Klarna launches its own dollar-based stablecoin

Swedish fintech Klarna will launch its first US dollar-based stablecoin with KlarnaUSD. The company announced this on Tuesday. According to its statements, Klarna is thus the first bank to introduce a stablecoin on Tempo, a new blockchain developed by Stripe and Paradigm specifically for payments. Currently, KlarnaUSD is limited to Tempo's testnet and is not publicly traded. In the coming year, KlarnaUSD will be introduced on Tempo's mainnet and will be fully backed by the US dollar, it says.

Given an estimated 120 billion US dollars in annual transaction fees for cross-border payments, stablecoins offer a way to drastically reduce costs for consumers and merchants, so Klarna in a press release. Stablecoins are cryptocurrencies whose value is pegged to central bank money. A KlarnaUSD is therefore always worth one US dollar. As a rule, stablecoins are secured by an equal amount of cash, debt instruments, corporate bonds, or other assets. This means that behind every dollar-based stablecoin is a US dollar. Merchants appreciate stablecoins as – as the name suggests – a relatively stable asset for moving funds between more volatile crypto assets or for cross-border money transfers.

Faster and Cheaper Payments

Payments will thus be "faster and cheaper for everyone," said Sebastian Siemiatkowski, co-founder and CEO of Klarna and once a vocal crypto skeptic, in a statement. "Cryptocurrencies are finally at a point where they are fast, inexpensive, secure, and designed for scalability. This is the beginning of Klarna in the crypto space, and I look forward to continuing to shape the future of payments together with Stripe and Tempo."

Klarna's US competitor PayPal launched a dollar-backed stablecoin two years ago as the first major fintech company. US fintech Stripe followed suit after acquiring crypto company Bridge for 1.1 billion US dollars earlier this year and also introduced a stablecoin. Just a few days ago, J.P. Morgan launched its coin as the first major US bank and promises fast, round-the-clock payments via the blockchain.

Growing Stablecoin Market

Management consultancy McKinsey estimates stablecoin transactions at over 27 trillion US dollars per year. Before the end of the decade, they could overtake traditional payment networks. At the same time, regulators are tightening control over this financial sector. Regulators in the United States and the European Union are meanwhile pushing forward with new regulations for digital assets. In July, the US Congress passed a first law to regulate stablecoins despite criticism. And the EU is also considering stronger control of exchanges and cryptocurrency companies operating in the Union.

(akn)