The Better Money Company announced on Tuesday that it has raised $10 million in seed funding to build a stablecoin clearinghouse. The project is designed to help different dollar-backed stablecoins move more smoothly across platforms and products.
According to the company, venture capital firm a16z Crypto led the funding round. BoxGroup, Sunflower Capital, The Fintech Fund, and several individual investors also joined including Sean Neville and Patrick McHenry.
Need for stablecoin clearinghouse
In its announcement, The Better Money Company said stablecoins are already faster and cheaper to move than many traditional payment methods. However, they still do not work as smoothly as real money.
The company cited fragmentation as a major problem.
For example, one stablecoin may not easily convert into another. At the same time, prices can vary across platforms, even when both tokens are meant to equal one U.S. dollar.
The company compared this problem to the early U.S. banking system. Back then, private bank notes often had different values depending on the issuer and where they were used.
It said clearinghouses helped fix that issue by aligning value between participants and making money more consistent. Now, The Better Money Company believes stablecoins need a similar layer to connect issuers and builders through one network.
“Clearinghouses solve a fundamental coordination problem. They transform a fragmented many-to-many market into a unified network, so systems can scale,” The Better Money Company said. “In a world with hundreds of stablecoins, which we believe is fast approaching, a clearinghouse is necessary. We’re building it.”
How the proposed network would work
Companies that launch stablecoins would only need to connect to the clearinghouse once. After that, any business building on the network could accept and use those stablecoins at face value from the start.
In the same way, companies using stablecoins would only need one connection to send or receive any supported stablecoin through one modern payment system.
The Better Money Company described the clearinghouse as a missing connection layer between stablecoin issuers and the companies building payment products around them.
“Stablecoins are the foundation on which companies will build better money and payments products. The last generation of great companies owned their software stack. The next generation will own their financial stack,” the firm noted.
Early partners and market focus
The Better Money Company said stablecoin issuers and sponsors that intend to join the clearinghouse include Paxos, MoonPay, Agora, Bridge, Frax, Brale, M0, Bastion, MetaMask, and Phantom.
It also named early builder partners such as Ramp, Modern Treasury Mesh, LayerZero, Utila, Privy, Turnkey, Notabene, alfred, BitGo, and Takenos.
This initiative is important because stablecoins need to move easily between platforms. If they stay fragmented, businesses may face delays and extra costs.
According to CoinMarketCap, the stablecoin market has grown to about $320 billion. As of 31 March, USDT made up roughly $184 billion of that total, while USDC was around $77 billion.
As the sector expands, a stablecoin clearinghouse could help connect this growing market and improve the flow of supported stablecoins across platforms.