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Where Crypto and Fintech will Merge

August 25, 2022

Brace yourselves! The crypto ecosystem is experiencing its next major downturn.

By Matt Levinson and Ryan Savell

Brace yourselves! The crypto ecosystem is experiencing its next major downturn.

Over the past two years, decentralized finance (or “DeFi”) has been waylaid by the “digital casino.” Whether centralized or decentralized, many projects and protocols were built with quick profits in mind, fueled by mercenary capital that is leaving just as quickly as it came. Many of these projects will be short-lived, akin to the ICOs of 2017.

Of course, crypto is not going away. This is not the first, or even second, but the *fourth* crypto drawdown of ~70%+ in the past decade. Through each cycle, the ecosystem takes a leap forward and continues to draw increasing amounts of talent, capital, and awareness.

When we look back on the 2022 bear market, we’ll remark that real-world use cases in financial services were only in their infancy.  Innovation at Layer 1 and Layer 2 protocols are enabling vastly better throughput while collapsing fees. This new financial architecture has structural advantages over legacy systems as a global, 24/7, open-source system of record.  Ultimately, blockchains will enable value to flow over the internet as seamlessly as data – and the impacts will be far reaching.

Predicting the use cases to come, however, is like predicting internet applications in the mid ‘90s. The creativity of entrepreneurs will surely surprise investors.  That said, at B Capital we are in a unique position to observe trends across fintech globally and hypothesize some of the real-world use cases that could gain significant traction.

In this piece, we’ll explore 4 areas of financial services that could potentially be reimagined on permissionless blockchains:

  1. Emerging markets: stablecoin settlement and financial reporting
  2. Cross border payments: consumer remittances and B2B payments
  3. Treasury management: capturing sustainable yields in DeFi
  4. Smart contracts replacing toll-takers: with early use cases in lending, trading, insurance, and capital markets

Stablecoins and Emerging Markets: Despite our inflation woes, the US Dollar remains the reserve currency for the world and has continued to strengthen against benchmark currencies globally. As such, USDC or USDT settlement offers a hedge to more volatile governments and currencies. It is no surprise that countries with the highest usage of crypto include nations looking for currency stability.[1]

Moreover, the total stablecoin supply has grown by about 10x over the last two years[2]. The primary use case today is a “poker chip” for exchanges, indicating another exponential leap with real world use cases.

Whether USD, Euro, or some basket of currencies, relative stability and purchasing power is always desirable.  If international companies could clear into a USD-backed stablecoin daily, and then report monthly and quarterly financials in USD, there would be no FX slippage on returns for U.S. investors. Every VC or PE investor should want every one of their portfolio companies to do something like this.

Cross-Border Payments: Consumer remittances are a huge and vitally important market. The market was worth $702bn in 2020 and will grow to $1.23tn by 2030.[3]  However, the process to remit money overseas continues to be inefficient: a remittance of $200 costs $12 (6% of the total) and can take 5 days to settle.[4]

Sending on-chain remittance payments overseas will ultimately be no different than making a payment to a person standing directly next to you – instant and nearly costless — and will improve alongside Layer 2 and payments-specific blockchains.

We are already beginning to see real traction from both crypto businesses and TradFi remittance platforms:

  • BitSo, the leading LatAm crypto exchange, has handled over $1bn in crypto remittances year-to-date, making up 4% of all remittances sent to Mexico. Coinbase also launched a cash-out service in Mexico in 2022.
  • Moneygram, an 82-year-old cross-border payments company, launched a partnership with Stellar to enable payments on the Stellar network and to enable easy cash-out solutions into fiat currencies from USDC.[5]

B2B cross-border payments represent a huge market opportunity as well, with a revenue pool of $150bn at stake. Roughly half of B2B payments still utilize paper checks, which can cost $8-$14 per check.  On average, a U.S. firm is waiting 33 days to receive a cross-border payment, and an average transaction can touch up to 6 different banks before reaching its destination.[6]  Crypto offers the promise of replacing some of these human intermediaries with code.

Regulation will certainly play a crucial role in this arena. Many projects will need to obtain relevant money servicing licenses, and AML / KYC guardrails will need to be tracked at the fiat onramp and potentially encoded into the token. Payments companies and government agencies will need to leverage blockchain monitoring solutions like B Capital portfolio company TRM Labs to combat illicit or fraudulent activity on-chain.

Treasury Management: Stablecoins and DeFi will increasingly offer access to sustainable yields. We see a future where corporate treasuries can provide integrated blockchain and fiat-based solutions and can generate yield by accessing DeFi native protocols and infrastructure. Extraordinary yields should always be scrutinized and are rarely sustainable – but solid and uncorrelated yields are certainly attainable.

For example, by partnering with staking players like B Capital Portfolio company Figment, corporate treasurers gain access to uncorrelated and relatively safe staking rewards. As staked Ethereum becomes the risk-free benchmark rate for the DeFi ecosystem, corporate treasurers can use that price signal to manage risk.

Longer term, stakers and liquidity providers should look to more modest yields, with a risk premium relative to traditional finance and regulatory protections where necessary – via capital requirements, guardrails on risk, and other consumer safety measures.

Smart Contracts Replacing Toll-Takers: We expect convergence between blockchains and real-world assets over the coming decade, offering lower friction methods of transacting with fewer toll-takers.

There is progress being made today, with real-world assets being brought on chain. For example, MakerDAO and Aave have begun tokenizing invoices, real estate, revenue sharing agreements, real world loans, and other financing agreements to create a tokenized asset that is fully imbued with all necessary legal work. The process creates a legally enforceable, tokenized version of the asset or security. The token helps originators access new customers and lower cost-of-funds, while helping investors access illiquid asset classes.

Broadening the scope, capital markets are primed for disruption from smart contracts. For equity raises, cap tables can become easily auditable and automated. You’d be able to encode in the token restrictions on secondary transfers (e.g., accredited investor requirements). Smart contracts can enforce vesting and lockups for securities that can be transferred to a secondary market armed with instant settlement, improved liquidity, and 24/7 availability. Moreover, post-trade settlement times and multi-party clearing processes could be disintermediated.

The toll-taker narrative applies to many financial products – mortgages, insurance, supply chain logistics. The innovation will be driven by stakeholder’s buy-in, regulatory constraints, and builders’ creativity.


With fewer speculators to serve, the new economic reality will help builders focus on a broader set of customers with real problems to solve.  They will build generation-defining financial applications in the process. We are beyond excited to continue partnering with transformational companies at the intersection of financial services and blockchain technology.

[1] Total Stablecoin Supply (
[2] The 2021 Global Crypto Adoption Index: Worldwide Adoption Jumps Over 880% With P2P Platforms Driving Cryptocurrency Usage in Emerging Markets – Chainalysis
[3] Remittance Market Size, Share and Analysis | Forecast – 2030 (
[4] Remittances to Reach $630 billion in 2022 with Record Flows into Ukraine (
[5] MoneyGram Announces Innovative Partnership with the Stellar Development Foundation to Utilize Blockchain Technology | MoneyGram International, Inc.
[6] Average US Firm Waits for Cross-Border Payments |

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