A company valued at 2 billion USD has entered the second half of stablecoin payments.

Written by: Charlie Little Sun

Today, let’s talk about a highly notable funding news from last week: Rain just closed a $250 million Series C round, reaching a valuation of $1.95 billion, led by ICONIQ.

What’s particularly interesting about this news, from my personal perspective, is that the partner leading the investment, Kamran Zaki — who was my first boss at Adyen. At that time, he was the head of Adyen’s US market and later became the global COO.

Another connection to Rain is that Rain previously announced a partnership with Lithic, a card issuance technology provider, whose chief product officer (CPO) was Robin Gandhi — my second boss at Adyen.

It’s very intriguing because, although Adyen is not involved in stablecoin payments — in the payments industry, Stripe has fully embraced stablecoins, while Adyen has not taken any action so far — the former executives of Adyen have actually established various connections and relationships with stablecoins at different levels.

01｜Why this funding round is “more important”: not just card issuance, not just payments

The amount in this round, $250 million, is also very interesting: back in 2015, ICONIQ led a $250 million funding round for Adyen — and as Adyen gradually moved towards an IPO, I find this “full circle” quite fascinating.

For those unfamiliar with ICONIQ, it’s not like other Silicon Valley venture firms that often make headlines or do their own marketing like Andreessen or Sequoia. ICONIQ has a very strong background; it is part of the family office network of Silicon Valley tech giants like Mark Zuckerberg and Reid Hoffman, and has invested in many well-known internet and fintech companies.

But what we’re discussing today is not just about a large funding round; it’s about an underlying logic I see behind it:

Rain represents not only stablecoin card issuance — a topic we’ve discussed extensively over the past year in both English and Chinese environments — but it’s not just about card issuance or even stablecoin payments.

More fundamentally, in my view, it signifies a shift of stablecoins from payments to credit — a crucial step in what could be called a transition from the first half to the second half of the ecosystem.

Today, we will explain this logic step by step, in a simple and clear manner.

And for those who might be very interested in this news:

What exactly does Rain do?

What is its role within the payment tech stack?

If it’s about stablecoin card issuance: why doesn’t VISA do this themselves?

Why do their partners like “lific” (Lithic), or even traditional card issuers like Marqeta, Unit, etc., not do this?

And from an investment perspective: what’s next for Rain? Will it go public, be acquired, or what? We will clarify all these points step by step.

02｜What does Rain do: connecting on-chain USD to the VISA network for “frictionless” spending

Let’s start with what Rain does.

In short: Rain connects on-chain USD (i.e., stablecoins) to the VISA global payment network, allowing stablecoin balances to be spent seamlessly like fiat (bank card balances) by businesses and users.

If you only think of it as card issuance, you underestimate its scope. Because it’s actually a comprehensive package of capabilities — transforming on-chain balances into spendable fiat balances. It includes, for example:

How to authorize each transaction? Who makes the decision at the moment of card swipe?

How to settle the second step? When is the money actually transferred?

How to do reconciliation?

And how to handle risk management and compliance?

As everyone knows, the high cost of card payments is due to the pricing of risk and liability — the pricing of the entire risk and responsibility chain.

From Rain’s perspective, what’s even more important is that the on-chain environment is extremely complex. Different layer 1 and layer 2 blockchains; various stablecoin brands (USDC, USDT, etc.), and potentially more white-label stablecoins in the future. How to abstract this complexity so that users only see a USD balance — this is a key capability of the system.

03｜Breaking down the payment tech stack: roles within a transaction

To help everyone understand this function, let’s briefly outline the entire payment tech stack: who are the key players in the ecosystem? What are their roles? And in a transaction — what are the information flow, money flow, and responsibility chain?

Within a transaction, these key roles are:

(1) Card network / card organization: VISA, Mastercard, Amex, and domestic networks like UnionPay. Its role is to serve as a global connection layer: setting transaction rules, costs, and authorizations.

(2) Merchant and acquiring side: the merchant providing products/services, and the acquiring bank or service provider (like Stripe). They connect transactions to the network to collect payments.

(3) Issuing side: originally handled by banks. Its key role is the “liability” — acting as the legal entity and bearing some regulatory responsibilities.

(4) Processor (issuing processor): the technical partner handling card issuance. Well-known examples include Marqeta, Unit, and now Lithic. Its function is to interface with card networks and banks, handling authorizations, clearing, and large volumes of transaction messages to ensure system efficiency and stability.

