Inside The Better Money Co and Why Stablecoins Need a Clearinghouse

Money show. We got Sam live with us from Better Money.

How how's it going, man? I'm doing great. Good to see you guys. How's it going? To have you on. And it's it's good. We're excited. The stream gets a little bit better and better. But thank you better, man. Better and better and better. Yeah. Better and better. When I heard that before

Right. I'd love that hype reel when you guys launched. That was just a a masterclass in in branding and market. Yeah. And a nice refresh, I think, when we're just seeing, like, companies come out and launch with just the Better Money Code. Just it just flows off the tongue. Per se. I think the the real thing is to to

have I have been thinking about how to make stablecoins into a better payment rail and take advantage of the fact that they're programmable,

instant, nearly free for a long time. So, you know, just an opportunity to point out that that we've been here thinking about this and starting to build the product that's gonna change how how money moves. Yeah. Well, let let's unpack that. I know I'm sure you went super deep with Drew last week, but kind of bring people into this moment because I think it all hit our timelines really fast of, hey. I'm leaving. I'm doing I'm doing something new. Hey. Here's what I'm doing, and we're off to the races.

So maybe bring us a little bit into to that story and that evolution. And then I think for a lot of people, the question is, why even stablecoin clearing in the first place, and how does that make stablecoins

better money? Yeah. Sure. So I'll start with my personal history. Worked at Microsoft. I was building distributed systems. And as a engineer in, you know, 2018, you'd experiment with a side project, get to the point where you had to accept payment, and realize money does not how work how you expect it to work as an engineer. And so I went to MIT after I wrapped up my time at at Microsoft and worked with the Boston Fed on their stablecoin initiative. And from there, I was angel investing.

I was working on that, and a 16 z asked me to join their team as an investor full time where I basically covered stablecoins. I met with hundreds of stablecoin companies, invested, helped larger fintechs, payments codes, and banks with their stablecoin implementation and developed their thesis as I developed my own. This past summer, it became clearer and clearer that stablecoin infrastructure is really built around the trading scenario. You buy and sell stablecoins as if they're separate currencies.

But, ultimately, in the wake of the the Genius Act and this really improved regulatory clarity about how stablecoins work, we should be able to treat stablecoins like money. We should be able to have them all be worth the same amount. And so we're building a stablecoin clearinghouse as part of our effort to bring about the next generation of of money and make it so that you can rely on on on guaranteed rates, one to one, and guaranteed settlement times for sending

stablecoins around. I wanna pull up the the actual video here because it's just beautiful. And we we gotta play this. And alright. Here we go.

So why are we building the Better Money Company? Well Because stablecoins represent better money. It's faster. It's cheaper, and it's programmable in a way that traditional rails are not. Global, nearly free, nearly instant, better money on day one. Stablecoins are better money. We're talking about better money here. We need to have, like, a ticker money? They're better money. Better money? Better money. Better wear this store shirt. It's been a long time coming. Dude, it's so cool. Have So cool.

Apparently, it's three shirts, a dark blue one, a light blue one, and this one that I'm wearing right now. Everybody's company? Well What was the what was the total count of Better Money mentions? I think that was, like, around 20.

I don't have a ticker, but yeah. And someone fact check me later on. After you go through this year and and you're on stable dash live and all these other shows, you gotta do a round two of that with the ticker countdown of So I'm actually saying better money less now because, you know, it it's,

you know, it feels sort of funny to say your own name. The truth I mean, I stand by it. Like, stablecoins are better money. I have seen what payments look like. There's often a person in the loop who's, like, approving documents, and there's all this craziness. It's you separate settlement and clearing and have these long lags and approvals. So stablecoins are better money, but I do say it a little bit less now. It's really bring it back. Yeah.

