Stablecoins Are Going to Main Street

Presented by Rain.

In this special series Crossing the Chasm, we explore when stablecoins stop being “crypto” and start functioning like real money, becoming familiar, fast, and cost-efficient. Justin Friedman is joined by Farooq Malik, founder and CEO of Rain, joins us to break down what true adoption looks like across payments, on-chain settlement, and card programs that integrate seamlessly into existing financial systems.

Using a simple lens, technology wins when it improves infrastructure without changing user behavior, we trace the evolution from early experimentation to real-world adoption. Farooq shares how regulatory clarity, institutional demand, and interoperability are moving stablecoins beyond their early phase into mainstream use by banks, payment providers, and merchants.

We also dig into what is holding adoption back, from internal inertia to underestimating urgency, and highlight a key insight: many businesses are already interacting with stablecoins without realizing it. Finally, we examine the global access challenge and how compliant stablecoin infrastructure could expand financial inclusion across borders.

Subscribe for more conversations on what it actually takes to bring tokenized money into the real world.

Connect with the Hosts & Guest

Justin Friedman: https://www.linkedin.com/in/justingfriedman/

Farooq Malik: https://www.linkedin.com/in/fhmalik/

About Crossing the Chasm

Crossing the Chasm is a special series with Rain focused on what it actually takes for stablecoins to become the default for everyday payments. Instead of rehashing benefits or highlighting pilots, the series breaks down the real work behind winning on Main Street, from upgrading payment rails and navigating regulation to embedding stablecoins into products people already use. Through conversations with builders and operators, we explore how tokenized money moves from early adoption to practical, widespread use across businesses and consumers.

Transcript

Intro

Ruthika Narayanan 0:00

Rain helps any business begin using Stablecoins for payments and card programs. Stablecoins are transforming payments around the world. The question is how to get started with maximum impact and minimum effort. But that's where most teams get stuck. Rain gives you a way in. With a single integration, businesses can launch stablecoin-powered card programs and payment solutions. Rain handles the on-and-off ramps, infrastructure, and compliance behind the scenes. Your users get the same familiar experience they trust, and your business gets the benefit of lower fees, faster settlement, and new revenue streams. If stable coins are on your roadmap, you're closer than you think. Learn more at rain.xyz.

Farooq Malik 0:39

If you continue thinking about every technological innovation as an opportunity to grow, you'll always find opportunities to grow.

Justin Friedman 0:52

Welcome to Crossing Chasm. I'm Justin Friedman, Head of Policy at Stablecon. I advise early stage companies building in digital finance, and I'm also a former financial regulator. This series comes in partnership with Rain today. I'm excited to welcome Farooq Malik, founder and CEO of Rain, as our very first guest to set the stage for the stories that we'll explore on what it takes to make stablecoins a mainstream medium for value transfer and payment. Welcome, Farooq. Thank you for having me. Delighted, delighted. So tell us a little bit about your background and uh what you're doing here at Rain and uh what brings you to this podcast today.

Farooq Malik 1:35

Yeah, so uh my background is in traditional financial services. I spent several years in um traditional banking and project finance, structured finance, and uh got connected into the stable coins ecosystem just um a little bit by accident was exploring a couple of ideas with Charles, my co-founder, and we discovered that there was a lot of activity happening in the stablecoin space. And as we started digging into it, realized that um, you know, central banks globally were talking about this as like the future of money. And uh people that were using it was talking were talking about it like the future of money, and we were like, okay, well, this is interesting. And we started exploring uh the space in earnest and uh wanted to build the infrastructure to make it a reality.

Justin Friedman 2:15

Love that. Um so we're calling this series Crossing the Chasm. Let's start by defining what is the chasm and how will we know when we've crossed over?

