want that money back to pay their rent in a local market in Brazil or Argentina, or they want to be able to send that money to another person in that ecosystem right, and so providing that type of infrastructure to allow programs to actually not only augment what they do with us but also work with all of the other customers that we power is a big part of how we're looking to grow our footprint over the next year and a half.
Chuk Okpalugo:And it makes sense, right? Many folks know we're interested in cards. Cards are never standalone half. And it makes sense, right? Many folks know re-interest for cards. Cards are never standalone. You never just want a card, right?
Chuk Okpalugo:It's not a product in and of itself, it's usually part of something and if that's a consumer, it could be a consumer neobank, a consumer wallet. If it's business, it could be business expenses. If you have a wedge into a customer, the cards could be the first product or it could be the second, the third, the fourth, and therefore there's usually other things that those customers want to do. And you're like hey, by the way, you like our service for XYZ, we're in all these different jurisdictions. Hey, that consumer wallet that you have, you probably also want on and off ramping. We can do that as well. So it makes sense and I think it goes to that market pull and being that regulated and trustworthy provider that you mentioned. But before we move on, we just want to take a quick moment to hear from our sponsors that make MoneyCode possible. Every business needs a stablecoin strategy and if you're looking for the best place to start, that's BVNK. Bvnk is the world's leading provider of stablecoin payments infrastructure, helping businesses move money faster, reach new markets and even launch their own stablecoin products. Global licensing and compliance are covered, so you can build with confidence. Learn more at bvnkcom, thinking through this new space. Right, we are at the intersection.
Chuk Okpalugo:I think people call it the convergence of traditional finance and blockchain, and I genuinely think this is one of the most exciting places to be in fintech. I've seen a lot of crypto Twitter chatter. I call it stablecoin Twitter. Now, depending on what part of it you're in, it's fintech. It's just fintech. There just so happens to be this other technology that's good at certain things and if you want to solve certain problems with it, then use that technology. That's how I see it, but it's new, right, and there's not that much infrastructure out there. You are part of the infrastructure that people are using to build these products, so, given that you are part of what other people are using, how have you gone through stitching everything together? Has there been enough for you to build on? How much have you had to build yourself? Can you talk through what that experience has been like?
Farooq Malik:Most of what we've built has been built ourselves from scratch. Right, we started off focusing on a very narrow use case, which was payment infrastructure tied to card programs and card payment networks, and then we've expanded from there. So, like, we've added additional capabilities on, like, the credit side, we've added more cross-chain capabilities, cross-chain settlement, all of that stuff, authorizations, pending transactions. So everything that we designed was specifically made with the idea that what happens post regulatory clarity right, everything we've been building has been indexed on being the market leader the day after regulatory clarity comes in. And that's been the unifying kind of vision that we've had, which is let's build as much as possible, let's make sure that we're using it and stress testing it and growing it with real money so that we have a track record that we can point to as a solution that works and has been tested, has been audited, has been built from first principles, has been built to be core financial infrastructure rather than an obvious project for stablecoin payments only, and so everything that we've done here has been, you know, coming from looking at this market and opportunity from a institutional lens. Like both Charles and I have spent, you know, our careers sort of working at large enterprise, and so everything that we are focusing on here is really about, as larger institutions, financial institutions, market leaders and other categories start exploring this ecosystem, how can we be a trusted kind of partner so that we can help you understand? Hey, these are the pitfalls. These are the things to watch out for. These are where we've seen other people make mistakes and this is where you know, as you're building something new, totally fine, the world is a very big place and there's going to be a lot of opportunity to build something new, but these are the things that you should be thinking about, that we've learned from having moved, you know, millions of people's money over several years, and these are the advantages that you can actually take from us.
Farooq Malik:Because we've been here longer, I mean, even as we've been building, a lot of things have changed right. Like we have been building since, like before ethereum moved to proof of state model, like it was still proof of work, it was a very expensive chain. Now it's significantly more cost effective. We've been doing this since before L2s became a real thing, and so, like we've been here at every step of the like the growth of various different pieces of the technology, infrastructure and technology stack, and so we've had to. I mean, we've been able to actually evolve our thinking and evolve our product stack to take advantage of all the technology innovations that have come.
