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James McDowall Matthias Knab, Opalesque for New Managers: Stablecoins have won the argument they spent a decade losing. The interesting question is no longer whether the future of money is arriving - it is who captures the upside, how early you can get in, and whether an institution can act on the macro case without owning the risks it cannot underwrite. This is a profile of one manager's answer.
For most of the last ten years, "the future of money" was a promise that kept not arriving. It belonged to conference stages and pitch decks, to the recurring vow that the unbanked would soon be banked and money would finally move at the speed of the internet. The promise kept being made. The future kept being deferred.
Then, quietly, the argument ended. In January, a white paper from Boston Consulting Group and the on-chain data firm Allium reported that once you strip trading, treasury and exchange mechanics out of the numbers, business-to-business payments are now the single largest category of real-economy stablecoin volume - roughly 40% of it, growing about 65% a year. Card spending collateralised by stablecoins, near zero in late 2024, has climbed past $300 million a month. The velocity of stablecoin money has nearly doubled since the start of 2024. The conclusion is no longer in dispute. As one operator in the space put it recently, businesses are not coming on-chain. They are already there.
The market has voted with its chequebook. Stripe paid $1.1 billion for the stablecoin infrastructure firm Bridge. Mastercard agreed to pay up to $1.8 billion for BVNK. Kraken's parent, Payward, agreed to buy the Hong Kong payments firm Reap for up to $600 million. In barely a year, incumbents committed something on the order of $3.5 billion to buy the companies that solved the first hard problem of this era - moving money across borders, compliantly, on stablecoin rails. The land grab is on. And it raises the important question for any allocator reading the headlines: how do you participate in this, at a price that still makes sense, when the strategics are already writing nine- and ten-figure cheques?
It is a question we have spent the spring putting to James McDowall, Founding Partner of Arcanum Capital - and his answer is the subject of this Big Picture.
The Manager at the Center of It
Arcanum is a BMA-regulated venture manager, anchored by Tether - the world's largest stablecoin issuer, in one of its inaugural venture fund commitments - and by Tim Draper and the Draper Foundation. Its second fund, Arcanum Emerging Technologies Fund II, backs the early-stage companies building what McDowall calls the blockchain-based payments stack: stablecoins as the core settlement primitive, Bitcoin as a parallel reserve asset, and AI agentic payments as the emerging control layer.
McDowall himself is an unlikely figure for the role - a former British and Swiss PGA professional turned portfolio manager, ten years into investing in blockchain, long enough to have watched the industry mistake noise for progress more than once. He has heard every version of the future-of-money pitch. So when he says the thing everyone predicted is now actually happening, the interesting question is not whether he believes it, but what he thinks changed.
What changed, in his telling, is that stablecoins escaped. "People have been saying this for a decade," he concedes. "The problem was that there were several bottlenecks: regulation, distribution, trust, and to some extent merchant acceptance." Each of those has come undone in the past 12 to 18 months, and one event did most of the work. "Especially with the GENIUS Act, that has been an inflection point. Stablecoins have escaped the Wild West crypto bubble." The wallets work now. The on- and off-ramps exist. Compliance tooling has matured. Liquidity is deepening. And the API infrastructure - one layer Arcanum invests in - is abstracting the complexity that used to keep ordinary users out. "For the first time, companies can come into a more mature environment and see very quick adoption. This is not a future use case anymore. It is actually happening."
The Mechanism Behind the Hype
The reason McDowall is willing to put a number on it - stablecoins in circulation rising from roughly $300 billion today to $2 to $3 trillion within five years, a forecast several major asset managers have published independently - has almost nothing to do with crypto and everything to do with the US balance sheet.
"The United States has a national debt problem," he says, "and every time a stablecoin is issued, Circle or Tether buys US Treasuries." The implication is elegant and slightly unnerving: Washington has discovered it can manufacture demand for short-term government debt simply by encouraging the world to hold dollars in tokenised form. Proliferating stablecoins is therefore squarely aligned with US fiscal policy, and in a moment when the BRICS bloc is openly working to erode the dollar's primacy, it doubles as a defence of dollar hegemony. More stablecoins mean more Treasury buyers, a firmer dollar, and a tighter grip on reserve-currency status.
If anything, McDowall thinks the figure is conservative; the brake, in his view, is the banking lobby pushing back on the yield stablecoin holders can earn, for fear of a run on deposits. But even at the low end, the consequence for the real economy is the same. "The real economy does well when money moves fast," he says. "Stablecoins speed everything up." Capital that once sat dead in escrow for three days can be put back to work the moment a deal clears. The market itself is a near-duopoly he does not expect to break: Tether's USDT at roughly $195 billion and about 60% share, Circle's USDC a distant second near $75 billion, with every exchange pairing priced against them.
