Bridge was founded in 2022, right before the crypto market downturn. Zach Abrams recalls that they raised money just before the Terra Luna and FTX collapses nuked the space. The company's origins can be carbon-dated to the NFT boom; their first idea was to help people use bank accounts to acquire NFTs, which was where most of the market volume was at the time.

When the NFT market evaporated, Bridge had to pivot. They briefly considered building wallets-as-a-service, which is Privy's business, but Zach viewed the space as a deeply competitive "tar pit" and quickly moved on to stablecoins. Henri Stern remembers Zach pitching the new stablecoin focus to the Privy team, who were initially skeptical that it was a viable market.

Today, Bridge provides APIs to help developers build with stablecoins. Zach explains their current work:

We enable developers to build with stablecoins and it could be anything they want to build. We help folks like SpaceX use stablecoins to move money cross border. We help folks like Dollar App build neobanks on top of stablecoins. We help folks like Felix Pago build cross border payments experiences with stablecoins. We help Treas rebalance their internal funds with stablecoins.

Zach sees stablecoins as a broad payment platform upon which many new financial experiences can be built.

Privy was founded during the peak of the crypto hype cycle. Henri explains that while he believed in the potential for crypto to codify ownership on the web, he felt the space was too focused on protocols rather than products people wanted to use. The initial idea for Privy was data tokenization, specifically to help crypto companies privately KYC people, a popular concept in 2021. However, they quickly ran into a major obstacle: most users didn't have a crypto wallet and didn't want to get one. This realization led to a pivot. They decided to solve the wallet problem first, which evolved into the company Privy is today.

Privy builds APIs that allow developers to integrate digital asset accounts, or wallets, directly into their applications. This means a user of a neobank, payments platform, or other consumer app can get a wallet as part of the sign-up process without needing to go to an external service. Essentially, Privy provides the infrastructure for companies to natively build digital asset functionality into their products.

The goal is to say you shouldn't need a PhD or deep interest in self sovereignty in order to want to engage in the space. You should be able to do it as easily as you do anything else on the web.

While many people in the US might not see stablecoins in their daily lives, their adoption is growing rapidly in specific sectors. The primary use case so far has been cross-border payments. Zach mentions an early developer, Zulu, a company in Colombia that used stablecoins to convert Colombian pesos into US dollars more cheaply and quickly. Another example is dolarApp, a global US dollar neobank built on stablecoins, serving users across Latin America.

Another significant use case is fund repatriation for global companies. Zach explains that SpaceX uses stablecoins to manage payments for its Starlink service. Starlink customers pay in dozens of local currencies around the world. SpaceX uses stablecoins to convert these various currencies and move the funds back to the US. This is possible because robust foreign exchange (FX) markets have developed between stablecoins and local currencies. During the last crypto cycle, local exchanges in regions like Latin America, Africa, and the Middle East grew significantly. These exchanges, dominated by stablecoin volume, now function as alternative FX markets, enabling the entire process.

A significant gap exists between the marketing and reality of what is currently doable in foreign exchange (FX) markets using crypto. Traditional fiat FX markets, such as converting between the Mexican peso and the US dollar, are incredibly deep and efficient. It's possible to convert $100 million without significantly moving the market. In these markets, as transaction sizes increase, pricing improves.

The dynamic in crypto markets is the opposite. While hyper-efficient for smaller amounts, stablecoin markets are not as deep. As transaction sizes get bigger, pricing gets worse because the spreads widen. This makes the current crypto market more efficient for startups than for large institutions. However, these markets are deepening over time as startups scale.

Crypto acts as a platform, a Schelling point, that brings different parties together to create more efficient financial systems. An analogy for this is comparing stablecoins to Starlink for money. Henri explains the comparison:

Stablecoins are like Starlink for money where you need the ground stations to actually beam the pipes up... Once it's in zero gravity it's super efficient to actually move the data around and move the money around. But the ground stations on the ground have to be built.