So when we talk I wanna dive more into this, like, how clearinghouse actually works. And, like, where my mind goes is, you know, we've seen curve with with their pools, you know, years back. Like, what makes this difference from a DEX and and, you know, these liquidity pools that have multiple stablecoins

in them or even going like OTC? Like, what needs to exist to bring this vision of stablecoin in, stablecoin out, and make it make it truly one for one that hasn't existed today or at least hasn't existed in the form that you're envisioning? Yeah. Yeah. So let's just talk about how you get stablecoin liquidity today for a second. When you wanna go from

USDC to PiUSD, you sell USDC to buy PiUSD. That is not at all how traditional payments work. Imagine if you had to sell Wells Fargo dollars to buy Bank of America dollars, and there's a market price for these two different banks. I mean, it it just it's it's not how payments companies think about money working, and that's for good reason.

Because over the last hundred and fifteen years, The US monetary system has painstakingly built up enough trust to have direct one to one transfers where we treat money in various bank accounts or attached to a debit card or in your Venmo account as being generally considered the same money. And that stitching together is what we're doing with the clearinghouse, and that's fairly different than what a market maker would do, where they really are giving you pricing and saying, no.

There's a spread, a spread that widens if you try to move more money. And and we're preventing that. So stablecoins can really integrate into the rest of the of the money system. It's amazing. And you guys, when you launched, what what seems so notable to me

was just the breadth of commits or, like, relationships that you went public with. As you announced the raise, we got modern I mean, some of the some of the most, like, reputable firms both in Web two and Web three landscapes coming together here. You got Modern Treasury, Paxos, Phantom, Privy, Ramp, Bridge. I'm not gonna go through the whole list. M zero, MoonPay, like, you kind of have assembled this incredible network already. Of stable nodes. Yeah. So what what does that now unlock for you?

It seems like you've you've done a really good job of, like, attracting these types of players. What would what would you say is the main reason that companies who are joining this clearinghouse,

what are they most excited about? What's the value add for for them and maybe segmenting them up a little bit so we can understand who is benefiting where? Yeah. Well, the the value add for them is that they get to have the new ability to treat stablecoins the way they traditionally treated money, where it's always a one to one on a swap. You can send, spend, bridge with guarantees that are familiar to you. For our our issuing partners, so that's Paxos Bridge, MoonPay, Agora, MZero, Fracs, Braille.

We help them get liquidity for custom issued stablecoins in more places. So if anyone interacts with one of these custom stablecoins, they know they that that user can reliably turn it into another stablecoin or get it to another person with the guarantees that they expect. As a little aside, that's sort of, like, why a smaller bank would join the clearinghouse so they can ACH between other US banks. They want that connectivity in order to offer a better product. So that's for our issuers.

On the on the builder side, we work with Ramp, Modern Treasury, Kirby Turnkey, Utility, and other Benet. Taking us in those companies, they wanna be able to access the long tail stablecoins, and they wanna be able to make better guarantees about how they can go from one stablecoin to another or how they can send to spend, bridge, swap. And so those are the two sides. It's a similar guarantee, though, and that's the benefit of a clearinghouse.

Really a place to bring people together so they can do commerce in, like, a trusted,

simple way. Yeah. I think a lot about what Joe Joel from mZero was on a few few months ago, actually, almost to say. Guy. And talking about how fragmentation is of Sablecoins is not an issue. It's it's how money currently exists.

And when we think about that and and kind of follow that downstream to what peep what products are being built on top of Sablecoins, You know, how how does this I'm trying to play into this this narrative and this thought process of what products are going to exist that maybe don't exist yet or we're seeing in these very early stages that are only made possible with stablecoins, and and what does that type of commerce look like? What are what are you looking forward to in that for a second? Say, hey.

I'm so pumped that somebody could go you know, I want to have this foundation at the clearinghouse. I'm so pumped that now x, y, and z builders can go build this. Yeah.

There's three areas that I see a lot of a lot of interest. One is the least sexy of them all. It's just treasury management in a way that works as you expected. You know where every dollar is. You can quickly settle into a currency that you control. You've got better security guarantees. You can do sort of escrow and basic accounting and other things on top of the stablecoin. And you can do that better if you can easily swap into a stablecoin that you've issued yourself.

