Stablecoin mergers: there will be no "winner takes all"

In this episode of Money Code, hosts Chuk Okpalugo and Raj Parekh talked with Itai Turbahn, the founder and CEO of Dynamic (now acquired by Fireblocks). His team is building embedded wallet infrastructure that allows developers to establish global fund flow capabilities in hours instead of years.

They discussed why the world's largest companies are building their own payment networks (YouTube alone has already paid creators billions of dollars), what happens when technology costs approach zero but crypto, security, and compliance remain challenging, and why the recent wave of mergers and acquisitions from Mastercard's acquisition of BVNK to Fireblocks' acquisition of Dynamic allows each participant to approach the global financial system from different angles.

Chapters:

00:00 What is Dynamic? Embedded wallets— the "Twilio" of fund flow
02:15 From optimizing crypto-native user experiences to global financial infrastructure
07:37 Full-stack capabilities: wallets, on/off ramps, liquidity, licensing— and why companies don’t want "Lego-style assembly"
10:52 "Build a global Venmo in an hour": remittances, payroll, B2B, and the bridge between CeFi and DeFi
14:23 Earning yields, issuing cards, converting to local currency— the integrated capabilities of embedded wallets
17:55 "Don't build your own crypto system": problems AI and cloud code can't solve
22:36 "Our industry should be boring": scaling trust and redefining fintech
25:35 YouTube's $100 billion payment problem: payments are innovation, not risk management
29:42 No winner takes all: why M&A is chaotic, and that's the key
36:22 "Now there are more opportunities, not fewer"

Takeaways:

1. Embedded wallets are becoming the "entry layer" of the new generation of financial infrastructure, similar to how Twilio abstracts complex fund flow capabilities into developer-callable APIs, reducing "global payment capability" setup time from years to hours.

2. The true path for stablecoins and blockchain is not "crypto-native applications," but rather being used as underlying payment rails by non-crypto companies (fintech, neobanks, platform enterprises), with the industry shifting from crypto-native to mainstream adoption.

3. The core need for enterprises is not "to use crypto," but rather faster, cheaper, and more flexible fund flows (speed / cost / optionality); stablecoins are merely a means to achieve this goal, not the end.

4. The key value of embedded wallets lies in "abstracting complexity": users can complete cross-border payments and asset management without needing to understand concepts like private keys, gas, or chains, which is a prerequisite for scaled adoption.

5. Full-stack capabilities become the core of competition: wallets are just the first layer; real solutions must include on/off ramps, liquidity, clearing and settlement, licensing, compliance, etc., which is also the essential driver behind the recent surge in M&A.

6. Current stablecoin/payment M&A is not leading to centralized monopolies, but rather "multi-entry, multi-path competition": different players (card organizations, PSPs, exchanges, cloud vendors) are all entering the financial system from their own advantages.

7. The reason there is no "winner takes all" is that global finance itself is highly fragmented—divided by region, regulation, industry, and payment scenarios (B2B/B2C/C2C), with each segment having different needs and optimal solutions.

8. The technical barrier is decreasing, but real moats still exist: cryptography, security systems, user experience (abstracting complexity), and most critically, compliance and licensing, which cannot be quickly replicated through "AI + code."

9. Large platforms (like YouTube) are essentially already "financial systems," with their payment capabilities shifting from cost centers (risk management) to product capabilities (innovation levers).

10. The industry is undergoing a cognitive shift: payments are no longer just about "sending money," but can extend to a full suite of financial products like wallets, yields, cards, and asset holdings, thereby changing user retention and business models.

Chuk Okpalugo:
You can basically build your own Venmo in an hour now, right? That's the capability we have today. Assuming technology costs really drop to near zero, what other barriers remain?

Itai Turbahn:
I think there are several key points that are still non-trivial, which is why you see a lot of M&A happening now. Essentially, it's about integrating these capabilities into a cohesive solution. Because when you're dealing with a Fortune 50 company, they don't want to connect to multiple vendors; they don't want to piece together a "Lego block" system. For example, Mastercard's $1.8 billion acquisition of BVNK, and a series of mergers in this space over the past 12 months.

