Klarna Launches KlarnaUSD as Mainstream Fintech Pivots to Stablecoins

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast Simon Taylor of Fintech Brainfood, Pet Berisha of Sporting Crypto, 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. 

Join us every week as we meet your Tokenization needs.

Simon’s Market Readout 💬 

There's a meaningful amount of fear in the markets at the moment. As prices dip and worries of an AI bubble hit, people tend to react with fear first. Yet it's a timely reminder that hype and hyperbole is not where value is. Value comes from solving real problems.

We talk about the K-shaped economy - where stock prices grow higher, while the real lives and incomes of people continue to struggle. But there's potentially also a K-shaped digital asset market, where the value of solving real problems with stablecoins continues to grow higher, even as the asset prices go lower.

The decoupling of stablecoins from crypto prices has been the single most important thing to happen in the digital asset market in its existence. This is the definition of true product-market fit. Even the most ardent long-term banker will tell you that they see meaningful value in stablecoins - for exotic-to-exotic currency pairings, last-mile payment delivery, or global treasury collections. And their clients are asking about it. Roughly half are just curious, another 30% want to know more, and about 20% of the corporates are seeing real value and actively demanding that their banks offer stablecoins compatibility.

This explains why Citi is making the rounds, talking up its digital assets practice and its ability to tokenize deposits. It's why many banks are promoting their token services. Some skeptical bankers will point out they already have internal 24/7 transfer capabilities without tokens. But banks tokenizing their deposits on internal ledgers have a different view: sure, we can do it internally today. But we intend for this to go open loop. The market just hasn't agreed on how yet.

Project Agora and SWIFT and many others have been tiptoeing towards this for some time. But are we tiptoeing towards a tipping point? Are we finally at a place where we can take real action? Where there's enough regulatory clarity in the US, between stablecoins and tokenized deposits, to build a proper market structure?

Because it's not about market prices. It's about market value. Isn't that what the great Warren Buffett once said: 'Price is what you pay, value is what you get.'

Stories You Can't Miss 📰

🚀 Klarna Launches KlarnaUSD: The BNPL Giant's Play to Become a Global Neobank

In 2022, Klarna's CEO dismissed Bitcoin as a "decentralized Ponzi scheme/fraud." Fast forward to February 2025: "Ok. I give up," he tweeted.  Now the Swedish BNPL giant is launching KlarnaUSD, a dollar-backed stablecoin built using Stripe's Bridge platform and launched on Tempo, the payments-focused blockchain developed by Stripe and Paradigm.

Key Points:

• Infrastructure partnership: KlarnaUSD is issued using Stripe’s Bridge and runs on Tempo blockchain, making Klarna the first bank to launch on Tempo

• Phased rollout: Launching first for internal treasury operations, then expanding to consumer and merchant settlements. A logical path from there is P2P and remittances

• Scale advantage: Klarna processes ~$112 billion annually across 114 million customers in 45 markets

• Industry momentum: Follows Cash App's stablecoin launch last week and recent moves by Robinhood, while Revolut and Nubank explore similar strategies

The Tokenized Take:

What changed? Stablecoins achieved product-market fit.

A good share of Klarna’s ~$112 billion relies on correspondent banking networks - meaning 2–3-day settlement windows, FX spreads and intermediary fees on every cross-border transaction. KlarnaUSD eliminates those costs. They can hold working capital in dollars, move funds 24/7 globally, and generate yield on reserves without touching a bank.

Klarna’s approach looks institutionally mature. Starting on Tempo’s testnet effectively makes KlarnaUSD an internal tool first, building operational expertise and regulatory comfort before it touches consumers. From there, extending stablecoin support into everyday and merchant payments would unlock network effects and directly attack one of Klarna’s largest cost centers: cross-border settlement. And if Klarna eventually pushes into retail remittances, it would put them head-to-head with Western Union, with better unit economics and 114 million existing customer relationships

The Stripe partnership solves the build-versus-buy calculation. Bridge provides institutional custody and compliance infrastructure that would take years to develop independently. Tempo offers a payments-optimized blockchain to avoid the "noisy neighbor" problem  of general-purpose chains, where NFT mints or memecoin trading can disrupt transaction processing. Additionally, Stripe is positioning Tempo and Bridge as neutral infrastructure. For a consumer bank like Klarna, that may feel less competitive than partnering with branded issuers like Circle or Paxos, whose business models also touch end-user financial services.

The economics are compelling. Capturing just 1% additional margin by removing correspondent banks adds up to $1 billion in annual revenue opportunity on Klarna's current volume. But the longer-term play extends beyond internal operations. If Klarna successfully deploys stablecoins for treasury and merchant settlements, they build the competency to offer these capabilities as B2B infrastructure - positioning against Stripe rather than just using their stack. With 114 million consumers and thousands of merchant relationships, Klarna could provide white-label stablecoin treasury services to other fintechs facing similar correspondent banking challenges.

