Multicoin: Stablecoins and FinTech 4.0

Authors: Spencer Applebaum & Eli Qian, Multicoin Capital; Translation: Golden Finance

Over the past twenty years, fintech has changed the way people access financial products but has not fundamentally altered the movement of capital. Innovation has mainly focused on simpler interfaces, smoother onboarding processes, and more efficient distribution channels, while core financial infrastructure has remained largely unchanged. During most of this period, this tech stack was simply resold rather than rebuilt.

Overall, the development of fintech can be divided into four stages:

Fintech 1.0: Digital Distribution (2000-2010)

The earliest wave of fintech made financial services more accessible, but did not significantly improve efficiency. Companies like PayPal, E*TRADE, and Mint combined traditional systems established decades ago—such as ACH, SWIFT, and card networks—with internet interfaces to digitize existing products.

Settlement was slow, compliance processes relied on manual effort, and payments strictly followed set schedules. Although the industry achieved online presence during this period, the fundamental way capital moved remained unchanged. What changed was who could access financial products, not how these products operated.

Fintech 2.0: The New Banking Era (2010-2020)

The next breakthrough came from smartphones and social media. Chime targeted gig workers who needed early wage access. SoFi focused on offering student loan refinancing for aspiring graduates. Revolut and Nubank, with user-friendly experiences, reached consumers underserved by traditional banking worldwide.

Each company told compelling stories for specific audiences, but they essentially sold the same products—checking accounts and debit cards operating on traditional systems. Like their predecessors, they depended on partner banks, card organizations, and ACH networks.

Their success was not because they built new channels but because they reached customers more effectively. Branding, user guidance, and customer acquisition became their strengths. Fintech firms of this era became highly skilled distribution entities relying on banks.

Fintech 3.0: Embedded Finance (2020-2024)

Around 2020, embedded finance began to thrive. APIs enabled nearly all software companies to offer financial products. Marqeta allowed companies to issue cards via API. Synapse, Unit, and Treasury Prime offered banking-as-a-service (BaaS). Soon, almost all apps could provide payments, banking, or lending services.

However, beneath the abstraction layer, the core remained unchanged. BaaS providers still relied on existing banks, compliance frameworks, and payment channels. The abstraction moved from banks to APIs, but economic benefits and control still flowed to the original systems.

The Commoditization of Fintech

By the early 2020s, the downsides of this model became evident. Almost all new large banks relied on a few sponsoring banks and BaaS providers.

Source: Embedded

As companies competed fiercely through performance marketing, customer acquisition costs soared. Profit margins shrank, fraud and compliance costs surged, and infrastructure became largely commoditized. Competition turned into a marketing arms race. Many fintechs tried to stand out through card colors, sign-up bonuses, and cashback offers.

Meanwhile, risk and value extraction concentrated at the banking level. Large financial institutions regulated by the US Office of the Comptroller of the Currency (OCC), such as JPMorgan Chase and Bank of America, retained core privileges: accepting deposits, issuing loans, and accessing federal payment systems like ACH and Fedwire. Fintechs like Chime, Revolut, and Affirm lacked these privileges and depended on licensed banks for these services. Banks earned interest and platform fees; fintechs earned transaction fees.

As fintech projects proliferated, regulators scrutinized the sponsoring banks more strictly. New regulations and higher compliance requirements forced banks to invest heavily in compliance, risk management, and third-party oversight. For example, Cross River Bank faced a regulatory order from the FDIC, Green Dot Bank was subject to enforcement by the Federal Reserve, and the Fed issued cease-and-desist orders to Evolve.

Banks responded by tightening customer onboarding, limiting supported projects, and slowing product iteration. Once experimental modes, these now increasingly required scale to offset compliance burdens. Fintech innovation slowed, costs increased, and the industry became more focused on developing generic products rather than specialized ones.

We believe that three main reasons have kept innovation at the forefront over the past 20 years:

1. Capital infrastructure remains monopolized and closed. Visa, Mastercard, and the Federal Reserve’s ACH network leave no room for competition.

2. Startups need substantial funding to develop core financial products. Launching a regulated banking app requires millions of dollars for compliance, fraud prevention, fund operations, etc.

3. Regulatory restrictions limit direct participation. Only licensed institutions can custody funds or transfer them through core channels.

Data Source: Statista

Given these constraints, it makes more sense to develop products rather than fight established rules. As a result, most fintech firms are just finely tuning bank APIs. Despite two decades of innovation, truly new financial technology remains scarce. For a long time, there have been no practical alternatives.

Cryptocurrency development, by contrast, has followed a completely different trajectory. Developers initially focused on foundational functions. Automated market makers, bond curves, perpetual contracts, on-chain liquidity vaults, and on-chain lending all evolved from the bottom up. Financial logic itself has also become programmable for the first time.