In this market, there is no "winner takes all." The M&A market is chaotic, and everyone is approaching it from different angles because there is no definitive winning formula in this market.

What does this mean? What does it mean for the evolution of the industry? These are my personal views and do not constitute investment advice.

This is Money Code, a show that interprets stablecoins and fintech.

Chuk Okpalugo:
I am Chuk Okpalugo.

Raj Parekh:
I am Raj Parekh.

Chuk Okpalugo:
Today, we have my good friend, Itai Turbahn, the founder and CEO of Dynamic. Itai, why don't you start with the basics—what is Dynamic?

Itai Turbahn:
Of course, thank you for having me. By the way, I have a bit of a cold, so I apologize if I sound uncomfortable.

Dynamic is essentially a company that does "embedded wallets." You can think of us as an SDK, similar to how you use Twilio for global SMS notifications or Plaid to connect to banking systems.

When you integrate Dynamic into your application, you can generate crypto wallets and embedded wallets in the background, enabling payments, transfers, earning yields, and everything you want to do with crypto. You can think of us as an intermediary layer connecting your application to the "world of global fund flows," and you don't need to understand the underlying complexities.

We handle security issues, complexities, and so on. For example, if you're building a global remittance application, a payroll system, or a new type of bank (neobank), and you want to use these crypto payment rails, the wallet is the entry point, and that's what we provide.

Additionally, Dynamic was previously an independent company that received investments from a16z and Founders Fund, and it has now joined Fireblocks. Within the Fireblocks ecosystem, we mainly focus on consumer-facing embedded wallets, typically non-custodial wallets, used in mobile apps or websites, serving millions of users.

The embedded wallet layer is actually the key infrastructure driving the adoption of stablecoins and blockchain in consumer and enterprise applications. You mentioned that allowing users to log in with an email to have a wallet is the core innovation in this space.

Many embedded wallet companies, including the Portal (a company Raj founded), have been acquired, largely because they sit at the interface between the "application layer" and "blockchain."

Recently, you've seen a lot of M&A activity, like Mastercard acquiring BVNK, and the industry has seen a lot of consolidation and new entrants, making the situation very complex. You've been observing this industry for a long time; why don't you talk about how this market has changed from its early stages?

Itai Turbahn:
That's a great question. Over the past few years, this market has undergone significant changes.

If you go back to 2020-2022, the market was almost entirely "crypto-native." For instance, if you went to platforms like Magic Eden or OpenSea, you'd encounter a typical problem: you want to buy something, and it tells you—first, go create a wallet, remember 12 seed phrases, and then come back.

That experience is actually very poor. By the time you come back, it will also tell you: you need gas fees, please go recharge tokens—how to recharge? Figure it out yourself.

This experience, to be honest, is terrible.

So the first phase of innovation was that crypto-native teams started doing one thing: abstracting away the complexity. How? First, they stopped redirecting users externally and instead "embedded" the wallet. Second, they didn't let users manage private keys but allowed login via email or Google, combining technologies like MPC to make the experience "seamless," while still maintaining security.

This is the starting point of embedded wallets.

The goal at that time was to make crypto accessible to a billion users.

But by 2023-2025, things changed. People began to say: I don't necessarily care about crypto; I just want to transfer money globally faster.

Thus, the value of embedded wallets became: abstracting the complexity of fund flows on both ends. For example, when I send money to Raj, I don't need to know what wallet he uses, nor do I need to understand crypto.

As a result, the market shifted from "purely crypto-native" to half crypto companies and half non-crypto companies. Today, most of our clients are actually traditional fintech companies, neobanks, etc.

The consensus has become: I just want a faster global payment rail, and the way to achieve that is through embedded wallets.

But you will also find that the wallet is just one layer; you also need capabilities for deposits, withdrawals, liquidity, stablecoins, gas abstraction, etc. So enterprises began to say: I don't want to piece together these modules myself; I want a packaged solution.

That's why M&A started to explode.

Raj Parekh:
You actually described a complete "tech stack": wallets, deposits/withdrawals, liquidity, exchange connections, licensing, etc. Many companies don't have all the capabilities, so they need to acquire to fill the gaps.