The pattern is accelerating. Last week, Cash App rolled out support for stablecoin transfers last week, with similar institutional ambitions. Robinhood joined the consortium launching USDG earlier this year. Revolut is actively exploring issuance. Nubank integrated USDC. These are mainstream fintech players rebuilding their core payment infrastructure around stablecoins because the unit economics are superior to traditional rails. The thesis is consistent - stablecoins let non-banks offer bank-like services (treasury management, FX, cross-border payments) without banking charters, correspondent relationships, or traditional capital requirements.

Watch the cadence: these announcements are coming weekly now, not quarterly. Each major fintech that launches validates the infrastructure for the next player considering entry. Network effects compound as more companies accept stablecoins for settlement, reducing the distribution challenge that previously kept companies on the sidelines.

The next 12 months will determine whether stablecoin-based settlement becomes the default for fintech treasury operations or remains a niche optimization. Based on the velocity of announcements, the market has already decided.

🏛️ Kraken Files for IPO After $20B Private Valuation: Citadel's Bet on Digital Asset Infrastructure

Kraken confidentially filed for a U.S. IPO days after closing an $800 million funding round at a $20 billion valuation - 33% higher than September's $15 billion round. The timing looks odd: Bitcoin just crashed from ~$126,000 to ~$90,000, wiping $1 trillion from crypto markets in six weeks. But here's what changed: Citadel Securities invested $200 million.

Key Points:

• Strong fundamentals: $1.5 billion revenue in 2024 (up 128% YoY), $424 million adjusted EBITDA, already surpassed full-year 2024 revenue in first nine months of 2025

• Institutional backing: $200 million from Citadel Securities, a long-time crypto skeptic that has only recently started ramping direct exposure

• Vertical integration: $665 billion trading volume in 2024, $42.8 billion client assets, integrated stack across custody, clearing, settlement, futures, tokenized equities, and payments

• Strategic timing: Co-CEO Sethi confirmed "sufficient capital to operate privately" - filing because the window is open, not because they need money

The Tokenized Take:

Ken Griffin's Citadel Securities spent years avoiding crypto. Now they're writing $200 million checks. In Kraken’s announcement, Citadel highlighted "liquidity provision, risk management, and market structure" - the same language they use for traditional market making businesses. That's the headline.

Now compare this with Gemini's September IPO. Gemini filed with widening losses and declining revenue for 2025 H1 vs 2024H1. Kraken is profitable with revenue growing triple digits. The market responded: Kraken's valuation jumped 33% in two months while Bitcoin fell 30%.

Crypto exchanges used to trade as leveraged Bitcoin bets. When BTC dropped 30%, exchange valuations typically fell ~50%. Kraken's valuation increased during Bitcoin's worst stretch of the year. Institutional investors are pricing infrastructure value, not speculative correlation to token prices.

Here's why: Kraken processes $665 billion annually across spot, derivatives, custody, and settlement. They hold $42.8 billion in client assets with 2.5 million funded accounts. Average revenue per customer exceeds $700 – a level Kraken says is higher than any comparable traditional or crypto exchange. Their vertical integration spans custody through clearing to tokenized equity trading. That's financial infrastructure, not a crypto app.

Citadel dominates traditional equity market making. They see similar infrastructure needs emerging in digital assets, with comparable revenue opportunity from spreads, clearing fees, and settlement services. They're not betting on Bitcoin going to $200,000. They're betting Kraken becomes the primary liquidity venue for institutional digital asset trading.

The IPO window opened because regulatory clarity improved, not because crypto prices rallied. The GENIUS Act provides stablecoin framework. The SEC dropped its lawsuit earlier this year. Banking relationships normalized for compliant platforms. Kraken's co-CEOs said they don't need the capital – their balance sheet is already well capitalized. What this means is that they're filing for investor liquidity and employee equity.

Compare the capital strategy to peers: Robinhood raised $800 million pre-IPO at $11.2 billion, went public at $32 billion. Coinbase raised $547 million pre-IPO at $8 billion, debuted at $85 billion. Kraken raised $800 million at $20 billion while stating they're adequately capitalized. They're choosing to go public from a position of strength.

Public markets will decide whether to price Kraken as a crypto exchange (speculative, volatile, correlated to BTC) or financial infrastructure (recurring revenue, institutional clients, diversified revenue streams). Citadel's involvement suggests traditional market structure investors see the NYSE of digital assets - critical plumbing for an emerging asset class.

