Outside of AI, there’s no hotter sector than stablecoins. Big tech companies like Meta are exploring integration, Congress is on the precipice of advancing legislation, and venture investors—including generalist funds otherwise wary of diving back into crypto—are showering startups with funding. The latest is OpenFX, an infrastructure firm founded by Prabhakar Reddy, which is emerging from stealth with $23 million in funding led by Accel.
For those not versed in blockchain jargon, stablecoins are a type of cryptocurrency pegged to an underlying asset, such as a fiat currency or a commodity like gold, and designed to stay at a certain price. By far, the most popular version has been dollar-backed stablecoins, with the market leaders Tether and USDC holding a combined market capitalization of over $200 billion.
While stablecoins serve an obvious utility for crypto players, who can settle and store capital in dollar-like assets without having to move back and forth between cryptocurrencies and fiat, they’re becoming increasingly feasible for a number of non-crypto use cases, from remittances to global payroll. Other than Bitcoin, stablecoins are poised to become the long-awaited “killer app” that crypto evangelists have long promised, though the technology itself is still in its early days.
That’s where companies like OpenFX come in. Readers of this newsletter have probably heard of Bridge, whose $1.1 billion acquisition by Stripe last October thrust stablecoins into the Silicon Valley consciousness. Bridge, along with its main competitor BVNK, helps companies move between fiat and stablecoins, allowing them to adopt stablecoins as a payment rail without having to manage the complicated crypto processes themselves. Take, for example, SpaceX, which uses Bridge to collect payments in different jurisdictions and move them through stablecoins into its central treasury, or Deel, which uses BVNK to pay contractors globally.
OpenFX is one layer more abstract. The major roadblock for stablecoins has always been that, while moving around crypto dollars may be near instantaneous and free, getting those crypto dollars into actual dollars (or other currencies) still means relying on the same old rails that blockchain is trying to replace. Until your neighborhood grocery store, and the neighborhood grocery store in Argentina and Nigeria, start accepting Tether or USDC, it doesn’t matter how fast and cheap stablecoins are. This is the so-called “last mile” dilemma, and it’s where OpenFX comes in.
Before starting OpenFX, Reddy was an investor at Accel in India and a serial entrepreneur, though his most successful company was his last—the institutional-focused crypto brokerage firm FalconX, which he decided to build after trying to do large block trades of crypto himself while at Accel. FalconX was last valued at $8 billion. While working on FalconX, Reddy began to see how global cross-border money movement worked, facilitated by the SWIFT network between financial institutions. “I saw how broken and fragmented it was,” Reddy told me. “All these ideas started churning behind the scenes.”