A16z crypto led a $10 million raise for startup The Better Money Company, which says it is developing the "critical missing connectivity layer" needed to make the stablecoin ecosystem function properly.

The Better Money Company compared today's stablecoin market to how fragmented the U.S. dollar was in the 19th century. The firm said that during that era, private banks issued their own banknotes, and it wasn't until clearinghouses emerged that the situation improved.

"Clearinghouses solve a fundamental coordination problem. They transform a fragmented many-to-many market into a unified network, so systems can scale," The Better Money Company said in a statement. "In a world with hundreds of stablecoins, which we believe is fast approaching, a clearinghouse is necessary. We’re building it."

The firm argues that as new stablecoins proliferate and market leaders like Tether and Circle see the supply of their USD-pegged tokens grow, the ecosystem as a whole will need to be better stitched together. The current situation is costly and not automatic, argues The Better Money Company.

According to the startup, Paxos, Bridge, MoonPay, Agora, M0, Bastion, Frax, Brale, MetaMask, and Phantom all intend to join the clearinghouse.

Besides a16z crypto, BoxGroup, Sunflower Capital, The Fintech Fund, Art Levy, Michael Tannenbaum, Patrick McHenry, Sean Neville, Charlie Songhurst, Will Manidis, Chris Harmse, Packy McCormick, and Adi Goel also participated in the round.

Former a16z investor Sam Broner founded The Better Money Company. Adam Zuckerman is listed as a co-founder.