Itai Turbahn:
Exactly. And this is just the "user-side" tech stack. Internally, companies also need treasury management, on-chain operations, tokenization, and other capabilities.

That's also why companies like Fireblocks exist—to provide complete capabilities.

So what you're seeing in M&A is essentially: integrating these capabilities into a "one-stop solution." Because when you're dealing with a Fortune 50 company, they don't want to connect to 10 suppliers; they just want to buy a comprehensive solution.

This is similar to the development path of the SaaS industry: from selling point products to selling complete solutions.

This is the stage the industry is currently in.

Raj Parekh:
I think there's another interesting point: in the traditional fintech world, the concept of a "digital wallet" has always existed. For example, opening an account through Banking-as-a-Service is essentially a checking or savings account.

But people are gradually realizing that when you want to facilitate global fund flows and utilize blockchain as a 24/7 payment rail, wallets must also become a core entry point. So wallets have always been the infrastructure for fund flows, but now they are becoming more user-friendly and developer-friendly.

You no longer need to connect to a Banking-as-a-Service provider and go through a bunch of complex processes; you can directly use an SDK like Dynamic and get up and running quickly.

And I think the entire fintech industry has reached a consensus: everything starts with the wallet. If the wallet layer is done well, it can connect to the entire blockchain payment network.

You also mentioned some changes in customer types, from crypto companies like Magic Eden to larger enterprises now. Can you elaborate on the types of customers you have now and what application scenarios they have built on Dynamic?

Itai Turbahn:
Of course. Let's continue with the point you just made, which I think is crucial.

If you go back in time and ask Venmo, Block, or Revolut how long it takes to build financial infrastructure in a region, the answer is usually: years.

But now, if you use cloud code, development tools, and combine them with Dynamic, you can basically build a "global Venmo" in an hour. Of course, you can't go live immediately; you still need to add security, but the leap from "years" to "hours" is a fundamental shift.

As for application scenarios, I think there are three (actually four) very key ones.

The first is remittances. For example, in the Philippines, about 10%-14% of GDP comes from overseas remittances; in Nepal, it's even close to 30%. The world actually operates on remittances.

But the problems are:
First, cross-border remittance costs are high.
Second, the speed is slow (using SWIFT, it won't arrive on weekends).
Third, many people don't want to hold local currency; they want to hold dollars.

Embedded wallets + stablecoins can solve these problems:
Users can receive money instantly (24/7),
they can hold dollar value in USDC/USDT,
and they can even earn yields.

So the current model is: remittance companies create an embedded wallet for each user, allowing them to receive money directly, hold it, spend it, and even issue cards.

The second scenario is payroll.
It's essentially similar to remittances, but it's B2C. For example, if you work in Sweden but are in Algeria, you want to receive money faster, priced in dollars, and even earn yields.

The third is B2B payments.
Cross-border payments between companies are still complex, costly, and slow. Embedded wallets can optimize this issue on both ends.

The fourth is bridging CeFi and DeFi.
For example, Coinbase adds a layer of embedded wallets between centralized exchanges and DeFi as an "isolation layer," allowing users to safely access DeFi.

There are actually more scenarios, but these four are the most typical.

Chuk Okpalugo:
You just mentioned a key point: developing these applications is becoming easier, and costs are decreasing. But if technology costs really approach zero, what else remains difficult?

Itai Turbahn:
I think there are four core challenges (it might turn into five as I talk):

First, cryptography.
The first principle for engineers is: don't write your own encryption algorithms. This cannot go wrong; you must use verified solutions.

Second, security.
Companies like Fireblocks deal with global-scale security issues, even needing to guard against "nation-state attacks." This is not something you can solve with cloud code.

Third, usability (UX).
You can create functionalities, but achieving something like Twilio, where one API connects to the global communication system, is very hard to replicate.

Fourth, compliance and regulation.
You can't "write code" to obtain a license. You must apply, wait, and establish processes. This is a real-world (atoms) process.

So to summarize:
Technology is becoming simpler, but cryptography, security, experience, compliance are still moats.

Raj Parekh:
I completely agree. I even tried to write encryption logic with cloud code and found it simply doesn't work. You can't achieve security control at the low-level language level, nor can you do formal verification.

