Who provides funding for the agent?

In March of this year, OpenAI shut down a feature that allowed AI agents to shop on behalf of users. In just five months since its launch, fewer than 30 Shopify merchants had used the feature. The payment infrastructure itself wasn't the problem; the problem lay in the lack of rules to ensure a seamless shopping experience. What items could the agent buy, who would collect sales tax, how to identify fraud, and who would handle returns—all these questions remained unresolved. Providing wallets or building payment infrastructure for agents is relatively easy. But enabling individuals or businesses to use agents for purchases in a trustworthy and regulated manner is far more difficult. Only programmability and rules can ensure a trustworthy environment. This lack of governance has created an opportunity for the agent economy. Last year, AI agents processed 176 million transactions, totaling $73 million. While this number may seem insignificant now, McKinsey predicts that by 2030, AI agents will facilitate $3 trillion to $5 trillion in global consumer commerce transactions. Companies building this economic system are racing to control the governance layers, including spending control, identity verification, and policy enforcement, which determine which agents have the authority to manage budgets. Today, we'll analyze who is building the banking layers for the bots and what benefits those who dominate those layers gain. Why have a multi-layered architecture? The economics of processing agent payments are extremely low. Over the past 12 months, the average payment made by an AI agent was just 31 cents. Think about how much profit a 31-cent payment leaves for those processing transactions across multiple layers in the background. Stripe's standard pricing is a 2.9% transaction fee plus a flat 30 cents, meaning merchants actually receive less than one-tenth of a cent. Visa's exchange fees further consume a third. On the other hand, Layer-2 stablecoin payment systems process the same transaction for only $0.0001. These economic factors provide a basis for the application of cryptocurrencies at the settlement layer. The payment infrastructure at the settlement layer is largely complete. Coinbase's x402 protocol processed the vast majority of the 176 million transactions last year, and currently approximately 3,900 merchants accept proxy payments. Stripe and Tempo jointly developed a competing protocol—the Machine Payment Protocol (MPP), which launched in March and integrates over 100 services. Google, Visa, and Mastercard also launched their proxy payment products around the same time. This means that five competing payment architectures emerged in just 12 months. But the problem with proxy payments is that no one can get rich by processing 31-cent payments. Therefore, value lies in the funds in circulation and the enforcement of rules governing how agents make payments. Last week, we explained how businesses can capture value by having a wallet layer that stores the balances of AI-powered proxy stablecoins. But floating balances are just one of many valuable layers to capture. Another layer is the rules governing how floating balances are used. These rules include spending controls, agent identification, policy enforcement, audit trails, and liability allocation in case of failed transactions. This layer is completely open. In April of this year, American Express launched Agent Purchase Protection, an insurance product designed to protect against losses caused by AI agents making erroneous purchases. This effectively acknowledges the current state of governance for AI agents. Addressing governance deficiencies holds immense value in an industry projected to reach $3 trillion to $5 trillion within five years. This is why current government officials are now vying for control of the governance layer. But at what level should this layer be built? It could be a bank, a developer API, or even a wallet. The wallet as the governance layer: Every transaction by an agent must pass through the wallet. Therefore, the wallet is the best entry point for implementing spending limits, identity verification, and human approval. Once you control the wallet, you control the governance. Payment infrastructure company Stripe recognized this early on. In June 2025, Stripe acquired Privy, a company that builds embedded wallets for consumer crypto applications. Through this acquisition, Stripe gained access to 75 million wallets distributed across more than 1,000 development teams. These wallets are now at critical junctures in the flow of funds, where all policies, spending limits, and manual approvals must be executed before funds flow. Stripe has also built a complete proxy payment technology stack. It acquired Bridge to handle stablecoin coordination and fiat currency conversion. Furthermore, it partnered with Paradigm to incubate Tempo, a Layer 1 blockchain focused on payments. Stripe and Tempo jointly developed the Machine Payment Protocol (MPP), an open standard that regulates how proxies request, authorize, and settle payments. Stripe's proxy-ready financial solutions now support software-based balance inquiries, bill payments, fund storage, virtual card creation, and transfers. Agents can execute regular payments independently, but any actions outside their policy scope are reported for human review. Fund balances are powered by the non-custodial Privy wallet, which operates in over 150 markets. Even when Amazon had to allow its developers to empower AI agents with spending capabilities, it chose two wallet companies—Privy and Coinbase. Instead of experienced financial institutions like banks or credit card networks, it opted for a wallet provider that had only been established for five years. This is because wallets act as ideal checkpoints, allowing for a suitable degree of human intervention to ensure necessary checks and balances. Keyrock, in its report "Who Pays for Agents," notes that the agent business market will "tend to equilibrium, with agents possessing considerable autonomy but operating within the boundaries of cryptographic enforcement that humans can audit and revoke." This is where Privy stands within the Stripe technology stack. The wallet is responsible for setting the boundaries that agents must operate within. The following explains how the governance strategy works on this technology stack. Privy offers two smart wallet models. In the first model, the agent has complete control of the wallet and executes transactions within policy constraints, requiring no human approval. This model is best suited for fully autonomous agents such as trading bots and portfolio managers. In the second model, the user retains ownership of the wallet but grants the agent limited permissions, enabling it to act as a signer. Users can revoke access at any time. Stripe's MPP follows a similar governance strategy. MPP introduces a feature called "session" for high-frequency proxy tasks. In session mode, the agent pre-authorizes