If Kraken IPOs successfully at $20 billion+ while Bitcoin trades at $90,000, it proves digital asset infrastructure companies can access public markets based on business fundamentals rather than token price momentum. That opens pathways for Fireblocks, Anchorage Digital, and other infrastructure players who've been waiting for "favorable crypto conditions."

The S-1 filing in Q1 2026 will also show revenue composition (spot vs. derivatives vs. custody), customer concentration, and margin sustainability. But Citadel's pre-IPO investment at a premium valuation during a market downturn already answered the core question: institutional capital is backing digital asset infrastructure regardless of where Bitcoin trades next week.

🚀 Cross River Bank Launches Stablecoin Payment Rails: The BaaS Model Goes Onchain

Cross River Bank launched stablecoin payment infrastructure integrated directly into their real-time core banking system, COS. The platform unifies fiat and stablecoin flows through a single system - enabling companies to move money across blockchain networks and traditional rails without building new ledgers or restructuring operations.

Key Points:

• Integrated infrastructure: Stablecoin payments run through Cross River's existing real-time core (COS), unifying fiat and onchain flows in one system

• No separate blockchain infrastructure needed: Companies can tap stablecoin rails through Cross River’s existing banking infrastructure, without standing up their own blockchain nodes or wallet infrastructure.

• Regulatory backing: Cross River operates as a federally regulated sponsor bank, providing compliance infrastructure for fintech partners

• Existing crypto relationships: Cross River already partners with Coinbase and other digital asset platforms for banking services

• Current rollout: Currently available only to approved partners in select states, with broader availability planned

The Tokenized Take:

Cross River just extended the Banking-as-a-Service (BaaS) model to stablecoins. They already power payments for Affirm, Stripe, Coinbase and dozens of fintechs that don't want to become banks themselves. Now those same partners can access stablecoin rails through their existing Cross River integration. Same bank relationship, new payment option.

Rather than building a siloed ‘crypto offering’ that operates independently from their core banking system. They integrated stablecoin payments directly into COS - their real-time banking core. A fintech company currently using Cross River for ACH, wires or card issuing can add stablecoin payments under the same bank relationship and compliance stack - likely with far less integration work than building their own blockchain stack.

This directly targets the distribution problem for stablecoins. Circle and Tether have $250+ billion in combined supply, but most companies struggle to integrate blockchain payment rails. They lack technical expertise, compliance infrastructure, and banking relationships. Cross River packages all three into their existing BaaS offering. Companies get stablecoin payments the same way they get ACH - through their bank.

A company wanting to accept stablecoin payments typically needs blockchain node infrastructure, wallet custody solutions, fiat on/off ramp relationships, AML compliance for crypto transactions, and treasury management across multiple networks. Cross River reduces that operational friction significantly.

The timing works. The GENIUS Act provides federal framework. The OCC issued guidance on bank-issued stablecoins. Banking regulators shifted from "avoid crypto" to "manage crypto risk appropriately." Cross River is betting that regulated banks offering stablecoin infrastructure will capture market share from unregulated crypto platforms.

With $20 trillion+ in annual stablecoin transaction volume, we're past retail speculation. While a large portion is still DeFi activity, an increasing portion of this volume reflects institutional treasury operations, international remittances and B2B payments settling in USDC or USDT. Cross River is building the plumbing for those flows to integrate with traditional banking.

Stablecoin payments now become a product differentiator for BaaS providers. If Affirm, Stripe, or other major fintechs enable stablecoin payments through their Cross River integration, it validates the infrastructure thesis. Stablecoins become just another payment rail, alongside ACH, wires, RTP, and FedNow, that companies can turn on without restructuring operations.

Cross River just made stablecoin adoption easier for any fintech already using their platform. And this could be the unlock for mainstream distribution.

🏛️ Paxos Acquires Fordefi - Stablecoin Issuers Race to Control the Full Stack

Paxos just acquired Fordefi for a reported deal of over $100 million - its second acquisition this year after Membrane Finance in February. Fordefi is an institutional-grade MPC wallet provider safeguarding $120 billion in monthly transaction volume across 300 clients including hedge funds and market makers. The deal follows a clear pattern: Stripe (after acquiring Bridge) bought Privy in June, Fireblocks acquired Dynamic for a reported deal of $90 million in October, and Ripple bought Palisade earlier this year. Stablecoin issuers and infrastructure providers are racing to control the full stack.