The hard work of converting fiat to crypto is building the 'ground stations.' Once the money is on the crypto rails, it moves with incredible efficiency, similar to data moving between satellites in space. The analogy may be even deeper, as Starlink is now enabling more satellite-to-satellite connectivity to reduce the need for ground stations, which could mirror the future evolution of crypto finance.

The primary use for stablecoins is holding assets and putting them to work in credit and yield markets, which opens up access for people globally. Henri notes that the demand for a stable currency is so high that Tether (USDT) operates like a hedge fund, keeping all the carry for itself. Another major use case is the emergence of fintech "super apps." Startups can now build in a year what used to take neobanks decades, because the financial stack is readily available.

This creates a more efficient global financial system. Previously, expanding into multiple countries required building unique infrastructure for each region, an N-squared problem. Now, the system is becoming more open source.

One person just needs to build a US dollar stablecoin and then you throw it into the wallet and now you have a US balance and then someone else in the world needs to build a Naira stablecoin and now you have Naira... Previously was N squared and now it's just N.

Despite the global nature, US dollar stablecoins are overwhelmingly dominant, making up over 95% of the market. This is attributed to a "revealed preference." In emerging markets, the US dollar is highly preferred over local currencies. Additionally, the majority of the market is B2B and involves American companies, reinforcing the dollar's position. While local stablecoins are needed for transactional purposes and will likely grow, network effects will probably ensure the US dollar remains the dominant stablecoin currency.

For businesses, stablecoins offer an "always on" money rail. This allows companies to build longer-lasting relationships with their users, essentially creating their own neo-banking arms. For example, instead of a payout ending the relationship, a company can maintain it through a user's wallet. This trend, however, leads to fragmentation, where a user's assets are spread across many different apps. Henri sees an opportunity in building "money networks" or a "control plane" that helps users manage these fragmented, programmable assets. The ultimate outcome of this landscape, however, will likely be dictated more by regulatory requirements than by free-market forces.

European crypto regulation, like MICA, is still largely untested. Compliance will likely look very different in five years as enforcement clarifies the rules. Currently, different issuers like USDC and local European companies are interpreting the requirements in their own ways. Henri notes that despite its imperfections, having a framework like MICA is better than the previous lack of clarity because it encourages businesses to engage.

The conversation then shifts to the stablecoin Tether, which Zach describes as a "0/100 hedge fund" for not paying out any of the yield it generates. This raises questions about its long-term competitive equilibrium. However, Tether's brand power is immense. Henri mentions seeing posters in Kenya featuring only two crypto logos: Bitcoin and Tether. This brand recognition and entrenched network effect are powerful advantages.

The reality is you can hold Tether or you can lose 25% of your net worth every year by doing nothing.

Zach believes Tether will remain wildly successful, but predicts that as consumers gain easier access to risk-free rates, some money will flow out of USDT. He hopes the entire stablecoin market expands significantly, so even if Tether grows, its market share might decrease from over 60% to around 10% of a much larger pie. Despite this, both Zach and Henri agree that Tether will likely not pay a yield in the next five years. They argue it doesn't need to, as its dominance in the trading use case is sustained by strong network effects. However, they also note that trading, which once represented the entire market, is expected to shrink to just 5% of the market in the coming years as other use cases grow.

The adoption of stablecoins in the United States might follow a pattern similar to apps like WhatsApp, which first became popular internationally before gaining mainstream use in the US. This happens as Americans with international connections start using the technology, creating a network effect that gradually expands domestically. Adoption is likely a two-pronged strategy: on one end, large US traders and companies move millions of dollars, and on the other, a much wider network of smaller consumers abroad drives usage.

For new startups, building on stablecoins is a way to future-proof their business. Even if a company initially serves only the US market, this foundation makes future international expansion seamless. It allows businesses to build for a single global market from day one, avoiding the landlocked nature of traditional fintech. Henri notes that as a European, it was always tough for French startups because the local market is small and doesn't easily translate to other European countries, a problem US companies never had.