So treasury management gets so much better if you can be in your own currency. So much easier. The second is when you do stablecoin payments today, again, a basic scenario, you don't have tools that payments people expect, reconciliation, simple tax stuff, recipient verification, and so forth, and we can enable those things. But really to answer your question, Zach, like, the things that are most exciting to geek out about are the ones that were never possible for at all.

And for agentic payments, all sorts of vertically integrated applications, like, maybe, like, a restaurant loyalty app or some sort of upstreaming compute creator payouts. We can enable those in a way where you don't need to really know about crypto, but you still get all of the benefits of instant global

programmable payments, and you can do custom and creative things with that. How are you thinking about loyalty? I saw somebody post the other day that, like, cashback is the most boring form of loyalty. And, you know, we've seen this wave of neo banks and especially we're seeing a lot of them start to diverge. They're going away from just stable coin cashback as loyalty. You know, we've seen Moto come on and kind of bring in this luxury experience.

When you think about building these these loyalty experience, how much of it is it cashback, and how much is it something else? Okay. So is a loyalty is one thing. I think it's worth talking specifically about cards, credit cards. Because credit cards are where a lot of us think about loyalty first. They'll have a branded card from somewhere where they are getting some sort of loyalty benefit. Well, a card is a bundled product of a loyalty thing, some sort of points, benefit, so forth. It's got fraud protection.

So if you are not the one spending, you can ultimately do a chargeback or have some sort of remediation. It's also got the credit where they'll give you a loan for thirty days, and then it's a payment rail where they bundled in the ability to to sort of settle all this. For most scenarios, you don't need all four of those benefits in order to complete a payment. You could, in theory, just send someone a stable coin and then have a loyalty program attached directly to that.

So think about, like, when you're at the grocery store. This is a low dollar expense. You're buying a couple of apples with some coffee beans and so forth. You don't need the credit. It's actually you. We could have more advanced verification that you are who you say you are. But then how do we layer on top of that some sort of loyalty program with the grocery store?

And that actually should be easy because, ultimately, the grocery store wants to save the two or 3% that they would otherwise have to spend when you swipe your card. So it's pretty easy for them to give you a 1% discount on the on the purchasing, maybe 2%, maybe even a little bit more to keep you in their network and make you a more loyal customer. So I'd like to see those kind of really deep integrations

become more common where people figure out how to get people to have the best possible experience in these niches and move folks off of cartwheels. Yeah. It's really interesting if you think about that, you know, the different the different types of network participants or clearinghouse participants that could be useful in that example.

You know, let's just say there is a hopefully, one day, what would be really cool, I don't know of any right now, but, like, mid market enterprise grocery stores issuing I I go to a grocery store here in my city, Schnucks, and they have a huge presence in the city. They are Mhmm. I think they do billions of like, billion plus in in top line revenue. Massive company. And they if they if they were to issue they have a loyalty app. They have a rewards app. Maybe they partner with MoonPay or MZero or Braille.

They have their own stablecoin reward program. That type of issued custom stablecoin is gonna need to interoperate with all of the other ones because if Schnucks wants to or their grocer or customers want to go in and out of something else. The the thing that blows my mind with the Better Money that I actually never really thought of was the fragmentation within the issuer class.

Like, we've covered m zero extensively, and they've done a really interesting job of, like, solving that fragmentation and interoperability within same thing with Braille, like, their network. But there's really no incentive for m zero and Braille or these other issuers to, like, really do the work to play well nicely with each other. And I think there's a there is that huge gap and opportunity that you guys seem to be going after, which will be needed for the grocery use case. Yeah. I agree.

There's there's not I wouldn't say there's no incentive for them to work together.

It's actually they're all better off if they work together to some degree, but it's hard to have a bunch of bilateral relationships between competitive entities, which is why we're able to step in and say, everyone's better if stablecoins are a drama. That that's good for the consumer experience and therefore good for industry wide growth. But it's fair to say, don't wanna necessarily work directly with you, and I don't have the time and engineering horsepower to work directly with everyone.