Key Points:

• Deal terms: Reported to be over $100 million acquisition (Fordefi valued at $83 million in last funding round); second Paxos acquisition in 2025

• Fordefi scale: 300 institutional clients, $120 billion monthly transaction volume, marketed as the first institutional MPC wallet built specifically for DeFi

• Technology: Multi-party computation wallets with developer APIs, web3 connectivity, granular policy controls for decentralized protocols

• Industry context: Follows Stripe-Privy, Fireblocks-Dynamic ($90M), and Ripple-Palisade acquisitions in 2025

• Paxos portfolio: Issues PayPal USD, USDG, and launching USDH for Hyperliquid; operates under New York State regulation

The Tokenized Take:

The strategic logic is straightforward: stablecoin issuers face a distribution problem. You can issue the most compliant, best-reserved dollar token available, but if institutions can't securely custody it or deploy it into DeFi protocols, adoption stalls. Paxos already handles regulated issuance - PayPal USD moves through traditional channels, USDG targets institutional treasury. But when those same institutions want to deploy stablecoins into yield strategies or provide liquidity on decentralized exchanges, they need wallet infrastructure that doesn't exist within traditional custody frameworks.

Traditional qualified custodians excel at cold storage and regulatory compliance. DeFi requires hot wallets that interact with smart contracts, sign transactions programmatically, and maintain multi-signature security without single points of failure. Fordefi built exactly that: MPC wallets with APIs that let hedge funds execute complex strategies while maintaining enterprise security. $120 billion in monthly volume across 300 clients proves this is production infrastructure, not experimental tech.

The acquisition creates vertical integration. Paxos mints the stablecoin, custodies it under qualified frameworks, and now provides wallet infrastructure for DeFi deployment. One vendor, complete stack, single regulatory relationship. When corporate treasuries adopt USDG for settlement, they can deploy idle balances into yield protocols without migrating to third-party providers.

The strategic insight: you don't need to win every issuance contract if you control the custody and wallet layer. Paxos lost its bid to issue USDH for Hyperliquid, but Fordefi still will allow it to provide institutional-grade wallet infrastructure for whatever stablecoins institutions deploy on that platform. The same logic applies across every DeFi venue. Circle might issue the token, but Paxos can still capture infrastructure revenue by securing it, managing it and enabling institutions to deploy it.

Every major infrastructure player is executing the same strategy. Stripe spent $1.1 billion on Bridge for stablecoin rails, then bought Privy for embedded wallets. Fireblocks acquired Dynamic to unite institutional custody with consumer wallet experiences. Ripple bought Palisade for wallet-as-a-service, GTreasury for treasury software, Hidden Road for prime brokerage, and Rail for payment infrastructure - assembling every layer of the enterprise crypto stack under one roof.

The market is consolidating around vertically integrated platforms. Banks didn't adopt cloud by integrating twenty specialized providers - they chose AWS, GCP or Azure because consolidation reduces vendor risk and simplifies compliance. Digital asset infrastructure follows the same path. When treasury teams evaluate stablecoin adoption, "Who provides custody, wallets, DeFi access, and compliance?" becomes a single vendor decision instead of procurement across multiple providers.

Paxos is betting regulated issuers who control the full infrastructure stack will dominate institutional adoption. Based on what Stripe, Fireblocks, and Ripple are executing, that's consensus, not contrarian.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• U.S. Bank Taps Stellar Network for Custom Stablecoin Trial, Backed by PwC and SDF (Read more here)

• Dinari Integrates LayerZero to Offer Cross-Chain Access to Tokenized U.S. Equities (Read more here)

• MegaETH's USDm stablecoin pre-deposit launch hits 'turbulence' amid outages and cap flip-flops (Read more here)

• KuCoin integrates with Brazil's Pix instant payment system (Read more here)

• SKALE Launches on Base in New Initiative for Onchain Agents (Read more here)

• SGX's Bitcoin and Ethereum Perpetual Futures Debut Strong with $35 Million Volume (Read more here)

🤑 Funding and M&A

• Coinbase Plans to Acquire Vector to Help Build 'Everything Exchange' (Read more here)

• Stablecoin issuer Paxos acquires Fordefi, bolstering its crypto custody and wallet offering (Read more here)

• Kalshi Goes Head to Head With Polymarket Following $1B Funding at $11B Valuation (Read more here)

• BitMine Acquires $195 Million Worth of Ethereum, Now Owns 3% of Circulating Supply (Read more here)

• Metaplanet Doubles Down: $130M Bitcoin-Backed Loan Despite $643M Unrealized Loss (Read more here)

💼 Government & Policy

• United States, Korea, and Brazil Eye Crypto Tax Crackdown (Read more here)

• MoonPay Secures New York Trust Charter, Expands Institutional Crypto Services (Read more here)

• ECB Warns Fast-Growing Stablecoins Could Transmit Financial Risks Across Borders (Read more here)

• 'Privacy Is Hygiene,' Says Ethereum Creator Vitalik Buterin After Bank Data Leak (Read more here)

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