Welcome And Farooq's Origin Story

Defining The Chasm In Finance

Farooq Malik 2:24

Yeah, I mean look, I think the chasm for any new technology type is from when you discover that it is usable for a variety of different things other than what people are using it for today. And you know you've crossed it when traditional things that you expected to be done uh using a different mechanism are now using this new type of technology to enable uh the same types of use cases with material impact uh to quality, cost, uh, efficiency that uh you would normally see from a technical upgrade. Right. If we look at uh traditional transitions between traditional technology uh or like the last way of doing things and the new way of doing things, we've seen this several times, right? If you look at um music, music used to be delivered to people on pieces of plastic that were round. And now music is delivered at the press of a button on a device that you own at your home or by voice by asking to uh a speaker to play a song. And what you're getting on the other end is the same thing that you always got, which was to be able to listen to and enjoy music, and the way that it's being you know requisitioned for you and delivered to you is different. And we all have, you know, to a certain degree gotten used to that way of doing it. That's not to say some people don't continue to do it on vinyl or CVs or other mechanisms, but um, there is a critical mass of people that now consume music in this new modality, right? And if you apply that to financial services and stable coins and the promise of distributed ledger technology and tokenized money, where that goes is that, hey, what are all the things that we do today, which is earn money, save money, invest money, send money, spend money? Those are all the things that we all do. And we do it all enabled by financial infrastructure that is decades old in many respects. And there's a lot of hidden fees and costs of doing it that way, which is um because of the nature of the technology that is being used to provide that service. Now, using stable coins, some of those things that I just mentioned can be done cheaper and more efficiently uh for a larger global audience. And that can be done today. But there's many of these things where we still haven't gotten to feature parity with traditional financial services products, which is not to say that it's, you know, we've lost the battle. It just means that we haven't uh figured out what are the durable, institutionally compliant ways to provide the breadth of services that are currently offered by existing uh financial rails. And that's where we see a lot of innovation taking place, which is this upgrade of the wholesale back-end financial infrastructure that is taking place with distributed ledger technology and tokenized money and CBDCs and stable coins. There's a lot of terminology that's being thrown about right now. But in fact, what's what's really happening is that we're just taking what previously exists, we're upgrading that infrastructure to have a fatter pipe to be able to do more things, uh, provide more utility, reduce the latency and the cost associated with it. And generally, when you reduce the cost of servicing somebody, that just means that you can service more people at the same cost, right? And the people that wouldn't normally qualify at the bottom tiers of financial services because the cost to serve them is too high, you can now serve them profitably, right? And so that's where we think that like the early trappings that would haven't crossed the chasm will be that financial access is going to get expanded, largely because the cost of providing those services will have reduced, um, because the infrastructure in the back end will have been upgraded, which should be and may be completely invisible to the end user, but will result in a massive change in the lifestyle and access and economic sort of value being driven by individuals that are transacting on new rails.

Justin Friedman 6:21

So I actually really like this analogy to vinyl. When I think about listening to music, you know, um even in my relatively short lifetime, I've seen many lifetimes of transformation in how we listen to music, from vinyl to cassette tapes to CDs to the dawn of the internet and downloading music illegally on Napster, not that I ever did that. And eventually streaming streaming platforms like Spotify, which I don't know if Spotify is the end state of listening to music, but it's certainly something that has achieved widespread adoption globally. And people, it is the default mechanism, right, for most people to listen to music. Um, you know, vinyl is a novelty. I don't know if anyone's listening to set tapes, but I do have a few friends who still have their collection of CDs. Um but most of us want just the thing that works, right? The thing that's seamless and easy to access and always on and available anywhere. But the the real evolution of Spotify, I think, is that it's a platform, right? It has created this ecosystem where creators can very easily distribute what they're creating, and listeners can find almost anything available out there at their fingertips. And so when you think about the adoption curve in financial services, where are we on that? Are we at that Spotify platformization moment or are we not quite there yet?

From Vinyl To Stablecoin Rails

Farooq Malik 7:54

Aaron Powell If you kind of extrapolate that analogy to what's happening in stable coins or digital assets or crypto, whatever you want to call it, we for a while were in that Napster moment, right? Where there was uh people that were creating technology like songs and music and content, and they were distributing using this new technology, and that intellectual property belonged to them, and they were doing it uh within the regulatory framework, right? There was also people that were engaging in uh activities that were not consistent with the regulatory framework, and certainly many people, including many artists and music houses, were quite upset about it. And slowly that technology enabled the ability for large platforms like Spotify to come into market, like uh iTunes and um YouTube, et cetera, to actually now be the largest distributor distributors of how people consume media, right? And a lot of that is now within the regulatory landscape, a lot of that has uh fully been regularized. But sometimes in these markets, there's this period of time where there's um a bit of a wild west, right? Where anybody that wants to engage in this new technology can access it and use it. And then that ends up making some people happy and some other people upset. And then eventually there's uh rules and requirements and regulations and you know thoughtful things that come in to kind of regularize the new technology and um you know, and try not to throw the good out with the bad, right? And I think right now we're past that phase, right? We now have rules for the road in many like G20 markets. Uh, there's many rules for the road coming in the remaining markets in the G20, right, which is where uh a bulk of global economic activity takes place. And this is all good, right? This is now something that large institutional players are exploring. You know, we've seen G SIBs talking about, hey, we're exploring uh stable coin cooperative, or we're exploring our own tokenized deposit, we're open, we're exploring multi-currencies tokenized deposits or stable coins. And so there's a lot of this innovation that's now across pollinating across from this like uh innovative um group of people that have been building a lot of tooling on the stablecoin and digital asset side. And this like large institutional side, which consumes financial technology, they're not necessarily the benefit, they're not the beneficiaries of the technological stack that exist today. They're just consumers of the technological stack that exist today. And there's a lot of rigidity in what they want to do from a business perspective that they can't do technically because of the technology infrastructure that they're powered by today. And so we're starting to see this like natural break take place where people that want to have efficiencies in distributing financial products and services are having that moment where they're like, well, before, uh to go back to the music analogy, Justin, is that before to distribute it media, you'd have to go print a bunch of DVDs, um, label them, you know, ship them, distribute them. If you could do that without having to do that, without having that physical component, you'd save a lot of money, you'd make a lot more money. And so financial technology companies or banks globally are now figuring out, okay, if I can service a larger customer base without having to do a massive amount of technical integration, that's a no-brainer, right? If I can add rather than subtract or switch, that's a massive no-brainer. And so we're starting to see those like early um, you know, the early trappings of what the product market fit on the institutional and broader side is going to look like. And I think that the digestation period of this has already begun.

