KAST Raises $80M to Build the Global Neobank on Stablecoin Rails

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast. Written by Simon Taylor of Fintech Brainfood and Shwetabh Sameer of Molten Ventures.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

In This Week's Edition:

📣 Simon's Market Readout – SoFi and Mastercard partner to settle card transactions with stablecoins — Mastercard's competitive response to Visa's USDC playbook.

🚀 Stories You Can't Miss:  KAST raises $80M at a $600M valuation as the stablecoin neobank thesis proves out. Nasdaq picks Kraken to distribute tokenized stocks globally. And Jack Dorsey publicly embraces stablecoins as a company-wide direction for Block.

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Simon’s Market Readout 💬 

SoFi and Mastercard have done a partnership that just looks like a headline to the casual observer. But if you scratch a little deeper, it's a lot more interesting.

SoFi's fully reserved US dollar stablecoin, SoFi USD, will support settlement across the Mastercard network. Together, SoFi and Mastercard are going to explore how issuers and acquirers can settle card-based transactions with Mastercard using SoFi USD.

The idea here is that it enables faster settlement options for Mastercard customers. And this is especially important in cross-border remittances and B2B money transfers.

So what does this actually mean in practice?

1. The use case is real and specific. Let's say you are making a transaction in Brazil with a neobank based in Brazil, but the merchant is based in the United States. Maybe that takes three days for the merchant to get paid. But if there is a stablecoin being used underneath the hood for the settlement of that, then we don't rely on the correspondent banking system to move that money. You can settle that stablecoin as an issuer or acquirer in real time in SoFi USD.

2. This is a competitive response, and the competitor is Visa. If this all sounds familiar, it's the exact same thing Visa has been promoting with USDC for quite some time. So what's fascinating is it's SoFi here. And SoFi, of course, has the ability to make this available inside of Galileo, its captive issuer processor company. So they're getting started somewhere. And the goal here is to make it faster, cheaper and safer for people to move money around the world, but at the same time, really catch up on what our good friends at Visa have been doing for quite some time and potentially make this the default way of settling with the card networks.

3. This is still a pilot — but the weak signals matter. A lot of what Visa is doing is still probably quite early. But you can see the weak signals here that really point to how payments infrastructure itself is being radically reshaped for the next decade.

Stories You Can't Miss 📰

🚀 KAST Raises $80M Series A at $600M Valuation - The Stablecoin Neobank Thesis Goes Mainstream

Key Points:

• KAST, a stablecoin-powered financial platform founded by former Circle executive Raagulan Pathy in July 2024, raised $80 million in Series A funding co-led by QED Investors and Left Lane Capital, with Peak XV Partners, HSG (formerly HongShan), and DST Global Partners also participating

• In under 18 months, the company has scaled to 1 million+ users and ~$5 billion in annualized transaction volume, with revenue doubling since September 2025 and a $100M ARR target for 2026

• KAST offers USD-denominated accounts in 150+ countries, cross-border payouts to 190+ markets, and a Visa card - all on stablecoin rails, none of the correspondent banking overhead

• The company has hired 250+ people from Stripe, Revolut, Binance, Circle, and Airwallex, and will use fresh capital to expand into Latin America, North America, and the Middle East

The Tokenized Take:

When Raagulan Pathy joined us on the Tokenized Podcast four months ago, he was blunt: during his time at Circle, moving money via stablecoins was often faster than a bank's own internal treasury system. Not a crypto outsider making claims - someone who built Circle's USDC business across Asia and saw the gap firsthand. His pitch when he left to start KAST was simple: the biggest stablecoin opportunity isn't issuing them or building the rails. It's building a global neobank on top of them. Own the consumer relationship and build an experience around them. Don't get disintermediated by sitting behind someone else's distribution.

The market was skeptical. Stablecoins had a use case. It was called trading. Nobody was talking about them as the backbone of everyday financial services for a billion people.

Sixteen months later, the skeptics have a problem. 1 million users. $5 billion annualized volume. Revenue that has doubled since September. And a cap table that reads like a thesis gaining converts: Peak XV and HSG at seed, now QED, Left Lane and DST Global at Series A. That's fintech infrastructure conviction capital, not crypto speculation money.