Fintech 4.0: Stablecoins and Permissionless Finance

Although the first three fintech eras introduced many innovations, their underlying mechanisms have changed little. Regardless of whether products are delivered via banks, new banking institutions, or embedded APIs, capital flows still follow closed, permissioned tracks controlled by intermediaries.

Stablecoins broke this pattern. They do not merely overlay software on top of the banking system; they directly replace key banking functions. Developers interact with open, programmable networks. Payments settle on-chain. Custody, lending, and compliance functions shift from contractual relationships to software layers.

BaaS reduces friction but does not alter the economic model. Fintechs still pay compliance fees to sponsor banks, settlement fees to card networks, and access fees to intermediaries. Infrastructure remains expensive and requires licensing.

Stablecoins eliminate the need for rented access. Developers no longer call bank APIs but directly write code to open networks. Settlements are on-chain. Fees accrue to protocols, not intermediaries. We believe build costs will greatly decrease—from millions of dollars via traditional banking or tens of thousands through BaaS—to just a few thousand dollars using permissionless smart contracts on-chain.

This shift is already evident at scale. The market capitalization of stablecoins grew from nearly zero to about $300 billion in less than ten years. Today, their actual economic transaction volume even surpasses traditional payment networks like PayPal and Visa—excluding internal exchange transfers and MEV transactions. Non-bank, non-card payment channels are now operating at truly global scale.

Source: Artemis

To understand why this transformation is so important in practice, we need to look at how today’s fintech companies are built. Typical fintech relies on many vendors:

• User interface / user experience
• Banking / custody layer — Evolve, Cross River, Synapse, Treasury Prime
• Payment channels — ACH, Wire, SWIFT, Visa, Mastercard
• Identity & compliance — Ally, Persona, Sardine
• Fraud prevention — SentiLink, Socure, Feedzai
• Underwriting / credit infrastructure — Plaid, Argyle, Pinwheel
• Risk & financial infrastructure — Alloy, Unit21
• Capital markets — Prime Trust, DriveWealth
• Data aggregation — Plaid, MX
• Compliance / reporting — FinCEN, OFAC

Launching fintech products in this architecture involves managing contracts, audits, incentive mechanisms, and failure modes across dozens of counterparties. Each layer adds costs and delays, and many teams spend as much time coordinating infrastructure as developing products.

Native stablecoin systems simplify this complexity. Functions that once required six vendors are now consolidated into a set of on-chain primitives.

In the world of stablecoins and permissionless finance, banks and custody services are replaced by Altitude. Payment channels are replaced by stablecoins. Authentication and compliance are important but can be on-chain, with privacy and security maintained via zkMe and similar tech. Underwriting and credit infrastructure will be thoroughly reformed and moved on-chain. Once all assets are tokenized, capital markets firms become irrelevant. Data aggregation will be replaced by on-chain data and selective transparency, such as using fully homomorphic encryption (FHE). Compliance and OFAC screening will be handled at the wallet layer (e.g., if Alice’s wallet is on a sanction list, she cannot interact with the protocol).

This is the real difference of Fintech 4.0: the underlying architecture of finance has finally changed. People no longer need to develop another backend app secretly requesting bank authorizations; instead, most banking operations are replaced directly with stablecoins and open payment channels. Developers are no longer tenants—they own the land.

Opportunities for Professional Stablecoin Fintech Companies

This shift has a straightforward and immediate impact: the number of fintech companies will greatly increase. When custody, lending, and fund transfer are nearly free and instant, starting a fintech is like launching a SaaS product. In a native stablecoin environment, there’s no need to interface with card issuers, wait days for settlement windows, or perform tedious KYC checks—all these barriers disappear.

We believe the fixed costs for launching core financial products will fall from millions of dollars to just a few thousand. Once infrastructure, customer acquisition costs (CAC), and compliance hurdles are eliminated, startups can begin providing profitable services to smaller, more specific social groups through what we call specialized stablecoin fintech.

A clear historical analogy exists. The previous generation of fintech mainly served specific customer segments: SoFi for student loan refinancing, Chime for early wage access, Greenlight for teen debit cards, Brex for startups unable to get traditional business credit. But this specialization ultimately failed to become a sustainable operating model. Transaction fees limited revenue, and compliance costs rose. Reliance on sponsoring banks pushed firms to expand beyond their initial niches. To survive, teams had to horizontally scale, and the products ultimately offered were driven more by infrastructure needs than actual user demand.

With dramatically lower costs in cryptocurrency infrastructure and permissionless APIs, a new wave of stablecoin-native banks will emerge, targeting specific user groups as early fintech innovators did. With significantly reduced operating costs, these new banks can focus on niche, specialized markets and maintain their focus: for example, Sharia-compliant finance, crypto enthusiasts’ lifestyles, or athletes with unique income and spending patterns.

Secondary effects are even more significant: specialization improves unit economics. Customer acquisition costs (CAC) decrease, cross-selling becomes easier, and lifetime value (LTV) increases. Specialized fintechs can precisely match their products and marketing to high-conversion target groups and gain more word-of-mouth growth from serving specific communities. Compared to their predecessor fintechs, these companies operate at lower costs but with clearer profitability per customer.