Justin Friedman 11:43

So does that mean there are shortcuts that can be taken now where you know in the past, if you wanted to financialize whatever you were doing, so I mean I love to think about the Starbucks wallet, right? Starbucks business is selling coffee. But to uh maintain loyalty with their consumer base and gamify the experience, they have built essentially something that looks a lot like a bank or a prepaid card or uh a wallet. And there are a lot of different names for what they've done, but it's something that's been very enviable to a lot of businesses out there who want to engage their customers and want to give them a reason to come back and make them feel invested in the lifestyle, the ecosystem, call it what you will. So my question for you is uh is it that much easier to build your own Starbucks wallet or whatever iteration it is to financialize the experience that you're trying to offer as an enterprise?

Napster Phase And Regulatory Catch-Up

Farooq Malik 12:43

Absolutely, right? I mean, if you look at Starbucks, that's a great example, right? Starbucks got to a massive amount of scale before they could actually credibly take a product like that to market, largely because the institutional uh relationships that you would need to launch that product at that scale or even subscale were the type of institutions that would have left you out of the room if you'd gone in earlier, right? We've seen some of that democratization of financial innovation in this like last stage of fintech innovation where uh regional banks, like some $10 billion banks, have become very interested in financial innovation. So we've primed the pump with institutions that are interested in providing these services to players like the next generation of Starbucks. But at the same time, with stable coins, we can now supercharge that entire ecosystem and say, hey, look, this is no longer a product that you necessarily need to rely on a bank for. You can actually just spit together the ecosystem that already exists. So you can pick a blockchain, pick a wallet, uh, you know, pick a stable coin, and then now you have a support value product that just exists. And you can make that available to your customers that exists, and you can just provide that uh within the regulatory perimeter uh to your customers without a whole bunch of overhead and without without a whole bunch of um legacy dependencies. And so that means that you no longer need a multi-year MSA with a partner bank to do this. You don't need to have to worry about what if it's uh failure, right? I mean, a lot of times innovation is restricted because the cost of failure is so high, right? And so with this new type of technological primitive around financial services, you're reducing this the this you're you're increasing the speed at which you can prototype and build POCs. You're increasing the speed at which you can get a product into the hands of customers, and you're reducing the cost associated with that, which means that you're reducing the cost of failure, which allows you to try and iterate and shut things down if they're not working. And if they are working, you can pour additional fuel in the fire and you can continue growing. You can change it to a more traditional model if you want down the line, you can expand it however you want. And so I think the most important thing that I think you know we need to kind of make sure that we all understand, innovation comes at the cost of failure, right? If you look at uh man's first flight, there was thousands of failures before we got off the ground. And so a lot of innovation is not necessarily about, hey, how do we create this like massive opportunity for everybody uh to unlock this massive tie in the sky? It's really about how do we reduce that aperture of failure and the time to failure and the cost of failure to the point that anybody that is interested in exploring what stable coins can do for their business can actually plug them in and see. The best way to check if your customers want it is to give it to them and see if they want it. Instead of conjecturing that they'll never use it or that it's only for cross-border or whatever it is. I think that those types of conversations are quite non-productive.

Justin Friedman 15:44

So can you give me an example of someone who's tried and failed and what lessons we can learn?

Building Faster By Lowering Failure Cost

Farooq Malik 15:50

I think there's I mean, in the stablecoin space, right, there's a lot of people that have tried lots of different things, right? Um people have tried to build kind of a closed loop payment ecosystem uh using stable coins only. I think that those things have had some amount of product market fit, but they've certainly not been runaway successes, largely because you need to have that ability to transact with the traditional ecosystem uh on both sides to be able to make it usable for people transacting. I think much of the opportunity that Rain was able to come into and take advantage of and uh and grow our business in is because we one of the things that we learned early on is that anybody that had stable coins expected it to work like real money, yet it didn't. And at the time we got involved, it was certainly wasn't at the beginning of the stable coin phase. It was there, you know, there was over $100 billion in assets and stable coins at that time. And that's when we got involved, right? But the journey from $0.1 to $100 billion was quite long. And that entire time, people were trying to do various different things. And I don't think that they were super successful because I think they were optimizing for this future state without adjusting for what you need to do in that intermediate intervening period between the current state and a technically feasible future state. And so on the other side, right, like you've seen financial institutions explore tokenized deposits and uh closed loop stable coins or CBDCs or token, you know, internal private label tokens on their own private blockchains. Again, I don't think that many of those expeditions have been successful, you know, with a capital S, but many of them have been successful internally at these institutions because they've taught the people on what you need to do to ship the product. And so is there adoption? Not necessarily. Is there utility outside of that limited scope? Not necessarily. But as additional regulations come in, as rules for the road come in, as financial institutions realize that the future is uh the same way. I mean, the future is more of what we do today, which is collaborate rather than a series of walled gardens. Um, I think that those sort of I wouldn't call them failures, but I'd say that those attempts will have been necessary to get these institutions over the finish line or even the starting block for the next phase of innovation.