Stablecoins are a new species. How does the ecosystem they bring integrate with existing fiat payment systems? That’s what Rain is doing now: orchestrating the native funds and settlement of stablecoins — on-chain balances, authorizations, on-chain holdings, double-spend prevention, etc., into a cohesive system.

04｜What really happens in a transaction: information flows at the moment of card swipe, not money

After introducing the roles, let’s walk through a transaction: the information flow and money flow behind each transaction.

When you swipe your card, what runs is not money, but information — specifically, the authorization process.

This information flows from offline POS terminals or online checkout:

POS → acquiring bank/service → VISA network → issuing bank, to determine whether the transaction is permitted.

Rain’s importance here is that, upon receiving VISA’s authorization message, it makes the authorization decision within VISA’s system and creates an on-chain witness of the “pending transaction” to prevent double-spend.

After authorization, when is the money actually transferred? This involves the settlement delay issue common in traditional fiat systems: banks have holidays, weekends, and holidays affect settlement timing.

Rain’s key role here is to transform this traditional settlement delay into a more “instantaneous,” daily, 24/7 system that is unaffected by holidays or time zones — essentially an update to the underlying payment settlement system.

05｜Why doesn’t VISA do it themselves: VISA is a network of networks, not “getting into the money game”

Why are VISA, Mastercard, Amex’s card transactions so expensive? Because many responsibilities are involved:

Who does KYC/KYB for cardholders? Who handles sanctions screening?

Who bears the final losses from chargebacks, fraud, disputes?

During audits, where does the money come from, where does it go, and how is the entire利益链条 (benefit chain) documented?

These are issues of card compliance licensing — not just about credentials, but also about risk pricing behind the利益链条 (benefit chain) and responsibilities.

With the advent of stablecoins, the entire pricing system will be fundamentally revolutionized. Rain’s role in the payment process is not to replace VISA’s authorization but to leverage VISA’s acceptance to make the authorization-to-settlement process more efficient, unaffected by time zones, bank holidays, or weekends.

Last year, after Rain closed its Series B, the CEO mentioned in a podcast an interesting analogy: comparing VISA to a layer 2 of stablecoin payment networks.

This analogy is important because it reveals that VISA in payments is not about handling money directly; it’s about information, rules, and pricing — a network of networks.

This also explains a question: if stablecoin settlement is so important, why doesn’t VISA do it themselves and absorb Rain’s layer?

Because VISA’s core positioning is as a network of networks — it considers stablecoins as part of its global payment network. This network includes banks, various payment systems, and local payment schemes. VISA’s role is to unify capabilities and standards across all platforms, not just focus on individual payment systems.

If VISA were to develop Rain’s layer itself, it would increase its responsibility and regulatory exposure. From a business and organizational perspective, a network of networks is better suited to be a neutral platform where ecosystem partners grow, rather than being both player and referee.

Therefore, VISA’s current strategy is to fully support stablecoins but not to compete directly with ecosystem partners.

06｜Why Rain still partners with Lithic: card issuance is not a single action, but a chain

Another question: why does Rain still partner with Lithic for card issuance instead of issuing cards themselves? Because Rain is already a VISA principal member, so why involve Lithic in issuing processing?

This relates to the understanding that “card issuance” is not just a single action but a chain involving network layer, banking layer, processor, and project operations.

Lithic (the processor) acts as a connector among card issuers, cardholders, card networks, and banks, handling large volumes of transaction messages among these roles.

Rain’s differentiation is that it’s not building a new processor from scratch but integrating more effectively with the existing processor-supported network to facilitate native stablecoin funds and settlement orchestration.

Their collaboration leverages each other’s strengths: Lithic, as a global card issuing service provider, helps Rain scale processing globally; Rain provides better stablecoin payment infrastructure. This layered approach clarifies responsibilities and reduces compliance costs.

Regarding regulation and compliance, we must also mention the recent chaos in the Chinese-speaking world with “U cards”: many players rely on patchwork compliance, scaling through manpower, which is not the forte of tech or infrastructure companies. Large scale often leads to risks.

Rain’s positioning is very good: it abstracts the complex on-chain ecosystem — similar to the analogy of “coins issued by mints that can be spent anywhere” (a phrase often used by Rain’s CEO).

Its goal is to prepare for the “second day” after clear regulation: evolving as infrastructure alongside regulation, ensuring resilience — a key difference from many “U card” companies.