The QED connection deserves special attention. When Nigel Morris's firm invested in Nubank's Series A in 2014, conventional wisdom held that a digital challenger couldn't crack Brazil's banking oligopoly. Twelve years and 112 million customers later, Nubank is worth ~$60 billion. QED's thesis was structural: legacy banking infrastructure created a cost floor so high that a digitally native competitor could build an entirely new customer segment underneath it - people the incumbents couldn't profitably serve.

QED is making the same bet with KAST, except the structural advantage is wider and the addressable market is global. Nubank replaced branch infrastructure with mobile infrastructure within a single market. KAST is replacing correspondent banking with stablecoin rails across 150+ countries simultaneously. A $200 remittance through Western Union costs $10-14 in fees and takes days, unless you prefund the account. The same transfer on stablecoin rails costs cents and settles in seconds. Where Nubank's cost edge was measured in percentage points, KAST's is measured in orders of magnitude.

And unlike a traditional neobank, KAST doesn't need banking licenses in 150 countries. Stablecoin rails route around the licensing requirements that historically made global distribution a game only the largest banks could play.

We've spent months covering the infrastructure wars - Coinbase acquiring BVNK, Mastercard buying Zerohash, Klarna launching KlarnaUSD, Citi adding stablecoin payouts. All essential plumbing. KAST is making a different bet - that the company closest to the end users captures more value than the company moving the money.

The logic is straightforward: issuers capture the float, infrastructure providers capture basis points on volume, but the company that becomes the default USD account for someone in Manila or São Paulo captures something far more durable - a banking relationship on rails that are 90% cheaper than the system they replace.

The $600 million valuation is priced on trajectory, not current revenue - the company is targeting $100 million ARR for 2026 but isn't there yet. That's venture math: investors are underwriting the growth curve, not the snapshot. If KAST hits that target, the next round could price it north of $2 billion.

The stablecoin market hit $310 billion in total supply this week. February transfer volume: $1.8 trillion. The debate about whether stablecoins have consumer utility is settled.

The race to own the distribution layer is not.

🚀 Nasdaq and Kraken Partner to Distribute Tokenized Stocks Globally

Nasdaq has chosen Kraken's xStocks platform as its distribution channel for tokenized versions of publicly listed stocks, targeting European and international markets with launch expected in H1 2027. Separately, Nasdaq partnered with Boerse Stuttgart Group's Seturion to build the post-trade settlement layer across its European trading venues. Together, the two partnerships rebuild the capital markets stack on blockchain rails: Seturion replaces the traditional Central Securities Depository function, while Kraken replaces the broker-dealer distribution layer. The announcement follows ICE's strategic investment in crypto exchange OKX at a $25 billion valuation - putting both of America's dominant exchange operators on the same strategic path in the same week.

Key Points:

• The partnership builds an "equities transformation gateway" that allows tokenized equities to move between Nasdaq's regulated, permissioned market environment and permissionless DeFi ecosystems. This isn't a simple distribution deal - it's interoperability infrastructure connecting two fundamentally different market structures.

• xStocks has already proven demand. Since launching less than a year ago, the platform has processed over $25 billion in transaction volume with 85,000+ unique holders. In February 2026, Kraken expanded xStocks to Deutsche Börse's 360X platform ahead of the Nasdaq partnership.

• Seturion handles post-trade settlement under Europe's DLT Pilot Regime and MiFID II. Seturion is seeking authorization from BaFin under the DLT Pilot Regime, the EU's regulatory sandbox specifically designed for DLT in securities trading and settlement.

• The U.S. is explicitly excluded. Kraken's announcement states xStocks "are not registered under the U.S. Securities Act and are not available in the United States." Reuters' language about "jurisdictions where it's allowed" is diplomatic - the U.S. and likely the UK are out.

• Nasdaq's design points to a two-track architecture. Press materials cite both the September 2025 SEC proposal for domestic tokenized settlement and a 2026 SEC Staff Statement, describing a system bridging "permissioned markets, DTCC settlement pathways, and permissionless networks." Two distinct products are developing in parallel: a domestic DTC-integrated offering pending SEC approval, and an international permissionless product through xStocks.

• ICE's (owner of NYSE) concurrent OKX investment creates a direct competitive track. Both of America's largest exchange operators have concluded that crypto exchanges are the distribution partners for tokenized equities.

The Tokenized Take:

We covered Nasdaq's SEC filing in our September 10, 2025 edition, when the exchange proposed letting brokers flag "tokenized settlement" for any stock or ETF, with DTC handling everything behind the scenes.