Justin Friedman 18:16

But I I totally agree with you. I mean, I think interoperability is key and trust is key. And so to cross the chasm, so to speak, to you know, not to go from zero to a hundred billion, but to go to you know a trillion and multiple trillions in value on-chain, what's it gonna take? Who whose trust are you trying to earn? Is it institutions, is it end users, is it consumers? Um is it both, and are those very different exercises? Aaron Powell I think it's certainly both, Justin.

Farooq Malik 18:48

You have to tr and you have to build trust with the financial institutions and financial intermediaries of today, right? These are the people that have won the last several decades, and they have an intractable position in the market as it is today, right? And they've spent decades or hundreds of years or centuries building trust, right? Like there's a lot of institutions that we work with that have been around since the 1800s. And that's a long time of having built your brand and your reputation and your your ability of execution in your sort of socializing your ability to execute. And now those people are exploring stable coins, right? Because they've built that trust with a customer. Their customers trust them that, hey, this is a product enabled in a different way, being provided to me by somebody I trust, it's probably something that I can rely on. Similarly, I there's other examples of traditional folks that we work with where their customers are coming to them and saying, hey, I've had a really good set of experiences with stable coins in my business or in my day-to-day life. And I would really like to be able to transact with those tokens and digital money here at an institution that I already work with today. And so that's the other way around, where it's the customer trust and time and market is now cross-pollinating over to traditional financial institutions where they're like, well, if you don't help me figure this out here, I need to use it for myself and my own business. And if you don't help me figure it out here where I am at today, I will just leave to the next version of you. And so there's this healthy push and pull happening on both sides where institutions are really interested in upgrading their infrastructure. Consumers are really interested in the additional flexibility that you get with digital tokens or CBDCs and stable coins. And that's what you really need to cross the chasm fully, right? You actually need both that pull from end users and you need that push from institutional players to say, hey, we're gonna use this to innovate and we're gonna use this technology shift to actually reduce costs in our business, increase the ability for us to actually service our customers, uh, increase the amount of customers we can service, and ultimately grow our profitability. I think if you look at the last several decades, I mean, I uh this is my personal opinion, I think a lot of very uh well-known, successful businesses have had a really bad go of it because at some point along the last like two decades, we kind of lost our way as a society, and we decided, okay, well we should cut our cost to profitability. And if you think about what made this country great and what has made generally the world great, is this concept of there's always more out there and we can always have more. And I think when you make your aperture focus on efficiencies, that's kind of a value trap. Right? You think about it as, oh, well, I'll never be able to grow, so I have to cut. Whereas if you continue thinking about every technological innovation as an opportunity to grow, you'll always find opportunities to grow. And the That's what I think we've been missing. And we're finally there. We're starting to see public company CEOs talk about wanting to grow the aperture and speed at which their their business is growing, the amount of people they're serving, rather than only focusing on, hey, you know, if I cut costs here, if I make seats smaller, or if I charge more, that's the only way to get the goals I have in my business achieved.

Justin Friedman 22:25

And that that push and pull is so interesting to me because I think a lot of people working in traditional finance are asking themselves, what does my institution need to do to be ready for this on-chain economy? What products can we build? Can we offer? Can we push out to our customers? And I predict that in the coming years, that question is kind of going to be answered for them. You know, they're going to have to answer the question of, you know, okay, I got paid in stable coins and I want to deposit those in my wallet. Do you have a wallet that supports my stable coins? Or I want to be paid directly to my wallet at your institution in stable coins. Can you support that? And then on the opposite side of that, you have your employer who is telling their financial institution or their financial infrastructure, my employees are in 30 different countries, and in 20 of those countries, they're demanding to be paid in stable coins. I need to be able to support that, or I'm going to lose them. They're going to go somewhere else. They're going to go work for someone else who can pay them in the type of currency that they expect to be paid. And so I think those questions will start to answer themselves. My question to you is where does rain sit in that ecosystem? How are you solving for that?