When anyone can launch a fintech in weeks, the question shifts from “who can reach customers?” to “who truly understands them?”

Exploring the Design Space of Specialized Fintech

Where traditional pathways break down, the most attractive opportunities often emerge.

Take adult content creators and performers. They generate billions annually but are often deplatformed by banks and credit card processors due to reputation and chargeback risks. Payments are delayed by days under “compliance review,” and 10-20% fees are common through high-risk gateways like Epoch or CCBill. We believe stablecoin-based payments can offer instant, irreversible settlement with programmable compliance, allowing performers to self-custody income, automatically transfer earnings to tax or savings wallets, and receive payments globally without relying on high-risk intermediaries.

Now consider professional athletes, especially individual sports like golf and tennis, who face unique cash flow and risk dynamics. Their income is concentrated during short careers, often split among agents, coaches, and staff. They must pay taxes across multiple jurisdictions, and injuries can completely halt income. A stablecoin-based fintech product could tokenize future earnings, pay staff via multi-signature wallets, and automatically withhold taxes per jurisdiction.

Luxury goods and watch dealers are another underserved market. These businesses often transport high-value inventory across borders, with transaction amounts in the six figures, often settled days later via wire transfer or high-risk payment processors. Operating capital is often stored in safes or display cases rather than bank accounts, making short-term financing expensive and hard to obtain. We believe stablecoin-based fintech can directly address these issues: enabling real-time settlement of large transactions, tokenized inventory-backed credit lines, and programmable escrow embedded in smart contracts.

When you analyze enough cases, the same limitations keep recurring: traditional banking models are ill-suited for serving users with global, uneven, or unconventional cash flows. But these groups can develop into profitable markets with stablecoin platforms. We see strong case examples for specialized stablecoin fintech firms, such as:

• Professional athletes: income concentrated in a short period; frequent travel and relocations; multi-jurisdictional tax filings; payroll for coaches, agents, trainers; potential need for hedging injury risk.
• Adult performers and creators: deplatformed by banks/credit card processors; audiences worldwide.
• Employees of unicorns: cash “shortage,” net worth in illiquid stocks; exercising options may trigger high taxes.
• On-chain developers: net worth in highly volatile tokens; exit and tax challenges.
• Digital nomads: seamless foreign exchange via bank; automatic tax management based on location; frequent travel/move.
• Prisoners: families/friends have difficulty accessing funds within the prison system, and costs are high; funds often cannot be obtained through traditional channels.
• Sharia-compliant finance: avoiding interest.
• Generation Z: credit-lite banking services; gamified investing; social features.
• Cross-border SMEs: high forex costs; slow settlements; frozen working capital.
• Gamblers: using credit cards to fund bets.
• Foreign aid: slow, opaque flow of aid funds; high leakage due to fees, corruption, misallocation.
• Tandas / rotating savings clubs: inherently cross-border, suitable for global families; pooled savings earn yields; potential to build credit history on-chain.
• Luxury goods dealers (e.g., watch dealers): inventory financing; short-term loans needed; high-value cross-border deals; frequent trading via WhatsApp, Telegram.

Summary

Over the past two decades, most fintech innovation focused on distribution channels rather than infrastructure. Companies competed on branding, user onboarding, and paid customer acquisition, but capital flow remained within closed channels. This expanded financial coverage but also led to commoditization, rising costs, and slim margins.

Stablecoins are poised to change the economics of developing financial products. By transforming custody, settlement, lending, and compliance functions into open, programmable software, they dramatically lower the fixed costs of starting and operating fintech. Functions that previously required sponsoring banks, card networks, and large vendor systems can now be built directly on-chain, greatly reducing overhead.

As infrastructure costs fall, specialization becomes feasible. Fintech firms no longer need millions of users to be profitable. Instead, they can focus on niche, well-defined communities with unmet needs. Groups like athletes, adult content creators, K-pop fans, or luxury watch dealers—sharing backgrounds, trust, and behaviors—make product dissemination more natural rather than reliant on paid marketing.

Equally important, these communities often share similar cash flow profiles, risk tolerances, and financial habits. This consistency allows product design to be centered around real income, consumption, and financial behavior, rather than abstract demographics. Word-of-mouth works not only because users know each other but also because the product aligns with their community’s mode of operation.

If our vision comes true, this economic transformation will be profoundly meaningful. Distribution channels integrated into communities will lower CAC; reduced middlemen will expand margins. Previously small or unprofitable markets will become sustainable and profitable.

In this world, the advantage of fintech will no longer lie in brute-force scaling or massive marketing spend, but in deep understanding of real-world contexts. The next generation of fintech companies will succeed not by serving everyone but by building infrastructure based on how capital genuinely flows, offering premium services to targeted groups and winning market share.