We said the killer app for onchain finance would be tokenized stocks, not DeFi speculation, and that success depends on making blockchain feel like better traditional finance.

Six months on, the conviction has deepened but the geography has shifted. The domestic tokenization play - same order book, same CUSIP/ISIN, DTC settlement - appears stalled in SEC review. Rather than wait, Nasdaq is going international through Kraken first. Same playbook we've watched across stablecoins: build where the regulatory framework exists, prove the model, bring the evidence back to U.S. regulators.

The architecture is important because the two partnerships solve different parts of the capital markets stack.

• Kraken replaces the broker-dealer distribution layer - the entity that faces end customers and executes trades.

• Seturion replaces the Central Securities Depository - the entity that holds securities records and handles settlement finality.

Nasdaq sits on top as listing authority and matching engine. A full capital markets infrastructure rebuilt on DLT rails, each layer mapped to a clear European regulatory framework.

The choice of Kraken tells you where the users are. Nasdaq could have partnered with any European broker or digital securities platform. They chose a crypto exchange with 13+ million registered users and $25 billion in tokenized equity volume already processed (via xStocks). Citadel's $200 million investment in Kraken looks increasingly like a bet on Kraken becoming the bridge between TradFi products and crypto-native distribution.

One nuance worth watching: the current xStocks product and the future Nasdaq equity token may not be identical instruments. xStocks today are issued by Backed Assets under a Base Prospectus -they provide tokenized exposure to equities, not direct ownership. Nasdaq's equity token design, launching H1 2027, is described as preserving the underlying rights associated with company shares. Whether that means direct equity representation or an enhanced version of the current structure will matter for institutional adoption. Asset managers with fiduciary obligations need to know exactly what they're holding.

It’s also important to flag the risk: liquidity fragmentation. Tokenized shares on Kraken and traditional shares on Nasdaq create two pools for the same security. Market makers need to price both venues, spreads will differ, and block traders face execution decisions across two order books. Whether tokenized distribution creates net new liquidity by unlocking international capital that can't easily access U.S. equities today, or simply splits existing pools, determines whether this scales.

Then the two-track question institutions should watch. When the SEC does approve domestic tokenized settlement, does xStocks register under the Securities Act and open to U.S. investors? Or does the domestic product remain a separate DTC-integrated offering while xStocks stays the international permissionless product? The answer will determine whether we get a unified global market for tokenized equities or a fragmented patchwork of regional products with different regulatory wrappers around the same underlying shares.

The broader signal is clear. ICE investing in OKX and Nasdaq partnering with Kraken in the same week means the formation lap is over. H1 2027 is when we find out whether institutional order flow follows.

💸 Jack Dorsey Says the Quiet Part Out Loud: Block's Bitcoin Purist Publicly Embraces Stablecoins

If you've been reading this newsletter, this isn't exactly new. Back in November, Cash App's Bitcoin Product Lead Miles Suter told the world he'd "build on stablecoin rails natively" if he were founding Cash App today. The product had already shipped -stablecoin-to-fiat conversion for 58 million users, chain-agnostic by design, USDC and Solana at launch. Block's product team made the call months ago.

What's new is Dorsey himself publicly admitting it -and critically, framing it as a company-wide direction rather than just a Cash App feature. That distinction matters.

Key Points:

• Dorsey publicly acknowledged Block's move into stablecoins. His framing as a company-wide initiative strongly signals Square merchant integration is on the roadmap -though he stopped short of confirming it explicitly

• Cash App had already launched stablecoin support for its ~58 million consumer users, converting stablecoins to dollars automatically on receipt

• Block has simultaneously cut roughly 40% of its workforce, citing AI-driven restructuring

• Dorsey remains philosophically skeptical, stating "I don't think it's wise to go from one gatekeeper to another" -referring to centralized stablecoin issuers

• Competitors Stripe (Bridge acquisition, Tempo), PayPal (PYUSD), and Klarna (KlarnaUSD) had already moved aggressively

The Tokenized Take:

Cash App adding stablecoins was interesting. If Square follows,  and the company-wide framing suggests it will, that's where the real commercial impact sits.

