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A company valued at $2 billion has ushered in the second half of stablecoin payments

Today, let's talk about a very eye-catching financing news from last week: Rain just closed a $250 million Series C round, with a valuation reaching $1.95 billion, led by ICONIQ.

One particularly interesting aspect of this news to me is that the partner leading the investment from ICONIQ, Kamran Zaki, was my first boss at Adyen. At that time, he was the head of Adyen’s U.S. market and later became the global COO.

Another layer of relationship with Rain is: Rain recently announced a partnership with Lithic, a card issuance technology service provider, and Lithic’s chief product officer (CPO) is Robin Gandhi, who was my second boss at Adyen.

This is very interesting because, although Adyen is not a company involved in stablecoin payments — in the payment field, Stripe has fully embraced stablecoins, while Adyen hasn’t made any moves so far — many of Adyen’s former core executives have actually been connected to stablecoins at various levels.

01｜Why this round of financing is “more important”: It’s not just about card issuance, not just about payments

The figure for this round of financing is also very interesting: $250 million. Back in 2015, ICONIQ led Adyen's $250 million funding round — which eventually led to Adyen going public. I find this historical 'rhyme' very intriguing.

If you’re not very familiar with ICONIQ, it doesn’t grab headlines as often as other Silicon Valley venture capital firms, nor does it frequently market itself like Andreessen or Sequoia. ICONIQ’s background is actually very strong; it’s part of what you might call the family office of Silicon Valley tech giants like Mark Zuckerberg and Reid Hoffman, and it has invested in numerous well-known internet and fintech companies.

But what we’re talking about today is not just that this is a big round of financing. What I see behind this is an important underlying logic:

Rain represents more than just stablecoin card issuance — a topic we’ve discussed extensively over the past year in both English and Chinese-speaking environments. It’s not just about card issuance, and it’s not even just about stablecoin payments.

More importantly, in my view, it signifies the shift of stablecoins from payments to credit — a crucial step marking the transition from the first half to the second half of the game.

Today, we will carefully and clearly explain this logic step by step.

And something you may be very concerned about upon seeing this news is:

What exactly does Rain do?

What is its role within the payment stack?

If we say it issues stablecoin cards, why doesn’t Visa do this themselves?

Why don’t its partners like Lithic, or traditional card issuance service providers such as Marqeta and Unit, do this?

And from an investment perspective: What’s Rain’s next step? Is it going public, being acquired, or something else? Today, we’ll explain all of this step by step.

02｜What Rain Does: Connecting On-Chain USD to the Visa Network for 'Seamless Spending'

Let’s start with what Rain does.

In short: Rain connects on-chain USD (i.e., stablecoins) to Visa’s globally accepted payment network, allowing stablecoin balances to be spent as easily as fiat (traditional bank card balances) by businesses and users without any friction.

If you only think of it as issuing cards, you’d be underestimating it. Because in reality, it’s a full suite of capabilities that converts on-chain balances into spendable fiat balances. This includes things like:

How is each transaction authorized? Who makes the decision at the moment of swiping the card?

How is the settlement for the second step done? When will the money actually be debited?

How is the final reconciliation carried out?

And how do we handle risk control and compliance?

As everyone knows, the reason why card payments are priced so high is that they include a pricing of the entire risk and liability.

From Rain's perspective, what is more important is that the on-chain environment is extremely complex. Different layer 1s, different layer 2s; stablecoins themselves also come in different brands (USDC, USDT, etc.), and in the future, there may be even more unbranded stablecoins. How do we abstract away this complexity of the on-chain environment so that users only see a USD balance — this is a key capability in packaging and organizing.

03 | First, let’s break down the payment technology stack: What roles are involved in a transaction?

To help everyone understand this function, we will briefly go through the entire payment technology stack (payment stack): What are the important roles in the ecosystem? What are they doing? And for a transaction (transaction) — what are the information flow, money flow, and chain of responsibility?

In a transaction, these key roles are involved:

(1) Card networks: Visa, Mastercard, Amex, and domestically, UnionPay.

Its role is as a global connectivity layer: setting up the transaction rule system, transaction costs, and the authorization function for each transaction.

(2) Merchants and the acquiring side: The merchants who sell you products or services, as well as the acquiring entities behind them. Within acquiring, there are acquiring banks and also acquiring service providers (such as Stripe). They connect transactions to the network for payment processing.

(3) Issuing side: Historically, this function has been fulfilled by banks, which serve as the legal entity responsible for bearing regulatory obligations — often referred to as 'taking the blame' when issues arise.

(4) Processor (issuing processor): These are the technical partners of card issuance. Well-known companies include Marqeta, Unit, and the now highly regarded Lithic. Their role is to provide technical integration between card networks and issuing banks, handling tasks like authorization and settlement of large volumes of transaction messages to ensure efficient and stable system operation.

Stablecoins represent a new category. How does the ecosystem brought by stablecoins integrate with the existing fiat payment system? This is what Rain is working on: orchestrating the native flow of stablecoin funds and settlements — including on-chain balances, authorizations, on-chain holdings, and measures to prevent double spending — assembling these elements into a cohesive system.