The fintech ecosystem just overall has been very concentrated globally. Like in the US we don't appreciate how many banks there are and how many of them are willing to support all these different crazy fintech ideas... But in some countries you go into a country, there's one bank and that bank has no interest in enabling you to build a fintech.

The US banking ecosystem is an anomaly. With around 5,000 banks, it's a highly competitive environment that fosters fintech innovation. Most other countries have only three to eight banks, which are often unwilling to support new fintech ventures. This leaves consumers in those markets with stagnant financial services. Stablecoins represent the first major opportunity for financial innovation in these regions.

This technology effectively open-sources the fintech stack, allowing companies to choose which services to offer—credit, payments, or balances—without needing to bundle them all. This may lead to more fragmentation in the neobank space rather than a single super-app. However, traditional banks have a strong advantage due to customer stickiness. Many people, including the speakers, opened their first bank account in college for a simple incentive, like a free t-shirt, and still have their paychecks deposited there years later. Overcoming this inertia is a major challenge for new financial platforms.

Most financial experiences, from lending and trading to saving and spending, are expected to be rebuilt on blockchains. This shift will likely create a new generation of neobanks built on top of crypto wallets, which will be superior in many ways. As a result, the banking market could become even more fragmented than it is today.

Henri shares a personal story from the SVB crisis, which happened during Privy's first week after launch. It was a stressful period, and their backers asked them to diversify risk, as SVB was their only bank account. This led them to open accounts at three different institutions. This experience highlights the core pitch for self-custody in crypto.

The pitch for self custody in crypto is to say the account is yours. The skin that you choose to take it through, meaning the UX of the actual sort of Rails, the add on services that you get, all of that will come through the sleeve that you put the account in. But the account is yours and can be ported over and over and over again.

A helpful analogy for the future of crypto accounts is the traditional banking system. While large banks like Chase build their own software, mid-sized banks and credit unions use third-party software providers, known as "bank cores," for ledgering and account management. The vision for crypto is similar, where services could plug in the crypto equivalent of a bank core into a neobank or even a company like Uber for its drivers. Henri Stern explains that this is possible because the ledger is already public on-chain, and the account is essentially cryptography that users can take with them, allowing a consumer to move their own "banking core."

Thinking about crypto as a single, static invention is a mistake. John points out that just as computers evolved from the Univac to the Macintosh, blockchains have also improved over time. Early attempts to use raw Bitcoin for payments in 2013 were not effective, as the technology wasn't optimized for that use case.

Zach Abrams elaborates on this, explaining that general-purpose blockchains are not built for payments. For example, some chains require a new wallet to be funded with a native token before it can even accept a stablecoin like USDC. This becomes prohibitively expensive when creating millions of wallets. Additionally, these blockchains often have high transaction failure rates. Zach recalls an instance of disbursing aid payments where it took 18 hours to send tens of thousands of transactions because they had to be sent serially and many failed, requiring them to be resent.

Henri outlines the evolution of blockchains in three phases. The first was Bitcoin, which introduced incentives to peer-to-peer computing. The second was Ethereum, which brought programmability, creating a "world computer." The current phase is focused on scalability and specialization. However, the crypto community is often resistant to new, specialized chains for several reasons. There's a general fear of scams, a protective sentiment from early adopters, and a rational concern that making blockchains easier to use might sacrifice core principles like decentralization. Henri likens specialized blockchains to different computing devices; just as you use a phone for some tasks and a computer for others, different blockchains are needed for different use cases.

There are moments when a problem becomes so acute that multiple people start building solutions for it simultaneously. This pattern has appeared in the blockchain space. A few years ago, projects like Sui, Aptos, and Solana emerged to address the scalability issues of Ethereum and Bitcoin. Now, a similar moment is happening for payments, with new blockchains like Tempo being created specifically for payment use cases.