Farooq Malik:Even in this like short three to four year period and we really always thought about this as hey, individually and over time, there's going to be lots of different changes that will come in and new technology improvements that will come in.
Farooq Malik:We're starting to see this now, with a variety of new L1 being launched by incumbents to get access to their distribution, and for us we're observing it, we're thinking about it.
Farooq Malik:The reality is is that you know, even today, as a consumer, there's a core advantage and disadvantage versus a closed loop. And when I look at closed loop apps on my phone, like a Square Cash app or a Venmo, and then when I look at an open loop payment system similar to Zelle, it's like there's different utilities for various different things and there's room in the market to have closed-loop payment systems like L1 run by a single company or having a more open-loop, more egalitarian ecosystem that everybody can engage with. So there's a lot of room in the market to see various different things win out, but a big piece of what we've been building is that it doesn't matter. You know, consumers will vote with their wallets, and that's where Rain comes in. Like everybody will either have to get connected back into something else or things will need to work between one solution and another solution, and that's where we come.
Raj Parekh:I mean one of the things that's pretty interesting to what your point is that I mean you guys have had to build the hard things and, like I think, in addition to some of those hard things is the infrastructure that like the changing landscape of the blockchain space. But also, like you guys have been a Visa principal member for a very long time too, and that's a really hard, really hard thing to get. I can speak for it just because of my years at Visa. It's not easy to do. You talked about like the original narrow use case that you guys focused on right. I mean, what does that Visa transaction look like with RAIN and stable coins? I mean, a lot of folks are familiar with some of these. You know cards before where you kind of change your, you know, convert your crypto, but you guys do it pretty differently. And then on top of that, there's I new unlocks that you guys have been able to do, both for the network but for your customers also, but maybe just like break down, like just how that transaction actually works today.
Farooq Malik:Yeah, we can support a variety of different types of transactions but, like I guess, for the ease of this conversation, we can talk about like debit. So on a free debit transaction there's a wallet, like smart account on the blockchain. We've deployed that natively on all the different blockchains we support. I think it's 11 at recent count and you can have tokens in all 11 chains. It doesn't matter, you can have it on one. The user doesn't necessarily need gas on each individual chain for it to work. We can authorize it. Like you swipe a card, we can authorize that transaction on the blockchain within the card SLA, which is usually less than a second. We can do that, I think, at around 400 milliseconds on most of the chains we support. And then we've built this whole infrastructure to be highly performant but also to be able to have the concept of like a pending transaction on the blockchain. So if you spend $5, you have $10, you can withdraw $5 and that'll go through permissionlessly. If you try to withdraw $10, it'll fail on the blockchain and then, similarly, like now, whenever that settlement report comes in from the card network, we can actually pull those tokens out of your account and send them directly to the card network. So we don't off-ramp at all for most of the programs that we support and the only programs that are fiat-based are the fiat-based programs that our customers wanted to do.
Farooq Malik:But we set all payment volume seven days a week with Visa Pay, and we do that with USDC. We can also do that with USDG. We can do that on four different blockchains directly from the user balances straight to the pay now and then what's interesting is we have some clients which are on the other side and they're receiving merchant settlement from Visa and Stablecoins as well. That flows into Rainpower accounts as well, and so as soon as that hits the merchant account, they can spend that money on a card immediately. There's no settlement delay. There's no hey, you're going to get this money in two days. We'll click this button for a 1% fee to get the money instantly. It's just all internet money and it comes in immediately. You can spend that money and it goes back out to Visa and a stable coin, and so that's how it works today. It's a 24-7, 365 technology system that we've built and it works every single day, and we're the only player domestically that, as far as I know, still is settling seven days a week with the payment hours.
Chuk Okpalugo:And that's definitely a brand new unlock Another one, I should add. I should probably just create a list for folks who are skeptical of like. Here are things that are happening in the world with stablecoins that are not speculation Seven days a week, settlement with card programs is net new. It's a new thing and so that's a really exciting one.