07｜Comparison with some Asia-Pacific players: Rain as an infrastructure multiple

In Asia-Pacific, we also see some rapidly growing card issuance companies with reputable investors, such as Reap, RedotPay, etc.

Compared to Rain, there are several differences:

First, Rain is more infrastructure-oriented; while RedotPay/Reap focus more on channel operations, regional distribution, and piecing together compliance across countries. From an investment perspective: Rain is more like an infrastructure multiple, while the others are operating multiples.

Second, geographic advantage. Payments are global, but the core policy and rule-setting for payment systems — VISA’s “brain” — is still in the US.

For example, Adyen’s major growth burst happened after 2012, especially post-2015, related to its strategic shift to establish a second headquarters in San Francisco, where VISA is headquartered. Being closer to core rules is a significant advantage.

As players in the same geographic market, becoming a principal member and working more closely with VISA offers a real geographical edge over regional players based in Asia-Pacific.

This also supports the logic behind the nearly $2 billion valuation: Rain’s ability to leverage the US as a strategic high ground to expand globally, rather than just regional arbitrage; easier scaling of compliance and risk management without being hampered by uneven regional regulation.

More importantly, being closer to the core network (VISA) enhances key capabilities that are harder to replace. Coupled with rapid growth, a higher multiple is justified.

08｜Endgame: IPO / acquisition / acquisition by card organizations?

Investors also consider: now that Rain has reached this scale, what is its ultimate fate? Mainly three possibilities:

1. IPO
2. Acquisition by a payment service provider (like Bridge being acquired by Stripe)
3. Acquisition by a card organization (due to its close relationship with VISA)

Comparing to an independent IPO, like Bridge, in an interview, the CEO mentioned that during the explosive growth of stablecoin payments, opening up marketing funnels and reaching key negotiation tables is crucial. As a startup with limited influence, volume, and trust, being acquired by Stripe allows leveraging Stripe’s brand and sales network to accelerate stablecoin payment deployment in real-world scenarios — a “money-for-time” strategy.

Some compare Rain to this: even with rapid growth, it’s just a part of the payment process, even a small layer within stablecoins, so is IPO worth it?

But I think the situation is different now. The algorithm of Bridge’s CEO in summer 2024 is more legitimate because we haven’t yet seen the regulatory and acceptance changes. At this moment, the TAM (Total Addressable Market) for stablecoins is larger than a year and a half ago. As a core player in stablecoin payments, an IPO is not unreasonable.

Regarding acquisition by a payment giant — with a valuation of around two billion, the scale is already significant, unless there are very strong synergies.

As for acquisition by VISA — I lean towards thinking the probability is low. VISA and Mastercard’s network neutrality is fundamental; sacrificing platform neutrality for a body of just around two billion valuation may not be worth it. A more likely scenario is VISA continuing to enjoy the benefits: outsourcing core functions to Rain, allowing Rain to grow independently, which is also beneficial.

09｜Milestone: Stablecoins moving from Payments to Credit

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

It marks the official transition of stablecoins from the first half of payments to the second half of credit.

Last year, VISA published a white paper in September that already discussed on-chain lending quite clearly.

We are gradually seeing that in payment systems, especially card payment systems, processing involves two steps — authorization and settlement. Making the system faster, more convenient, and lower cost depends precisely on making the settlement part smarter and more efficient.

Once settlement becomes faster, the next step is: who provides cheaper, more flexible on-demand funds to keep the system capital-efficient and scalable?

In that white paper, VISA emphasized the importance of Rain as a key player in the credit system.

From a credit perspective, what Rain does is to treat each receivable at the transaction level (each swipe), and rely on that to borrow the settlement funds in real-time; repayment is handled via smart contracts and automatic routing, reducing reliance on traditional warehouse lending delays and costs — this is the leap from payment to credit for stablecoins, a disruptive change to credit infrastructure and underlying logic.

The same white paper also mentions another player, Huma — a deeper infrastructure provider for credit scenarios, which determines whether credit supply can be more scalable and institutionalized.

I am also very pleased that Rain’s recent funding round confirms our view that 2026 will be the year of explosive growth for stable credit.

But a word of caution: credit is more complex and riskier than payments. The 2008 financial crisis originated from credit. Recently, many private credit defaults have occurred.

Expanding stablecoins into the credit domain is progress, but it also amplifies risks. I will continue to monitor this field and share important developments with everyone.

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