Henri discusses the importance of an open, layered ecosystem, a topic that was central to conversations when his company, Privy, was talking to Stripe about acquisition. The goal is to avoid verticalizing the entire tech stack too early. The core value lies in having different modules that can be assembled to fit specific needs.

It's way too early in market development to try and verticalize the stack. Part of the core value prop of the stack is that actually it's layered and you can assemble it in the way that best fits your use case.

Using an analogy, Henri notes that if Microsoft wants the Office suite to have meaningful market share, it must run on both Mac and Windows. Similarly, you cannot bind all layers of the blockchain stack together and expect widespread adoption. Zach adds that for payments specifically, developers will only build on infrastructure that feels open and neutral. A future with a separate JP Morgan chain, a Stripe chain, and a Bank of America chain is not going to happen.

While many of the features offered by Tempo are theoretically possible on other chains, Zach points out there's a big difference between theory and reality.

This is one thing that we often get wrong in this space, which is the gap between the theoretically possible and the actually true.

Features like sponsoring Gas with any asset, built-in batch transactions, and reliable throughput are exciting for developers. By making these capabilities a primary, out-of-the-box purpose of the chain, Tempo provides a fundamentally better developer experience than chains where such features are merely a theoretical possibility.

Tempo's strategy of building for its launch partners is exciting. This approach, similar to how Privia operates, involves letting customers dictate the product roadmap in a significant way. This method helps avoid "shiny object syndrome," where a company builds features that nobody actually wants to use. If Tempo can successfully deliver for its partners, it will likely create an exceedingly useful payment chain.

However, this strategy introduces a significant risk of over-centralization. The critical question for Tempo over the next two to three years is whether it can successfully decentralize its validator set and the entities responsible for transaction validation.

It is difficult to determine how a cryptocurrency token should be valued. For example, it is not clear how a tenfold or hundredfold increase in transaction volume on Ethereum should mathematically translate to its token price. This highlights a key dynamic in crypto: the difference between value creation and value capture. Henri explains that Ethereum has created immense value as a network but has captured very little of that value in its token price. In contrast, Solana has a better balance of value creation and value capture, while some other blockchains capture a lot of value without creating much. Bitcoin is simpler because its value proposition is more straightforward.

This leads to the question of why the crypto space is so tribal. Henri suggests two reasons. First, people have a complex, almost quasi-religious relationship with money, which leads to a strong sense of identification with their chosen projects, similar to supporting a soccer team. The second reason stems from the community's history of shared struggle and rejection from the mainstream.

Being part of a leper colony for long enough creates really strong bonds of kinship with others. And then on top of that you've got money. And that creates an insane amount of tribalism where you feel like if anybody else succeeds, it comes at your detriment.

This shared suffering created strong bonds. When combined with the financial stakes, it fosters a zero-sum mindset where one project's success is seen as another's failure. Henri notes this is a shame, as crypto has the potential to be a very positive-sum environment, but the community often acts as if it is not.

A recent legislative development, referred to as the "genius act," has provided an incredible tailwind to the stablecoin business. The fundamental benefits of stablecoins, such as their use in global products and cross-border transactions, have not changed. They were legal before this act.

The primary shift has been in perception. Previously, the perceived risks of engaging with or issuing stablecoins were very high, which made potential participants hesitant. The act served as a signal of comfort and legitimacy, effectively lowering the perceived risk for businesses and investors.

It was like an official statement from the US government that with stablecoins, you can try things now.

This has sparked significant interest, leading to the realization that the stablecoin market is likely to become a very large and permanent part of the U.S. financial ecosystem. In response to this new demand and licensed opportunity for participation, an open issuance platform was launched to help others create their own stablecoins.

The belief that there will be many stablecoins, not just a few dominant ones like USDC and Tether, is based on companies acting in their own self-interest. Businesses will want to control the infrastructure they build on and capture the underlying economics. Previously, the perceived risk of issuing a stablecoin was high, which led to the dominance of a few players.