Chuk Okpalugo:But of the things you mentioned which you know not to stir the pot here a little bit but one of the things you mentioned was okay, you've got issuers on one hand, ie folks who are spending, and you also have some merchants who have Rain accounts. Wait a second, okay. So then visa's in the middle and obviously we're very early. But there's this whole question that many people ask about oh, stable stablecoins are going to disrupt Visa and MasterCard, and I think on the call we have someone from XVisa here in Raj and a principal member of Visa here in Farouk, so I guess I'll have to play the steel man on the other side. But can we talk about that? Are stablecoins going to disrupt the card networks and, if so, how?
Raj Parekh:I guess just to say a quick. I mean, you know I've been at Visa for you know, for seven years or so, early on, and the common adage at Visa was there's a lot of disruption fatigue. You know Visa has been around for 60 years 60 plus years now at this point and every time there was a new network or a new, you know, competitor that come up, they would effectively fade away after a while. I think for the first time I've seen stablecoins and blockchains actually that combination being a real competitor for Visa in some capacity, and we kind of alluded to having the merchant acquire and the issuer start to settle on stablecoins directly. But maybe, farouk, I'm curious to get your point of view, because you're building these systems at scale Now you're seeing both sides. Also, is the disruption fatigue actually something that Visa needs to take out? I'm curious to get your point of view, because you're building these systems at scale. Now you're seeing both sides.
Farooq Malik:Also, is the disruption fatigue actually something that Visa needs to take out and start to take the space a little bit more seriously? Curious to get your feedback on it. We've seen them take it very seriously. Our engagement with the Visa team has been a great relationship. We know that they're thinking about stable coins and how they play with their adjusting systems, how they can use stable coins as a way to improve the client experience for issuers as well as acquirers. So we've been having really productive conversations with the Visa team about how stable coins are a tool to help Visa grow faster, improve margins, reduce costs, that there's a universe in which obviously, like anytime, there's a technology shift and enabling technology changes, there's always going to be a risk of incumbent networks or incumbent kind of participants. What I think is going to be interesting to see is really you know how all of this stuff evolves over time and you can see I mean a lot of different players that visa and mastercard both work with are announcing competing networks right, or trying to announce competing networks while saying that it's not really a competing network, and so it's going to be interesting to see you know how that all evolves.
Farooq Malik:I think payments has been an industry where everybody's kind of a frenemy a little bit. It's been interesting for me to kind of learn more about. But overall, I think you know Visa and MasterCard and Visa especially has had a long time to build a global distribution network for merchant acceptance, and I think that that's something that's hard to duplicate, right. Being able to go country by country to block and tackle each individual merchant is a difficult endeavor, and I think that there's significant and strong network effects for having a global merchant acceptance network. I think stablecoins have an opportunity to kind of disrupt some of that, and there's a lot of people trying to figure out how to get merchants to accept stablecoins. I don't think that that's going to be sort of a big issue. It's really going to be how are people actually going to start in stablecoins in the first in the first place?
Farooq Malik:Right, our thesis has always been, you know, let us build solutions that get people into stable that wouldn't otherwise be, and then we can figure out what happens. I mean, we're lucky, we settle seven days a week today. You know, if the networks wanted us to settle 24 hours a day, we could probably do that too. I mean, we definitely can do that, and if they wanted us to settle in a variety of different tokens for a variety of different transactions. That's already something that we support today. So for us it's having networks that are thinking about this market as a risk but also as an opportunity has been really helpful because it's helped us engage with them productively and actually build these technology solutions. And if tomorrow there's a new network that comes up that hopes to disintermediate or sort of stand alongside, I think that it should probably be good for consumers to have lots of other choices Right. But at the same time I'm not convinced that a 50 year head start in kind of merchant acquiring it can be kind of short circuited.