Cash App's consumer integration was a B2C play - ~59 million users, stablecoin-to-fiat conversion, clean UX. But that's the demand side. Square is the supply side. Square processes over $200 billion in annual gross payment volume across millions of merchants. If those merchants can eventually accept stablecoin payments and settle instantly -bypassing card network interchange fees of 2-3% - the economics shift dramatically. That could well be what forced this from a quiet Cash App feature into a public, company-wide signal from Dorsey himself.

Consider the competitive pressure from the merchant side. Stripe's merchants already have access to stablecoin rails through Bridge. PayPal's merchants can accept PYUSD. If you're a Square merchant watching your competitors settle cross-border payments instantly at near-zero cost while you're still paying interchange fees and waiting for next-day settlement - you're going to start asking questions. And enough of them clearly did.

The regulatory environment sealed it. The GENIUS Act gave stablecoin issuers a clear compliance pathway. You can't argue "too risky" when the regulator has handed you a rulebook.

Dorsey's philosophical objection - that stablecoin issuers are just new gatekeepers - is honest. And he's not entirely wrong. But the market doesn't wait for philosophical purity. Lightning couldn't deliver dollar-denominated, instant, near-zero-cost merchant settlement at scale. Stablecoins did. And when both sides of your platform - consumers on Cash App and merchants on Square - are likely asking for the same thing, the CEO's ideological preferences become secondary to the business case.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Wells Fargo Files Trademark for 'WFUSD,' Signaling Stablecoin Ambitions (Read more here)

• Mastercard Launches Crypto Partner Program with 85+ Companies Including Binance, Ripple, PayPal (Read more here)

• European Central Bank Unveils Appia Roadmap for Tokenized Finance to Bolster EU Financial Autonomy (Read more here)

• Aon Tests Stablecoin Payments for Insurance Premiums with Coinbase and Paxos (Read more here)

• Tokenized Real-World Assets Climb to $23.6B, Up 66% in 2026 (Read more here)

• Tokenized Stocks Surpass $1B as Ondo and xStocks Dominate Sector (Read more here)

• Ontop Taps BVNK to Add Stablecoins to Global Payrolls (Read more here)

• Broadridge and Crypto.com Connect to Enable Crypto Order Routing for Brokers via Nyfix (Read more here)

• Mastercard and Google Unveil 'Verifiable Intent' Trust Framework for AI-Powered Commerce (Read more here)

• Coinbase-Backed x402 AI Payments Protocol Processes Just $28K Daily Despite $7B Ecosystem Valuation (Read more here)

• Nasdaq Partners with Boerse Stuttgart's Seturion to Advance Tokenized Settlement in Europe (Read more here)

• Hyperliquid's Tokenized Futures Hit $1.2B as Traders Bet on Oil and Stocks (Read more here)

• Coinbase Debuts Crypto Futures for European Traders via MiFID II License (Read more here)

• Revolut Gains Full UK Banking License (Read more here)

🤑 Funding and M&A

• Zcash Open Development Lab (ZODL) Raises $25M from a16z, Paradigm, Coinbase Ventures (Read more here)

• Stablecoin Startup SquareFi Emerges from Stealth for Global Business Payments (Read more here)

• Ripple Targets April for Australian Financial License via Acquisition of BC Payments (Read more here)

• Anchorage Digital Makes Strategic Investment in Security Firm Immunefi (Read more here)

• Bitpanda Reports $430M Adjusted Revenue in 2025, User Base Grows 25% (Read more here)

💼 Government & Policy

• FDIC Chief Says Stablecoins Won't Get Any Kind of Deposit Insurance Under GENIUS Rules (Read more here)

• US Bank Lobby (BPI) Considers Suing OCC Over Crypto Firms' Banking Charters (Read more here)

• CFTC Chair Selig: 'America Is Now the Crypto Capital of the World' as Digital Asset Rules Take Shape (Read more here)

• US Treasury Report Identifies Technology Tools to Counter Digital Asset Crime Under GENIUS Act (Read more here)

• US Treasury Says Lawful Crypto Users May Use Mixers for Financial Privacy (Read more here)

• Senator Alsobrooks and Tillis Working on Crypto Market Structure Compromise (Read more here)

• Australia's ASIC Fintech Chief: Crypto Should Be Regulated by Economic Substance, Not Technological Form (Read more here)

• White House Cyber Strategy Puts Crypto and Blockchain Under Federal Protection Umbrella (Read more here)

• Ghana Opens Crypto Trading Sandbox with 11 Firms Under New VASP Law (Read more here)

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