An open issuance platform makes it easy for any platform to issue its own stablecoins. This allows them to access economic benefits and control the money their financial experiences are built on. The target market is essentially any entity sitting on money at rest. Early adopters include crypto wallets like Phantom and MetaMask, and trading platforms like Hyper Liquid.

The adoption curve starts with crypto-native businesses. They act as early adopters, establishing the model for how it's done. Fintechs and traditional businesses are expected to follow. For example, a global neobank sitting on billions of dollars in stablecoins can simply swap them for their own and capture the yield.

They're sitting on top of millions, tens of millions, hundreds of millions, billions of dollars of stablecoins, and they can literally just swap them out and all of a sudden earn 4% on all of those balances. It is extremely economically rational for them to do that.

Beyond yield, the other major reason to issue your own stablecoin is control. This control manifests in two ways. First, you can guarantee your asset is available on any blockchain you choose to build on, including your own. Second, you control the economics and avoid platform dependency. Building on another company's stablecoin is risky because they can change the economic terms, such as introducing fees, at any time.

It's not that different than being Zynga and building on Facebook, and then all of a sudden Facebook is like, oh, you're making more money than we are. Why don't we take that money? So it just reduces general platform dependence.

The pitch for businesses that aren't using stablecoins is that eventually, all corporate treasuries will move to them. For example, a large global company that needs to move money from the U.S. to Brazil might currently have to route it through multiple countries, like Ireland and Singapore, with each step involving a SWIFT settlement. In the future, that company could tokenize its treasury, set up wallets, and move the funds instantly with a click of a button, ideally using its own stablecoin to avoid commingling balances.

While the idea of thousands of different stablecoins might seem chaotic, the vision is that they will all be interoperable and recede into the background as pure infrastructure. The mental model should be similar to having money in different bank accounts today. Moving funds between them is relatively trivial, and soon it will be completely trivial to move stablecoins between different wallets and platforms. As money moves between companies like Stripe, Walmart, and Amazon, it will simply change shape and be attributed to the different entities seamlessly.

For Henri, whose company Privy builds key management software, the rise of digital assets has opened up a lot of new business. He shared that a key moment in his journey with Zach was a frank conversation about their companies' trajectories. As Henri recalls, Zach laid out the reality of their situation.

In the next two years, we will either work together or we will compete very heavily. And it wasn't set as a threat. It was set as a pure statement of fact.

This led to the realization that joining forces with Stripe was a strategic move to accelerate their roadmap. What would have been a 10-year plan with many potential points of failure could be compressed into a two-year plan with a much greater expected impact. Privy had also long admired and modeled itself on Stripe's ability to simplify complex systems with elegant APIs, making the acquisition feel like a natural fit.

Zach added that initially, he didn't think his company was acquirable because he felt no one else shared their extreme optimism about the potential of stablecoins. However, through conversations with Stripe, it became clear they had a strong shared belief in the opportunity. Ultimately, they realized that pushing the stablecoin space forward as far as it could go was much more possible together than alone.

Recent acquisitions have made Stripe more bullish on M&A. The company recognizes that it would not be in its current position with crypto and stablecoins without acquiring companies like Bridge and Privy. A key benefit of these acquisitions was bringing in a different, crypto-native culture. This cultural infusion is particularly useful in new domains where Stripe doesn't have a pre-existing deep expertise.

There are different approaches to M&A. One model is Oracle's, which involves buying mature companies with stable growth, extracting costs, and repeating the process. Oracle is exceptional at this, operating almost like a private equity firm. However, a different skill is required to grow new initiatives through acquisitions. Google serves as a prime example of this alternative approach. It acquired companies like YouTube, which had no revenue at the time, and turned it into a cornerstone of its business. Many other key Google products, such as Maps and Docs, also started as early-stage acquisitions.