Chuk Okpalugo:Yeah, I mean, I know I said I was going to steal man. I don't think I have time right now, but we'd love to get into this another time if anybody else is listening. But the way I think about Visa and the network that has been built, it's taken decades. For a reason it's a very, very challenging thing to do and I think there's two things you mentioned there that we should discuss quickly here. But there's more than just connecting merchants and issuers. That visa does and I should say the card networks and I think, authorization and guaranteed funds. Okay, cool, if you have instant settlement, then technically you're basically authorizing and guaranteeing the funds instantly. So that's the part that most people realize and say, wait, we can disrupt this thing. But there's other parts that visa, mastercard do and the car networks do, which is this kind of governance layer and dispute resolution and chargeback risk, this whole liability shift, where, if you are ordering something online and it doesn't arrive or it doesn't arrive at how you think, there is a mechanism probably less needed if you're buying a coffee in a shop, but for online payments and digital payments, you need this mechanism, this agreed form of approach for how you deal with these things and, depending on the regulation, the customer gets the money back first. Then the merchant has to go and find the resolution to hey, this person has asked for this money back and there's a process in it and people follow it and that's really challenging to do at scale, but there are folks who are trying to do this in an open way. I think, for folks listening, coinbase Commerce Protocol is one to watch out for. It's like, hey, let's break down each of these roles, make them into smart contracts and let folks like Visa or anyone else play those roles, and it can unlock some really interesting things. But you know, we're still very early.
Chuk Okpalugo:And the other thing you said that is really important for folks to know is that it's hard to get all these disparate parties to work together and the incentive mechanism is interchange. You say, hey, we're going to take some fee out of the pie and I'm going to give it to the people in the network to grow the network. And when I started learning about payments, I was fascinated by these ISOs, which are essentially firms that get a cut by going and acquiring merchants and giving them to the merchant acquirer and then you take a fee. And that's just one example of multiple fees and cuts that get paid to encourage and incentivize lots of different people to go and build and go and acquire merchants and so on. And so there needs to be, or there can be, equivalents in the stablecoin world of who can be incentivized to get merchant acquirers to accept stablecoins.
Chuk Okpalugo:But how do you get everyone to agree on the same dispute resolution system? There's probably pathways to do that, but it's a complicated multi-party coordination problem. So that's one thing that I'm excited to see if it plays out. But we are at time. So, as we close out the show, this is one thing we want to do. I'm going to hit you with some closing questions here, farouk. You ready, let's do it. Okay, so if we project out five years from now, what does success look like for Rain it?
Farooq Malik:looks like a lot more people trust us to support them as they build more products and services. I mean that's our aspiration that anybody that wants to build anything interesting in this ecosystem can consider us as a partner.
Chuk Okpalugo:Lots of different people are in the space. Lots of folks are building things new. Like you were mentioning, there's only so many folks who are kind of in the media or busy on LinkedIn and X and so on, so who else should?
Farooq Malik:we bring on the show. Well, I think two of the smartest people in the industry are already on this show. You too, I appreciate it. I appreciate it, so I trust that you guys will be very good at finding the next group of folks. Look, I think that there's a lot of folks I admire, and I think you had Simon on right. I think Simon is a phenomenal person. I think you should probably bring on some of the folks from Raj's former employer, visa Kai. I think Kai has a lot of really interesting opinions about Visa's role and what stable coins will ultimately either drive as an opportunity or a threat, and I think that you'd be a great guy to have you bring on, I'm going to shoot Kai a message.
Raj Parekh:We'll make it. We'll make it happen.
Chuk Okpalugo:We can have a rerun of that Visa debate. Okay, cool, so that's a wrap. Thanks for a great conversation. Where can listeners go to learn more about you and your company?
Farooq Malik:Yeah, Rain is at rainxyz. I'm at a rooster on Twitter.
Raj Parekh:Please feel free to message me if you have any questions about what we do and happy to answer and you, raj, you can find me at manaxyz and then Raj Parikh, underscore on X. Thanks again for coming on.
Chuk Okpalugo:And you can find me at stablecoinblueprintcom or trackoxeplugo on LinkedIn or track underscore XYZ on X. It's been great having you, Farouk. Thanks so much for coming on. Thank you so much. Thanks so much for listening to Money Code. There was so much to take away from today's conversation.
Raj Parekh:I learned a lot, and I hope you did too. If you enjoyed this episode, do us a favor, share it with someone you know, or give us a five-star rating on Apple, Spotify or wherever you get your podcasts from. Until next time.