Trust Interoperability And Push Pull Adoption

Farooq Malik 23:45

So for our team, our internal monologue, right, is that it's not stable coins, it's not CBDCs, it's not. It's just money. We've always thought about it as money. It's just this next phase of money, right? Like I don't think that the next where we're going, people are going to be like, oh, I really, you know, I only accept stable coins. They're going to say, you know, I need to get paid. And if you want me to ship this thing later today, I will have needed to get the money later today. And the only way that you will be able to transact and send them the money later today is going to be using stablecoin infrastructure. But for you as a consumer or somebody buying that as a business, you shouldn't really have to care that that's stablecoin rails. You'll just have an option that says, when do you want these funds delivered? Is it four days from now? Is it three days from now? Is it tomorrow? Is it right now? And for that purchase, you will pick right now because you want to send the money right now. And you need to make sure that they receive it right now. And so that's where we're going here. And the other side of it, which has been really interesting for us to see, is that we are powering so many different use cases today. Um, both traditional financial services use cases enabled by stablecoins, net new use cases that weren't possible at all before without stablecoin infrastructure, um, and everything in between. And one of the really interesting conversations we had, I think last week, with one of the world's largest, you know, merchants, and they're always, you know, we're trying to figure out our stable coin strategy. What do you think, you know, what do you think we should be focusing on or thinking about? This is what we're thinking about. And one of the things our team said to them is that, look, do you know that you've already received $500 million in stablecoin settlements to you to purchase goods and services from you so far in the last six months? That got them to sit up and say, What do you mean? And they didn't realize that they're they're already transacting with customers that are paying them stable coins today. It's not showing up as stable coins on the other side, but it's starting as stable coins on one side. And so more and more institutions are going to wake up and realize I'm already in this, whether I like it or not. I've been in this for the last several years and I had no idea. And how do I think about it now? Now that I know that it already touches my business, now that it already impacts me, it impacts our ability to make money. How do we figure this out now? Right? I think a lot of institutions and a lot of people that are interested in stable coins are thinking, I have a lot of time before the first stable coin is asking to touch my system. The problem with innovation is that innovation doesn't ask. Innovation happens. And the only thing that you have control over is your ability to become aware that it's happening to you. And that's where I think we are in this cycle where slowly people are becoming aware that this is already happening to me, for my customers, with my customers, with my vendors. And I have to figure this out rather than I have two, three years, I'll wait until the market structure bill passes, I'll figure out what happens later. There's been a lot of companies that have made those decisions in the last cycle of every type of innovation. Those companies don't exist today.

Justin Friedman 27:24

So for that client who is surprised to learn that they're already getting paid in stable coins and they don't even know it, is that eye-opening to them because they didn't even realize that their customers wanted to pay in stable coins and are ready to do it? Or is it that they're concerned that there is some intermediary who's capturing value than in fact they could be capturing and also be offering a more seamless experience to whoever's paying them?

Farooq Malik 27:54

I think part of it is that they thought that they had more time, A. B, it's because they didn't realize that this was something that their customers wanted. And C, they're worried that there's some intermediaries in the middle that are monetizing this at their expense. And so it's a series of these things. It's not necessarily, you know, only one or only two. It's it's all of these things. And I think to their credit, I mean, this particular company is quite innovative. And to their credit, they're really thinking about it as a fourth way, which is now that we know this, how do we actually expand this aperture and allow more people that may not even know how to do uh this type of transfer using stable coins through the infrastructure Rain provides to actually access that maybe through our other properties, right? Uh where we have services that are catered to a whole other set of people that also would probably want to transact in this technology, uh, aside from just the folks that are trying to pay us. And so that's a really interesting thing to see on a discovery conversation or a client call or potential partnership conversation. Because a year ago, we would go in to have some of these chats, and you know, large publicly traded companies like this would have just said, we don't want to do anything here, and we'll never want to do anything here. And now those same people have said, well, we've actually changed our mind. Can you please come in and help us figure out how we can do this? And I think that's how you know that this industry, technology, uh, the infrastructure is starting to make headway into the business of doing business, right? And the interesting thing for these types of customers is that when we engage, like Rain prides herself on engaging with partners that have a plan. We are really not excited about opportunities which are for the public relations element of it, and to appear like you have a plan. We really prefer to partner with folks that are really thinking about how this could be potentially transformative. Now, it could be something that is potentially transformative that is a small aperture and it's a you know a tiptoe into the water, but that's more exciting to us than somebody that's standing on you know on dry land and saying, this is this is my stable coin strategy.

Justin Friedman 30:24

For those who are maybe going to be later adopters and um they have fears about taking this leap, is it skepticism about the asset class? Is it that they don't trust the rails? Is it concerns about user experience, that they don't want to make things clunky and create friction for their counterparties or their customers? And how do you reassure them?