04 | What really happens in a transaction: When you swipe your card, what moves is information, not money.

Having introduced the roles, let's walk through the process of a transaction: the flow of information and the flow of money behind every transaction.

When we swipe our card, what actually moves is not money, but information — specifically, the process of authorization.

This information flows through either an offline POS terminal or the online checkout process:

POS → Acquiring bank/Acquiring service provider → Visa network → Issuing side, to determine whether the transaction is allowed to proceed.

Rain’s importance lies here: Upon receiving the authorization message from Visa, it completes the authorization decision within Visa-related systems while creating an on-chain record of the “transaction in progress” to prevent double spending.

So, after authorization, when is the money actually deducted? This brings up the issue of settlement delay that has long been encountered in the traditional fiat currency system: In real society, banks have holidays, festivals, and weekends, which can affect the settlement of many systems.

An important role Rain plays here is to transform the traditional settlement delay into a more 'instantaneous' system that operates daily, 24/7, without being affected by holidays or time zones—essentially, an upgrade to the underlying payment settlement infrastructure.

05｜Why doesn't Visa do it themselves: Visa is a network of networks, not someone who 'gets directly involved with money.'

When we say that card transactions through Visa / Mastercard / Amex are so expensive, what makes them costly? It’s because there are many responsibilities involved in the transaction process:

Who performs KYC/KYB for cardholders? Who conducts sanctions screening?

For every transaction's chargebacks, fraud, and dispute resolution, who bears the ultimate loss?

During audits, where does this money come from, where does it go, and how is the chain of interests traced and explained?

These are issues related to card compliance licenses—not just about entry permits, but also risk pricing behind the chain of interests and responsibilities.

After the arrival of stablecoins, the entire pricing system will be revolutionized from the ground up. What Rain does in the payment process isn’t replacing Visa in performing authorization; rather, it leverages Visa’s acceptance to make the part between authorization and settlement (authorization to settlement) more efficient, avoiding the influence of time zones, bank holidays, and weekends.

After Rain completed its Series B funding last year, the Rain CEO made an interesting analogy during a podcast episode: comparing Visa to the layer 2 of the stablecoin payment network.

This analogy is important because it reveals that Visa isn't directly handling money in payments; it only manages information, rules, and pricing — essentially a network of networks.

This also answers a question: If stablecoin settlement is so crucial, why doesn't Visa handle it themselves and take over the layer that Rain occupies?

The reason lies in Visa's core positioning as a network of networks — it views stablecoins as part of its global payment network, which includes banks, various payment systems, and local payment infrastructures. Visa focuses on unifying capabilities and standards across all platforms rather than serving just one single payment system at the application layer.

If Visa were to step into Rain’s territory, it would increase its own chain of responsibilities and exposure to regulatory scrutiny. From another perspective, considering business models and organizational structure, the 'network of networks' allows Visa to be a neutral platform where ecosystem partners can grow instead of being both a player and a referee.

Thus, Visa's current strategy is to fully support stablecoins without competing against its ecosystem partners for market share.

06｜Why Rain still collaborates with Lithic: Card issuance is not an action, but a chain

Now let’s look at another question: Why does Rain collaborate with Lithic on card issuance instead of issuing cards itself? Since Rain is already a principal member of Visa, why involve Lithic in issuing processing?

This relates to understanding what “card issuance” entails: it’s not just a single action, but a whole chain involving the network layer, banking layer, processor, and program operations.

Lithic (the processor) positions itself as the connector between issuers, cardholders, card networks, and banks, orchestrating numerous transaction messages among these parties.

Rain’s differentiation lies in not reinventing a new processor but improving how to better integrate native stablecoin funds and settlement orchestration within the existing processor-supported networks.

Their collaboration leverages each other’s strengths: Lithic, as a global card issuance service provider, helps Rain scale processing among its global partners; Rain provides better stablecoin payment infrastructure. The division of layers is more rational, the chain of responsibility clearer, and regulatory compliance costs lower.

Speaking of regulatory compliance, it’s impossible not to mention the 'U-card' chaos we’ve seen in the Chinese-speaking world these past few months: Many players patch together compliance with quick fixes and scale by sheer manpower, which isn’t something tech companies or infrastructure companies excel at. Once they scale up, things are more likely to blow up.

I think Rain’s positioning is excellent: It simplifies the complex ecosystem on-chain—using an analogy of pocket coins where 'coins minted from various mints can all be spent' (a phrase often used by Rain’s CEO).

The goal is to prepare for the 'day after' clear regulation: As infrastructure, it evolves alongside regulatory changes, ensuring that it remains in an unbeatable position—this is also its biggest difference compared to many U-card companies.

07｜Comparing some Asia-Pacific players: Rain is more like an infrastructure multiple

In the Asia-Pacific region, we’ve also seen rapid growth in card issuance sectors and solid investor participation in companies like Reap and RedotPay.