What Comes After Adoption
Here is where the story turns forward, and where Arcanum's thesis stops being a recital of headlines and starts being a wager. If adoption is settled, the bottlenecks have simply moved - first to distribution and multi-jurisdictional compliance, the problems the $3.5 billion land grab just paid to solve, and next to something stranger.
The point was made, pointedly, by one of Arcanum's own portfolio companies. Writing in TheStreet, Viktor Ihnatiuk, co-founder of the Bitcoin-native settlement firm Utexo - a Fund II investment incubated alongside Tether - argued that the engineering of stablecoin payments is no longer the blocker. The next frontier is who, or what, is doing the paying. "It won't be humans who use it," he wrote. "Or at least, not just them."
McDowall calls this the most under-appreciated part of the entire thesis. "AI agents are not going to use correspondent banks, SWIFT messages, wire instructions, cut-off times and manual approvals," he says. "That is not how machine-native finance will work." Where a human finance team might run dozens of stablecoin transactions in a week, an autonomous agent executing a workflow could trigger thousands of micropayments an hour - negotiating, contracting, paying for compute, settling invoices, buying data, moving capital between applications. Such a system needs money that is programmable, instant, global and available around the clock. "That money," McDowall says flatly, "is stablecoins. They are not just a better payment rail for humans. They are the settlement layer for autonomous finance."
And that, he argues, is a venture opportunity of a different order than remittances. An agentic economy needs an entire stack built from scratch: agent wallets, identity and permissions, compliance and risk controls, transaction monitoring, programmable treasury, escrow, payroll, insurance, credit. It also surfaces problems no existing framework solves - chief among them liability. When a human initiates a payment, the chain of responsibility is clear. When a software agent with no legal standing of its own does the same, who answers for it if something goes wrong: the company that deployed it, the developer who built it, the platform that hosts it? "The compliance frameworks enterprises have spent years building for human payments will not port cleanly to agents," McDowall says. The firms that rebuild them - that can attribute every transaction to an accountable principal, produce an audit trail that satisfies AML, and contain the blast radius when an agent misbehaves - are, in his view, the financial infrastructure companies of the next decade. "The internet created digital information. AI creates autonomous decision-making. Stablecoins give those autonomous systems money they can actually use."
Getting to the Deal Before the Market Does
None of which matters to an allocator unless Arcanum can get in front of those companies before they are fashionable - which is the whole game in venture, where the returns are decided years before the term sheet. "One of our real key differentiators is our ability to generate alpha," McDowall says, "and that comes from a distinct sourcing advantage." It is a claim every venture manager makes; what makes Arcanum's credible is where its partners sit and who takes their calls. Co-founder Luchang Zheng is based in Silicon Valley, close to Stanford and Berkeley and to the founders coming out of them before they have a deck. She is a mentor and global ambassador for Draper University, plugged into Tim Draper's network. And the firm sits unusually close to Tether's ventures and business-development teams. The result is the thing every investor claims and few possess - the first look, and the chance to underwrite a company before the market knows it exists.
The discipline that follows is brutal by design. Arcanum sees roughly a deal a day across every channel, and dispatches most of it instantly. "Honestly, most cold emails we delete within about five seconds," McDowall says, "because the vast majority of what we invest in comes from our close networks." For the survivors, the questions get harder, and one governs all the others. "As a venture allocator you have to ask: can this company pay back the entire fund?" Venture is power-law math - a high failure rate redeemed by a few enormous winners - so a merely good outcome is disqualifying. A company raising at a $10 million valuation has to carry a credible path to hundreds of millions, even billions. "There has to be something that makes us say, wow," he says. "No one else can do this, and no team is better positioned to pull it off."
The relationship that made much of this possible was not forged in San Francisco or New York - which McDowall freely names as the only two centres that matter for his sector, the deep technical talent in one and the deep capital in the other. It was forged over coffee, under palm trees, in the south of Switzerland. McDowall lived in Switzerland for five years and watched the country's crypto centre of gravity migrate from Zug - the original "Crypto Valley," which lost its luster after the ICO boom - to Lugano, a lakeside town on the Italian border that offered better weather, a lower cost of living, crypto payment infrastructure across its shops, cafés and restaurants, and a deliberate partnership with Tether, whose leadership had deep ties to the region. He spent his time there getting to know founders and the local government, bringing entrepreneurs in and helping them set up. "Lugano was where many of those relationships were first formed," he says, "and where I gained a front-row seat to the emergence of stablecoins." Tether has since gone global; Arcanum's access went with it.
The Anatomy of a 6x
The proof that the edge is real shows up in the marks. Arcanum has been raising and deploying Fund II for just over a year - "this is not a greenfield fund," McDowall stresses - and on the capital it has put to work, the fund was up roughly 114% as of year-end 2025, a gross 2.14x, all unrealised. The arresting detail is the next one: new investors can still come in at par, at zero uplift, on a portfolio already marked at more than double cost. A closed-ended structure that has been compounding for a year, still open at the original price, is a window unlikely to stay open.