Why Late Adopters Struggle To Buy

Farooq Malik 30:50

Aaron Powell A lot of this is something even more basic, I'd say Justin. Uh so I used to work at a multi-billion door bank. And when I wanted to procure solutions like technical solutions to make my life easier or my team's life easier or my colleagues' life easier, the challenge of that was how do I get buy-in to buy something new? And the challenge was this financial institution, we were a um a consumer of technology, right? We didn't have technology ourselves. We were using infrastructure that we would procuring and then building uh processes around internally. And the challenge was of that was that when it came time to buy or use in something new, you had this chicken and egg problem, right? Like new things don't have people using them. There's not a whole lot of volume on something new. There's not a lot of customer references that you can do for new things. And so for a lot of institutions around the world, they've built these like walls around the procurement process driven by, you know, years of audits and audited financial statements and compliance consultants and everybody coming in the door for good reason to say, hey, you know, whenever you're buying or using something, you should have this process. And these are the things that you should look for. And many institutions around the world are like, well, okay, well, in order for us to consider it, they have to have 50 people using it or 100 people using it, or have to have been in market for more than five years or 10 years. The problem with some of those things is that, you know, you can't bootstrap being in market for 10 years, right? You have to have spent the time to be there to be able to have the opportunity to sell it to them. And so a lot of institutions are kind of stuck. And so they're now asking their technology vendors, hey, how can I use you that I'm already integrated with to actually provide this service to me? And that's where I think a lot of financial innovation will for pre like primarily be accessed is that this intersection of legacy winners in this technology infrastructure that are now partnering with maybe players like Rain and others to add access to other financial products and services. But a lot of innovation in this particular sector, right, financial services, can't happen super quickly, largely because we've spent the last, you know, whatever, hundred years, or definitely since 2008, 2009, um, building up like a shield around a lot of our financial institutions for good reason, right? But that is going to impact the speed of total innovation. And I think the folks that don't have that limitation are actually gonna be some of the biggest names and some of the newest winners in this market when the dust settles. I think maybe whatever, 10 years, 20 years from now, when we look back and we say, you know, where did this company come from? And it'll be because they started up as a neobank app or as a stablecoin payments company. And they will be one of the world's largest participants in the financial ecosystem at that point. And it will not be fully obvious on how folks got there.

Justin Friedman 34:01

But let's not be too modest. For Rain is already facilitating $3 billion in transactions a year, and your valuation has grown 17x over the last uh less than a year. And so obviously big things are happening, maybe you're reaching escape velocity. And so what point does your business and stable coin adoption broadly, and I I don't necessarily want to focus on stable coins because I I realize how you think about money holistically, but in terms of the type of optionality and you know incorporating on-chain infrastructure that you're building, at what point is this actually going to be making a material impact on the traditional financial system? When are we going to if at you know, if we're crossing the chasm here, you know, what is that notch where the financial system starts to take a look at this and say, okay, this is actually the future. This is something that users are demanding, those guys are building it. Where did they come from? Like they just sort of came out of nowhere.

Farooq Malik 35:08

Yeah. I mean, we've been at this for several years, so it certainly didn't come out of nowhere. But uh look, I I think we're at a watershed moment in this industry. Um all of the external factors that need to exist to make technology move faster are beginning to align, right, with the Genius Act, with Micah and Europe, with other regulations coming in or slated to come in later this year. We have the right mix of regulatory clarity and institutional appetite to actually hit the next gear in this industry. I think a lot of the volume is crossing over right now into more of the traditional space. I think that we're at the cusp of probably having more than 50% of all volume that we facilitate coming from traditional players. Um, I mean, more than that probably. And these are traditional payments use cases, right, that you would use somebody else that already exists to do, but now you're using stable coin infrastructure to provide it at a fraction of the cost to more people. And we're already working with lots of banks, like actual banks, regulated banks, to provide our technology infrastructure to them, to give them uh access to this and to this utility, to this world that they're unable to access or have been unable to access the last several years. And I think overall, we'll we will probably see that this year, 2026, we'll see the entry of many name brands in financial services and other segments that we all know and have potentially written off as people that would never enter into the space. Actually, not only enter into the space, make big bets, make moves, move real volume, and really start doing really innovative things. And I think that's the exciting part. I think we're already at the phase of where we're hitting that inflection point of traditional financial services crossover.

The Watershed Moment And 2026 Bets

Justin Friedman 37:03

Aaron Powell So you talked earlier about the desirable customer for Rain, and that is a customer who has a vision, they know where they want to go, they understand why they're building in uh the digital space. And so that's a good sign if they know what they want out of this. But what is the sort of critical mass or or level of maturity or digital readiness that you look for in an ideal partner?

What Rain Looks For In Partners

Farooq Malik 37:32

Yeah, I think Rain, we have a bit of a barbell customer base, right? Like we have a large amount of folks that are building brand new things. We have several companies building agentic payment products, right? Which is at the very, very cutting edge of financial services. Uh and that amount of people is growing. Like that's a super that's one of the fastest growing segments that we're participating in today. On the other side, we have very large financial institutions, banks, uh, global payments companies, revenge players using our infrastructure to embed into their products to revitalize their products and services, uh, to be able to offer the products to more people at a different type of economic value than the historical services that they have generally offered. And in the middle, like there's a sort of burgeoning side of the market, which is now coming to us, which is sort of in the middle of these large institutional bands, which is on one side large global uh you know, banks and financial players, on the other side very small teams, developers that are building super innovative solutions. And then we actually have a lot of people that started off here on the developer side transitioning into the middle and growing super rapidly and you know, crossing the chasm themselves. And for us, the best part about like having conversations like this about causing the chasm is that we see this every day, you know, week over week, month over month, more and more customers of ours that are going from one side of this uh ecosystem to the other where they're hitting scaled and they're hitting super scaled and they're continuing to grow, they're raising capital, they're you know making money, they're profitable. And eventually these players will continue and go on to be the other side of it, right? And so it's been really interesting for us to see. I would like to say that it was deliberate, but you know, it's just the nature of how the industry has evolved, right? It was a developer project for several years because those were the only people that could participate in the ecosystem. And then institutional awareness came all of a sudden because regulatory clarity came all of a sudden. And so that's why there's this barbell, but now it's kind of evening out, largely because small and medium-sized players need to figure out how do the we fit into the pie, because their larger competitors are figuring this out. And then smaller players are actually growing super fast and going into the middle. And so it's it's just it's been a super magical place in the industry uh to be able to see this level of success by people that trust us to provide the core infrastructure for them.