The art of integrating an acquisition is nuanced. Large companies are standardization machines, and their natural tendency is to impose their own way of doing things on the acquired company. While some standardization is valuable, the real skill is in striking a balance. It's crucial to identify which areas should conform to the parent company's processes and which should be allowed to maintain their freewheeling, startup culture.

When Zach sold his company, he sought advice from others who had gone through the same process. The most impactful feedback came from a person who leads integrations at Google and had overseen acquisitions like YouTube, Nest, and Waze. This person explained that founders often want to continue running their company independently after being acquired. However, the entire premise of an acquisition is the belief that one plus one can equal more than two.

If you totally stay independent and you don't do any form of integration, there is one plus one equals maybe two, but probably less than two. Almost certainly definitionally you are setting yourself up for less than two.

At some point, whether in year one or year five, it becomes clear that the two entities need to come together to create that greater value. DeepMind at Google is a perfect example. It operated as a separate business for a decade. But as AI became central to Google's strategy, the two were integrated. The art is in allowing the acquired company autonomy to push boundaries, but then bringing it into the fold when the moment is right.

This same convergence is happening between the crypto economy and the traditional economy. Henri points to Felix Pago, a remittance app powered by stablecoins, as a prime example. The website doesn't mention crypto at all; it focuses on customer value, like its WhatsApp integration. This demonstrates that the two economies are not separate but are merging. The belief is that building compelling crypto-enabled transaction infrastructure within Stripe will be better in the long run.

However, the practical challenges of integration are immense. It's much harder than anticipated, even with seemingly small things like merging different CRMs. This creates confusion, like when multiple teams are talking to the same customer without realizing it. This challenge is magnified because acquisitions often happen when a startup is in the frantic, high-growth "hold on for dear life" stage. Adding a complex project like a CRM migration on top of a team already operating at 120% capacity is what makes it so difficult.

When considering an acquisition, the dynamic at Stripe isn't a "good cop, bad cop" scenario. Instead, there is a general bullishness on key areas like crypto among the leadership. The primary debate is always whether to build a new product in-house or to acquire a company to do it.

For every potential acquisition, there's a price that is simply too expensive. Valuing early-stage startups is challenging because, unlike late-stage M&A deals with established businesses, the valuation is less concrete. It often comes down to what people are willing to pay, similar to a venture round. While decisions are backed by many spreadsheets, they ultimately rely on a certain amount of gut feel.

A huge part of that feeling is about the founders and the team. The acquisition isn't about buying what already exists. It's a bet on building leading infrastructure together over the coming decade, and that relies heavily on the people involved.

The next few years are expected to bring unrecognizable change to the crypto space. The vision is for stablecoins to become ubiquitous, a part of the fabric of reality for anyone interacting with global economic systems. Similarly, wallets for owning and controlling digital assets will become commonplace, allowing users to port assets across platforms and use them in new ways.

Stripe is positioned to become more crypto-native, using crypto as both another payment rail and as a superpower for new capabilities. Despite the hype, the field is still in its infancy. With only about two years of teams building at the application layer on top of stablecoins, many big problems remain unsolved. The expectation is that stablecoins will become vastly larger than they are today.

We're going to look back when stablecoins are 100 times bigger and just think of this moment as so cute.

A central question is whether stablecoins will disappear into the background infrastructure. Will they become an invisible technology that simply improves user experience, or will they remain a distinct, visible component? One perspective, shared by Henri and John, is that stablecoins will recede from public consciousness, much like Ajax or solid-state drives. These technologies improved web applications and music players, but people stopped talking about the technology itself and just enjoyed the better experience.

The counter-argument, presented by Zach, is that the infrastructure will remain visible because it is unique and different in kind, not just degree. The analogy here is the computer itself. While cars now contain dozens of computers, people still have and talk about their personal computers. The discussion concludes with a potential compromise: for the most part, stablecoins will become part of the background, but in some specific use cases, they will be blindly obvious.