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The newest generation of startups aiming to solve cross-border payments are focusing on stablecoins — cryptocurrency coins often pegged to actual currencies or other commodities to help them keep stable prices — to build solutions that work faster and often cheaper than classic financial rails. This trend is also driving a surge in investor interest in fintech.
The latest development is Cedar Money, a U.S.-based startup that recently closed $9.9 million in seed funding led by global fintech investor QED Investors with participation from Lattice, NIV, Stellar and Wischoff Ventures.
Like many cross-border payment platforms using stablecoins, Cedar Money acts as a bridge. Businesses and individuals transact using a fiat-based site, while stablecoin transactions run in the background. Cedar Money plans to scale its payment infrastructure and tackle the inefficiencies in international payments with this funding, it said.
These inefficiencies are particularly painful in Africa, where businesses face higher transaction fees and hidden costs in currency conversions because of added risk and the costs of working with local banking. Banks profit from exchange rate spreads, adding another layer of expense. “If you look at the SWIFT network, fees globally are around 2-3%, but in Africa, they’re much higher. It’s even more gouging in places where people have less money,” founder and CEO Benjy Feinberg told TechCrunch.
Feinberg founded Cedar Money in 2022 after nearly a decade leading alternative financing provider Behalf. Before launching his latest venture, he spent time identifying the next “big” opportunity in fintech, ultimately focusing on payments and blockchain.
While stablecoins have struggled to gain traction in the U.S. due to limited use cases and competition with traditional systems like the dollar and SWIFT, Feinberg recognized a different reality in emerging markets.
Businesses across Africa, the Middle East, and South America need dollars to pay for imports, even when buying from countries like China. In countries like Nigeria or Argentina, getting dollars can be a struggle due to weak local currencies like the naira or the Argentine peso.
Cedar Money launched in early 2024, starting operations in Nigeria, helping businesses in the country accept and send money to others globally. “You want to go to a place where you can solve a big problem, and the adoption will be easier. That’s why we started in Africa—because the need is greatest here,” the chief executive said.
However, despite their popularity, stablecoin platforms face limitations that may affect their scale across markets.
Feinberg, when asked, explained that while building the payment rails—converting fiat to stablecoins, transferring them, and converting back—is challenging, it’s not exactly groundbreaking. According to him, the real difficulty and where Cedar Money is trying to excel lies in building the compliance rails to accommodate every country’s unique regulatory requirements and banks’ extensive documentation to ensure legitimate transactions.
These requirements are particularly tricky in markets like Africa, where infrastructure differences make seemingly simple demands—like providing a street address—much more challenging.
Feinberg argued that the winners in this space will be those who can scale their operations globally while navigating complex compliance requirements, especially in underserved regions.
“I would say the biggest challenge is to educate the banks in the developing world that the funds they’re getting from the underdeveloped world are good. It’s a challenge, but we’re doing it.”
Yet, the U.S. is setting the tone for favorable regulatory sentiment towards digital assets that could ease compliance. Many stakeholders in the industry believe this event, coupled with others like Stripe’s acquisition of stablecoin startup Bridge, will not only cause a broader acceptance of stablecoin payments but also make banks and regulators globally and in emerging markets relax their strong views on stablecoin adoption.
That adoption is beginning to reshape the global payments landscape. Charts from a16z and other sources illustrate this clearly: in 2017, stablecoin transaction volumes were negligible compared to traditional systems. Fast forward to today, and stablecoins have surpassed Mastercard, PayPal and Visa. In Q2 2024, stablecoins transactions reached $8.5 trillion across 1 billion transactions compared to $3.9 trillion in volume across fifty times more transactions.
Cedar Money, founded a year ago, processes tens of millions in monthly transaction volume by focusing on import and export businesses handling tangible goods such as rice and shoes, supported by bona fide invoices, an approach that simplifies underwriting for banks since transactions involve clear documentation and physical commodities, according to Feinberg, who declined to share client numbers.
QED Investors partner Gbenga Ajayi, citing why the global fintech firm invested in Cedar Money, says the fintech is “uniquely positioned to tackle the inefficiencies of the global financial system.”
The payments company, which has 14 staff across Nigeria, the U.S., Israel, and Serbia, is QED Investors’ fourth Africa-focused investment after Moniepoint, Precium, and Remedial Health.
Cedar Money joins a growing list of players like Conduit and Caliza, which serve businesses in emerging markets with stablecoin-powered payments. However, despite growing relevance, reaching a $205 billion market cap last year, Feinberg says their collective share of the international payments remains small, so Cedar Money has no direct competition at this stage.
“Today, two-thirds of international payments are through the correspondent banking network. The size of the biggest fiat innovators is probably 2-5% of the market. So if you’re looking at this and you’re saying, well, two-thirds are the banks, 5% are the fiat innovators, and 0.01% are the stablecoins guys. Then your competition, or your way forward, is not to compete necessarily with other players; it’s just to find your little corner because the market’s just so big.”