I think there are several distinctions when comparing them to Rain:

First, Rain leans more towards infrastructure; whereas RedotPay / Reap focus more on channel operations, regional distribution, and piecing together compliance across countries. So from an investment perspective: Rain is more like an infrastructure multiple, while the latter leans more towards an operating multiple.

Second, geographic advantage. Payment is a global affair, but the builders of payment systems, the core policymakers and rulemakers—the 'brain' of Visa—is still in the United States.

Take an example I’ve repeatedly mentioned before: Adyen didn’t enter the US market at all before 2012; Adyen’s real growth explosion happened in 2012, and even more so after 2015, closely tied to its strategic shift to make the US (San Francisco) its second headquarters because Visa’s headquarters is in San Francisco. Being closer to the core rules offers a significant advantage.

As players in the same geographic market, becoming a principal member and cooperating more closely with Visa does give a competitive edge over regional players headquartered in the Asia-Pacific region.

This also indirectly supports the logic behind the nearly $2 billion valuation: Rain can leverage its strategic position in the U.S. to expand globally more conveniently, replicating its capabilities across multiple markets rather than relying on single-region arbitrage; compliance and risk control can scale more easily without being constrained by uneven regulatory development across different markets.

More importantly, being closer to the core network (Visa) strengthens its critical role and makes it harder to replace. Coupled with rapid growth, a higher valuation multiple seems reasonable.

08｜Endgame: IPO / Acquisition / Acquired by a card organization?

As an investor, one must also consider: given its current size, what is its endgame? There are only three possibilities:

1) IPO

2) Being acquired by a payment service provider (like we saw Bridge get acquired by Stripe)

3) Could it be acquired by a card organization (given its close relationship with Visa)?

An independent IPO comparison could be Bridge. In interviews with Bridge’s CEO, we heard that during the explosive growth phase of stablecoin payments, expanding its marketing funnel and gaining a seat at more important negotiation tables is crucial. As a startup, its influence, visibility, and trust are limited; after being acquired by Stripe, Stripe's brand and sales network can help it deploy stablecoin payments into real-world commercial scenarios more quickly — this is a strategy of 'trading money for time.'

Some have drawn parallels between this situation and Rain: no matter how fast it grows, it remains just a part of the payment process, perhaps even a small layer focused on stablecoins, so is it really worth an IPO?

But I think it's a different situation now. The algorithm of Bridge CEO was relatively legitimate in the summer of 2024 because we hadn't seen these changes in regulation and acceptance at that time; standing here today, the TAM endpoint for stablecoins is much larger than one and a half years ago. As a core player in the crucial part of stablecoin payments, an IPO isn't entirely unreasonable.

As for being acquired by a payment giant — with a valuation reaching two billion, the scale is already quite large unless there is very strong synergy.

As for being acquired by Visa — I tend to think the probability is low. The network neutrality of Visa or Mastercard is their foundation; sacrificing platform neutrality for a volume that currently is only two billion may not be worth it. A more likely scenario is that Visa continues to enjoy the convenience: after outsourcing core functions to Rain, it enjoys better growth, and allowing Rain to grow independently is also good.

09 | Milestone: Stablecoins Transitioning from Payments to Credit

Finally, I want to discuss the milestone significance of this event for the stablecoin industry:

That is, stablecoins have officially moved from the first half of 'payments' to the second half of 'credit'.

This point was actually articulated clearly last September when Visa published a white paper on-chain lending.

We are gradually seeing that in the payment system, especially in card payment systems, processing is done in two steps — authorization and settlement. What truly makes the system faster, more convenient, and lower cost lies precisely in how to make the settlement portion smarter and more efficient.

Once settlement becomes faster, the next natural step is: who will provide cheaper, more flexible on-demand funds to make this system run with less capital and become more scalable.

In this white paper, Visa mentioned the importance of Rain as a key player in the credit system.

From a credit perspective, what Rain does is handle each accounts receivable at the transaction level (for every swipe), and based on that, borrow funds in real-time for settlement. Repayment is managed via smart contracts and automated routing, reducing delays and costs traditionally associated with warehouse lending—this represents stablecoins' leap from payment to credit, a disruptive change to the infrastructure and underlying logic of credit.

The same white paper also mentions another player, Huma—a more deeply entrenched infrastructure in credit scenarios, determining whether the supply layer of credit can scale and operate in a more institutionalized manner.

I'm also very pleased to see Rain's latest funding round, which validates our belief that 2026 will be the year of the stable credit boom.

However, when mentioning credit, a warning must be sounded: credit is more complex than payments and carries greater risks. The 2008 financial crisis erupted from the credit sector. Recently, we’ve also heard many cases of private credit blowups.

Stablecoins extending into the credit space is progress, but it also amplifies risks. I will continue to monitor this field closely and share timely analyses of important developments with everyone.

That’s all for today. Thank you all, and feel free to leave comments below. I look forward to seeing your thoughts and discussions. Thank you, and see you in the next episode.

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