Justin Friedman 40:01

All right, let's shift a little bit just to talk about some vision here. As you look at today's financial landscape, what is broken? What is the thing that's not working, that's not meeting the needs of users, that will become an anachronism in five years, in ten years. What is the problem that's going to be solved and completely deprecated?

What Breaks When Money Hits Borders

Farooq Malik 40:27

I think we saw the world become a much bigger place for many people during the last several years, right? With the uh expansion of remote work, people now feel comfortable being around the world, right? Working from anywhere, foreign employer anywhere, doing all sorts of different knowledge work from different places. Now, as the world has become more uh free to be able to move around, a lot of the financial infrastructure that we've built is now stuck at the national border, right? So if you are uh working with a financial institution in country A, you move to country B, you start using their financial products in country B, their compliance tax is really not set up for that. Their fraud rules are not set up for that. Like a lot of the stuff that they would normally use to kind of make sure that you're safe and secure is not really set up for those types of things. So only I'll give you an example, personal anecdote, right? So I went to a grad school in the UK, and it was, you know, I did I did a whatever 12-month program for my master's degree. It took me the first six months of going back and forth to the bank as a student to open my first bank account. Right. The entire time I was there, like almost the entire time, more than the majority of the time I was there, I had to be transacting in cash for everything because I couldn't open a bank account. And it was simply because I was a student on a visa into a country that I didn't, you know, I wasn't from and I didn't have the passport for. Now, this is a country like the United Kingdom is a country which is one of the world world's largest destinations of students. And you can't open a bank account. And there's millions of students in in in like the United Kingdom, the US, Canada. Lots of places have students. Like the concept of student is not alien to anybody. And we would think that we would all agree that you would want students to have a good experience so that more students come and patronize universities and pay fees and all sorts of things. But this very simple thing was almost impossible for me to do simply because the bank just didn't have a process available to actually do it. And it was the bank that was across the street from the school. So like you can imagine like how broken a lot of financial products are simply because we just can't get like a lot of institutions can't get over themselves to be able to provide the service that they are ostensibly chartered or charged with providing because of a variety of reasons, right? And so if you can reduce those frictions by creating alternate products where folks that may not otherwise qualify for a full-fledged product and qualify for a for a different product, which has different rules and requirements, is enabled differently, it opens up the world in a different way. Right. Like we talk with um a lot of financial services or fintech companies that are quite large. They tell us that one of the biggest problems they have is this like leave behind customer, which doesn't qualify on the stacked for a variety of reasons, but would use the product if they were able to get on. Right. And so there's a big gap there. The other thing is that people are migrating, right? Like if you look at you know the United States, we've obviously dealt very publicly with a uh, you know, with a migrant um sort of issue, right, over the last several years. But if you look at a lot of countries, migration is natural, right? Like a lot of countries don't have fixed borders, they don't have border control, they just people move from one place to another for economic opportunity. If you're Somebody that's moving in South America from one country to another, how are you supposed to access financial services? Right? And that is millions of people, tens of millions of people. Um if you look at a lot of countries in South America, if you go to Argentina, the largest um secondary group, like the the sec the largest ethnicity or nationality in Argentina after Argentines is Bolivians. Bolivians can't access fintech in Argentina. So like this this is this is like this globalization of people that we've seen over the last several decades. Stable coins are allowing a lot of those people to hold value, transact bilaterally, and participate in this financial system. And they're doing it with dollars because they see dollars as a store of value and as a trusted currency, and in many cases a appreciating asset. And so if you look at where the world is going, there are so many different things that are just broken structurally because we just never assumed that you would want to transact with a financial institution or financial product from somewhere outside from where you're from. We're even seeing this in traditional financial services, right? Like with the FinTech boom, there's banks in one state lending money into banks to individuals in a different state. States decided, well, some states have already decided, hey, you know, we actually don't like that activity. We don't want you to be able to provide a loan from a state chartered institution in other states and to our citizens in this state. And these are like real structural problems, right? Like, and the only reason we were able to even do this is because the regulators decided state charter financial institutions can actually open across state branches, which wasn't that long ago. Right. So there's a lot of innovation we are taking for granted that has been done through regulatory vision. And there's a lot of things we still have yet to unlock from a user experience perspective, from an access perspective, from a cost perspective, that stable coins are in many ways the right product to provide those services. Like community banks are providing financial accounts for lots of people. Do they have the appetite to open a branch office in Bolivia to provide services to Bolivians in dollars? Chances are the answer is no. Does that mean that those people should be permanently excluded from having those products or services? I I don't think that that's in the best interest of our society, um, even from a basic economic perspective, right? Like much less a you know, a values-based perspective that many people may have. I think it's there's a lot of these types of things that are really important to start unpacking and start thinking about like, you know, the world is already global. People are global, people are mobile. How do we build the financial products and you know, how do we innovate solutions that can service that global customer base?