The returns come, as they always do in venture, from a few large cheques that went right - and the largest is a company most allocators have never heard of, solving a problem most have never had to think about. Crosspoint is Mexico's first and largest commercial neobank built on stablecoin rails, and to explain why it matters McDowall tells a story with nothing to do with crypto and everything to do with the friction of global trade. Picture a Chinese manufacturer selling into the United States and using Mexico as a proxy: it ships components south, has the goods assembled so they count as Mexican-made, then sends them across the border. Along that chain, money moves constantly across three currencies and a maze of banks that close at weekends, sit in incompatible time zones, and each take a cut. "Transactions were taking days," he says, "slowing business down and costing too much."
Crosspoint collapses that: it swaps the local currency into a stablecoin, moves the value across the border in seconds, and converts back on the other side - the entire journey on rails that never close. It now does this for Fortune 500 and top-100 companies, processing on the order of $436 million in monthly stablecoin volume, cash-flow positive since April 2024, with Coinbase Ventures, Bitso and Morgan Creek alongside Arcanum on the cap table. Arcanum seeded it at a $25 million valuation; it has since filled a Series A at $150 million - roughly a 6x in barely more than a year - and the firm has reserved follow-on capital to hold its 2% stake. The second driver, HiFi, builds the programmable layer above it: modular APIs that convert fiat to stablecoins and automate financial flows, now running $2 to $3 billion in transactions on an annualised basis and ranking among the largest movers on Circle's Payments Network. Arcanum seeded it at $45 million; a later financing closed at more than 3x that mark.
Both, it is worth noting, are exactly the kind of company the strategics have been buying. Bridge, BVNK and Reap were each acquired for the same capability Crosspoint and HiFi are building - compliant, distributed, cross-border settlement on stablecoin rails. Arcanum's wager is simply that it owns the next names on that list, at seed-stage entry prices, before Stripe or Mastercard or Kraken comes shopping.
The Discipline, and the Wrapper
A fund up triple digits in a year invites a fair suspicion: is this conviction, or a bull market wearing a manager's clothes? Arcanum's answer is in the parts of the strategy designed to lose well. The portfolio is built on power-law math - 30 to 50 positions, an initial 1-to-2% ownership target, around 30% of capital reserved for follow-ons, a hard 10% cap on any single name, and no leverage anywhere. The firm runs explicit kill criteria; in its first fund it wrote positions to zero when teams ran out of runway, and it marks liquid holdings to observable prices each quarter. The upside is real precisely because the firm is willing to recognise losses early.
For an institution, the story is never enough - the architecture has to hold. Arcanum is regulated by the Bermuda Monetary Authority. Administration and NAV run through Formidium, independent third-party audit through Michael Coglianese CPA, fiat through a regulated US banking partner, and custody through Apex for contractual instruments and XBTO, on Fireblocks infrastructure, for digital assets. Capital moves only under dual-authorisation and multi-signature controls, structured so that the manager cannot move fund assets on its own. The whole point, McDowall says, is a single proposition: exposure to the build-out of the stablecoin economy, without the volatility, regulatory ambiguity or operator risk an allocator cannot underwrite.
What an Allocator Should Take From This
Strip away the asset class and Arcanum's case rests on a few durable ideas. That the returns in venture are made at the moment of access, and that access is a function of relationships you either have or do not - Tether, Draper, Silicon Valley, Lugano. That discipline is what converts a sourcing edge into a track record, and a manager willing to delete most of its inbound and write its mistakes to zero is more credible, not less. That the most consequential macro story in markets right now may be the quiet marriage of stablecoins and the US Treasury - and that the wave after this one, agentic payments, is still an open field with no winners crowned. And that a closed-ended fund already marked well above cost, still open at par, is the rare structure that lets a new investor buy a proven portfolio rather than a promise.
Adoption is settled. The strategics have spent billions confirming it. What is harder to find than the macro case - which is everywhere now - is a regulated way to act on it early. That is the conversation, and the question we will put to James McDowall and Luchang Zheng live.
Investing Alongside Tether and Draper: Arcanum's Venture Strategy for Stablecoins and the Future of Money. Tuesday, June 30, 11am ET (4pm GMT, 5pm CET, 6pm Riyadh, 7pm Dubai, 8:30pm Delhi). Free registration: www.opalesque.com/webinar/. For qualified investors only. A replay will be provided to all registrants.
This article is educational in nature and does not constitute investment advice or an offer to sell securities. Past performance and unrealised valuations do not guarantee future results. It is intended for qualified investors and institutional allocators, who should conduct their own due diligence.
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