a spending budget and then continuously makes payments within that limit, without needing to issue a separate request for each on-chain transaction. MPP has implemented sub-cent billing for LLM inference and per-query billing for the data API. This is a level of governance granularity that card organizations cannot support. While Coinbase's x402 currently leads the AI-powered agent payments space, Privy's advantage has little to do with cryptocurrency itself; it's the distribution barrier it has built through Stripe. Coinbase has 3,900 merchants that accept agent payments. Stripe has approximately 1,000 merchants per merchant that accept agent payments. In February, Privy stated that if all Stripe merchants opted to accept machine payments, agent commerce could scale today through the Privy wallet. Stripe merchants do not need to build custom crypto infrastructure. The competition between Stripe and Coinbase is intensifying, with other traditional giants joining the race for vertical expansion, striving for growth across the entire technology stack. Keyrock has mapped 179 items across six layers of the proxy payments stack: settlement, wallets, routing, protocols, governance, and applications. Coinbase and Stripe each cover five of these six layers. Circle covers four. Despite its massive scale, Google covers only two, and Visa only one. Over the past twelve months, existing payment giants have spent more than $8 billion filling gaps in their technology stacks. Capital One acquired Brex, an AI-native software platform, for $5.15 billion. Mastercard acquired BVNK for $1.8 billion. The wallet and AI software layers attracted the most active acquisition activity. Stripe acquired Privy, Fireblocks acquired Dynamic, and Arbitrum acquired ZeroDev. In these cases, payment infrastructure providers acquired independent wallet providers. These transactions collectively demonstrate that the market has selected a scarce resource tier. Settlement fees have become low and interchangeable, but program production licenses, budgets, and responsibilities are where the value lies. Vertical integration across multiple layers also has a synergistic effect. Whoever owns this checkpoint can set the rules for consumption, intercept funds before they flow, determine which merchants, agents, and applications have trusted access, and charge fees for it. We see this in Privy-Stripe's distribution moat. Even Coinbase's stance reflects this operating model. Every x402 payment generates USDC demand on its second-layer, Base, resulting in floating returns. These returns fund more agent tools through AgentKit, which has built-in session limits, single transaction limits, and allow lists to restrict transfers to audited contracts. The more agents on AgentKit, the more x402 payments are generated. Each layer interacts with the others. Investment activity at existing companies is much more active. Coinbase Ventures has also invested in Catena Labs, Skyfire, and Payman, three of the most well-known independent governance startups. Circle co-founder Sean Neville founded Catena, and Circle also invested in Skyfire. a16z led funding rounds for both companies. Visa backs Payman and has partnered with Skyfire. The same companies building payment settlement infrastructure are funding the governance layer. The idea is that if governance functions, as Privy has built in both of its models, remain part of the existing infrastructure, then existing institutions can maximize their gains. If governance functions become a separate layer, they will profit through their portfolios. What does controlling the governance layer mean? Payment processing has never been the most valuable role because the financial system eventually tends to homogenize. Once this happens, profit margins shift to those who decide whether and under what conditions a transaction is allowed to occur. Historically, many industries have undergone the same commoditization process. Consider what happened after the internet commoditized cable television. All Internet Service Providers (ISPs) became virtually identical and interchangeable. As a result, telecom companies had to vertically expand to remain competitive. India's two largest telecom operators, Jio and Airtel, began bundling hundreds of TV channels, subscriptions to six OTT platforms, unlimited voice calls, set-top boxes, and free routers into a single broadband package. Similarly, AT&T acquired Time Warner for $85 billion, becoming a media and telecom conglomerate. Its aim was to combine Time Warner's premium content, such as HBO, Warner Bros., and CNN, with AT&T's vast distribution network to compete with streaming platforms like Netflix and Amazon. When broadband connectivity (the underlying infrastructure) became the least valuable part of a package, value shifted to the content, relationships, and bundled offers that were most attractive to customers. We've seen this in the cryptocurrency space as well. Settlement should ideally occur at the protocol level. Think of Ethereum as a shared ledger where everyone settles transactions. After Coinbase launched Base as a faster, less congested Layer-2 chain, it began charging gas fees for each transaction settled on its own chain. Today, Coinbase earns approximately $60 million annually in sequencer revenue by processing transactions on Base. Those involved in building proxy payment systems have learned lessons from this. In our book, *Active Buoys*, we explain how to build an economic system by controlling the stablecoin balances held by proxies between transactions. This allows companies that control the wallet layer of the technology stack to increase their revenue streams. The governance layer adds another, and potentially a larger, revenue stream. Visa processes $14.2 trillion in payment transactions annually, earning a 0.28% commission. This rate includes not only transaction fees but also the administrative fees Visa earns from the trust it builds by preventing fraud, resolving disputes, and enforcing network rules. Even applying a small fraction of this rate to proxy transactions reveals the immense value it brings to companies built on top of governance. McKinsey predicts that proxy transactions will reach $3 trillion by 2030, generating $3 billion in revenue annually even with a governance fee of only 0.1% (approximately 35% of Visa's fee). For reference, Coinbase's total subscription and service revenue in 2025 was approximately $2.8 billion. The governance revenue from proxy transactions alone would rival the combined revenue Coinbase currently earns from staking, custody, and Coinbase One. Companies with operations across the wallet, settlement, and governance layers of the proxy finance stack can profit from idle proxy balances (fluctuating revenue), settlement fees (orderer revenue per transaction), and compliance fees (executive governance). This is why vertical integration across the entire technology stack will be the only business model that allows companies to remain competitive in the proxy era.