Debanked Americans And Compliance On Chain

Justin Friedman 46:58

You know, Farooq, I really related to your story about moving abroad for grad school because I actually had a very similar experience. And I arrived and didn't have a local bank account. And of course, the very first bank that I visited was the one with a branch across from the campus of my university. And they wouldn't open an account for me. Um it was in a different country, but um, suffice it to say, the experience is really relatable. And I went to a second bank downtown, and they also wouldn't open an account for me. And I started asking why. And they said, Well, you're an American, there's all these like reporting requirements, um, you're just not a customer that we're eager to serve. And that was very um chastening. You know, it sort of knocked me down a peg because I I left my home country with this assumption that you know I had this passport that would get you know me into most countries in the world without a visa. I assumed that, you know, US dollars are king, and why wouldn't the local bank want me to deposit my my cash? And uh it wasn't until I reached the third bank and they said, yes, we can open an account for you, but we need to send you across town to the international branch, whatever that meant, which was the branch, I guess, that had professionals who were used to serving expats. So finally at the fourth stop, I managed to open an account and then I was ready to sign a lease on an apartment. The landlord wanted 12 postdated checks. And I said, I don't have a checkbook yet. I mean, I just opened an account, they're ordering checks for me, they're gonna come in a few days, but I can't give you 12 post-dated checks. Can I give you cash for the first month's rent? And they're like, no, no, no, no. There's no way that we're gonna sign a lease with a foreigner without 12 post-dated checks. So uh so I had to wait. And a week later, the checkbook came and I, you know, wrote my post-dated checks, but I certainly didn't have enough um value in my account to cover all of that. And so I started asking myself, how do I move money? Can I use my PayPal account? Nope. It turns out that my PayPal account in the US was incompatible with PayPal in this destination country. So I, in a pretty short order, developed a ton of empathy for people who move across borders and you know have to leave assets behind and figure out um how to fund their lifestyle. And um it's honestly one of the motivations that brought me into digital finance that got me excited about solving for these. But those those borders are real. And you know, a lot of us are naive to think that in the internet age, you know, the borders are meaningless. It turns out that, you know, they're actually especially relevant in financial services. So what can rain contribute to uh to that problem?

Farooq Malik 49:56

Yeah, I mean, it's a that's a great story, Justin. And I think one of the funny things to kind of just expand on that a bit is that a lot of people don't understand that the most de-banked nationality globally is Americans. Uh Americans don't have access to financial products and services outside of the United States. And that is like a massive problem because Americans should have the freedom of being able to do those things. Um and it's funny because you know, we think about de-bank or lack of access to financial services as a foreign problem. But it's really a problem that Americans face, you know, uh students face, uh American expats face, people that are being transferred transferred to different offices for their company face. And these are all you know people that we probably don't want to have these problems, right? And so to kind of answer your question about what is rain doing to kind of provide um the infrastructure and base layer to provide, you know, to essentially let folks build solutions with different outcomes. We're enabling people with stable coins, right? Stable coins are a way to hold value without a financial intermediary. Uh you can hold them in your own custody. You can rely on institutional custodians, right? And we have customers that rely on institutional custodians to hold stable coins. We have other customers that have wallet technology that individuals control and hold the keys of and they own, own outright on their phone or device in their custody. And you can spend from both, or you can send from both, you can do whatever you need to from both sides. And you don't need that institution to say, hey, you know, the only way to get access to a full suite of products or services is by going through our processes and procedures that are limited to how we've decided to kind of open our door. And you can actually have institutions that still comply, still have regulation, regulatory burden, still have BSA AML uh policies and processes, I mean, including ours. You have folks that still do have the obligation to report to law enforcement for various activities. And it is very much within the regulatory perimeter of financial products. It's just enabled differently. And because it's enabled differently, you have a different set of people that are now qualified to be able to use it. And I think for us, that's been a big part of our uh system architecture is how do we actually build financial infrastructure for this next phase of uh innovation, maintaining the regulatory perimeter around everything that's happening so that it is at the same quality of what exists today, is at the same standard of what is required by regulators, not only in the United States, but also globally, and still protects users, still protects um U.S. interests and others, um, while providing the flexibility to build and build these things and building blocks that can create opportunities for innovation. And that's been our focus.

Justin Friedman 52:57

Aaron Powell Ferouk Malik, you just might be the therapist that incumbents need to hold their hand as we cross this chasm. So thank you so much for joining us on this first episode and for all of your insights. Audience, follow along as we explore other stories and narratives and meet entrepreneurs who are taking stable coins and on chain solutions to Main Street. Subscribe today and keep listening. Thanks, Baruch.

Farooq Malik 53:27

Thank you so much.