Moreover, once you're handling billions of dollars in fund flows, or systems like Fireblocks that account for a large proportion of stablecoin traffic, you cannot take any security risks.

Another point is: these capabilities directly influence "trust." If you do security well, enterprises and users will trust you.

Itai Turbahn:
Exactly. Ultimately, we want to reach a state where this industry should become "boring."

Just like banks, you don't worry about their security every day. You assume they are safe.

I even think we shouldn't have "crypto conferences" anymore; this is just part of fintech.

Chuk Okpalugo:
This is also an advantage of the recent development of stablecoins; they are gradually being treated as an independent track rather than just a part of "crypto." Especially after the FTX incident, many large financial institutions have started to pay serious attention to this field.

When you communicate with these large institutions, what observations do you have? How are they thinking about this issue?

Itai Turbahn:
I think an example will be more intuitive.

We talk to many large companies about "creator payouts." For instance, YouTube has already paid over $100 billion to creators.

These are essentially "super large-scale financial systems." Moreover, these companies have basically built their own global payment networks because there are no ready-made global solutions in the market.

But now the situation has changed:
There are new global payment rails (blockchain + stablecoins).

Their core demands are actually very simple:
Faster payments
Lower fees
Allow users to choose to receive dollars or local currency
Even keep money within the platform ecosystem (wallet + card + yields)

Essentially, this is not an "innovation issue," but rather an "efficiency issue."

Raj Parekh:
I would add that these companies used to view payments as a "risk control function," rather than an "innovation function."

But now they are starting to rethink: payments themselves can also become product capabilities.

The challenge is that this represents a cognitive leap for them. For example, you are already doing video, hardware, and new businesses, and now you also need to understand stablecoins.

So the role of infrastructure providers is to simplify this process.

Chuk Okpalugo:
Returning to a core question: will the industry remain the same in the future? Will these large companies still prefer not to manage payments and leave it to suppliers?

At the same time, must payment companies support all capabilities, including fiat, cross-border, stablecoins, etc.?

What does this mean for the industry landscape?

Itai Turbahn:
I think M&A will continue, and the path will not be linear.

The current situation is:
Blockchain companies are acquiring payment companies
Exchanges are acquiring partners
Traditional payment companies are entering crypto

This is a highly cross-sectional market.

But if you look at it from a macro perspective—this is the global financial industry.

And the financial industry has never been "winner takes all."

You have different regions, different products (BNPL, wallets, banks, etc.), and no single company can cover everything.

So what will happen in the future?
Each player will expand their capabilities from their own perspective.

For example:
PayPal is doing crypto
BNPL companies are integrating crypto
Payment companies are expanding into stablecoins
Even cloud vendors may enter in the future

There won't be a "super integrator."

Moreover, customer needs vary greatly; different industries, countries, and scenarios require completely different solutions.

That's why M&A is "chaotic," because this market inherently has no standard answers.

Raj Parekh:
I agree; it fundamentally starts from customer needs. Large companies will be "forced" by customers to make build/buy/partner choices.

For example, Mastercard's banking clients are already asking: how do we do stablecoins?

Similarly, Payoneer, which serves a large number of marketplaces, is also considering issuing stablecoins and obtaining licenses.

So the changes in the entire industry are fundamentally "demand-driven."

Chuk Okpalugo:
And the combinations of financial use cases are limitless.
By country, industry, payment type (B2B / B2C / C2C), fiat / crypto, internal / external, countless scenarios can be created.

A solution that only covers part of it will leave new opportunities for other players.

This has actually been the operational mode of the financial industry all along.

Itai Turbahn:
I completely agree. And I want to add:

There are now more opportunities for entrepreneurship than ever before, not fewer.

Chuk Okpalugo:
A fantastic summary. Itai, it's great to have you on the show.

Itai Turbahn:
Thank you for having me.

If anyone wants to learn more, you can visit dynamic.xyz or the Fireblocks website, or find me on Twitter.

If you're working on crypto-related products, you're likely to use Dynamic, and we would be happy to chat.

Chuk Okpalugo:
Thank you all for listening to Money Code. If you enjoyed this episode, please share or give us a five-star rating. See you next time.