So can someone come in It's like the UN. Yeah. Yeah. You need you need a neutral intermediary, which, Andrew, we've talked to them this before, but, like, that's what the original clearinghouses were. It was a pub where people from various banks would meet up and exchange money and receivables, and we can do a similar thing by being a neutral place for people to make sure that their stablecoins are, in fact, in trouble.

On the site, you say, quote, I'm building the better money company because I'm offended by the status quo and impatient for the future.

The fundamental system of value must be faster, more open, more flexible, more resilient,

but we will have to make it so. I I guess on that, so was this a product that when you were at a 16 z, you were just, like, hoping somebody was gonna come along with and they just didn't? Or it was kinda like, you're kinda doing it, not really. I should just do this myself. Like, that's that's kind of a big jump, I I would think, you know, where you're kinda looking at, like, where do I want my career to go? Yeah. That that's exactly right.

I was hoping that that people would come in, move very fast, unite how stablecoin issuance works so we can much more quickly get to the next phase, which is use stablecoins for meaningful payment volumes in complex but everyday scenarios.

And it really is. It is crazy. Like, we the whole world type is payments. If you give someone anywhere in the world a US dollar, they know it's a valuable thing to have. We have an opportunity to make stablecoins faster, cheaper, and more seamless. And if we do and when we do, everyone wins. It's the people who pay, the businesses who send, entrepreneurs who build, and we can offer better products, cheaper prices, and better experiences.

So I I think we've we've a basic moral imperative to improve this, and it's a huge area under the curve, which is why I was so motivated to leave. It was ultimately a great job at a sixteen z, but the time is now to bring the industry forward. Sam, last question from my end. We were earlier today looking at the news with Drift, Tether, some of the backstop there and and what went down. I saw that you guys came out with a article, looks like last week,

roughly, about the Drift hack, another reason to have your own stablecoin. Any any sort of thoughts on that article, what what the belief is there, and then any kind of updates on that thesis with USDT and what what you we saw this morning? I'm

happy that the Drift team is coming to a a helpful and healthy resolution to this this hack. But, ultimately, if you are a serious company doing money movement, you wanna be in control of your security and compliance operations. And while USDC does a great job being a neutral way to move money, if you're known for money movement, you should probably own the the key features and faculties to to lock this kind of thing down before it can spiral out of control as it does.

In fact, this the ability to do that lockdown prevents the hack in the first place to some And so while folks who are focused on pure permissionlessness might say that's not the right way of doing things, we're already talking about a not fully permissionless good, a stablecoin, which is backed by US treasuries and regulated by US regulators, it's worth that extra step to say, no. We are in control of our future when it comes to security

fraud and compliance. Do you think that's what a lot of people miss? I I was seeing, you know, when Polymarket came out that they're coming out with their own stablecoin that they were kinda getting flames for it, and, you know, this is just a money grab and why do this? Is that, like, what the general call it, like, cash Who would Wait. Wait. Who was flaming them for that? I I don't know. I was reading a thread, and there was just one of those things of, like, oh, here we go.

Another another stablecoin so they could just make, you know, make some more money on it. And it seems like Yeah. Out so many people. Yeah, of course. That's that's that's you know, that there's the benefit there. But do you think that's what the general you know, maybe the person that understands that stablecoins are the future, but why are we seeing all these issuance are just completely overlooking?

I think that that's a big, big reason, and it's a reason that's really overlooked. I think that the well known reason is that you wanna get the the yield off of your stablecoin program. But the things that are less well known are the fact that you can make it more readily interoperable with your own ecosystem by having more control over the reserves and

that you control more of the the brand sorry, the the compliance and security infrastructure. It's a good call out. So it's it's not just a yield benefit. It's a security benefit, control benefit. That's good. That's good. Zach, any final thoughts from your side before we point? I I think you had a hard stop, so I think I see Bo in the green room. Yeah. I'm seeing I'm seeing the eyes go to the Google Calendar. We'll we'll let you go, man. Thanks.