Billionaire Peter Thiel-Backed Crypto Startup Plasma Raises $20M To Develop Bitcoin-Based Stablecoin Network

Crypto startup Plasma has successfully raised $20 million in a funding round. The funds will be used to develop a Bitcoin-based blockchain specifically for stablecoins.

What Happened: The fundraising round, spearheaded by Framework Ventures, will support the launch of Plasma’s testnet and mainnet, reported Fortune on Thursday. It will also facilitate the company’s expansion into remittances, payments, and DeFi applications. This follows an earlier $4 million round with early backers including Bitfinex, Paolo Ardoino, CEO of Tether USDT/USD, billionaire venture capitalist Peter Thiel, and well-known cryptocurrency traders Cobie and Zaheer Ebtikar of Split Capital.

Plasma aims to overcome the challenges that stablecoins face on current blockchains, including high fees and scalability constraints. By utilizing Bitcoin’s BTC/USD security, it intends to enable zero-fee USDT transactions.

Paul Faecks, founder and CEO of Plasma, said, “Stablecoins are the clear winner in blockchain adoption, yet they're treated as second-class citizens on current blockchains.” According to Faecks, Plasma offers the most secure, scalable, and efficient blockchain for stablecoins.

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Why It Matters: Stablecoins, now exceeding $220 billion in supply, are increasingly utilized for daily transactions and savings. While Bitcoin remains the oldest blockchain, the majority of stablecoin activity occurs on newer networks such as Ethereum, Tron, and Solana.

Although Plasma is not charging a fee for each stablecoin transaction, Faecks remains unconcerned about its balance sheet. "This is very much a scale business, and not a ‘need to make $18 and validate our revenue per transaction' type business,” he clarified.

Plasma’s recent funding round comes at a time when the crypto market is experiencing a significant upswing. Previously, it was reported that Bullish Global, a crypto exchange backed by Peter Thiel, is contemplating an IPO in 2025.

Furthermore, Coinbase Global Inc. COIN CEO Brian Armstrong has emphasized the need for comprehensive legislation regarding token classification and stablecoins. This could potentially drive more capital into the crypto market and further boost the adoption of stablecoins.

READ MORE: Coinbase Q4 Earnings Highlights: Trading Platform Welcomes ‘Dawn Of A New Era For Crypto’

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.