Klarna is launching a dollar-backed stablecoin,KLarnaCoin (KNC),as competition intensifies in the digital payments landscape,the Swedish buy-now-pay-later giant announced Tuesday. The new cryptocurrency will be fully backed by U.S. dollar reserves and aims to facilitate smoother and more transparent transactions within Klarna’s ecosystem and beyond.
The move positions Klarna directly against other fintech firms and established players vying for dominance in the rapidly evolving world of digital currencies and payments. Stablecoins, pegged to a stable asset like the U.S. dollar, offer a potential bridge between traditional finance and the volatile cryptocurrency market, and Klarna’s entry signals a belief in their growing importance for everyday commerce. The launch will initially be available to Klarna’s 150 million global users and is expected to expand access over time, perhaps reshaping how consumers and merchants interact within the Klarna app and across the broader digital economy.KLarnaCoin will be issued by Klarna and initially available within the Klarna app in the United States and Sweden, with plans for further expansion. Users will be able to seamlessly convert their Klarna balances into KNC and use it for purchases, potentially benefiting from faster settlement times and lower transaction fees. The stablecoin is being developed in partnership with Sigil Systems, a blockchain infrastructure provider, and will operate on the Polygon blockchain network.
“We believe that stablecoins can revolutionize the way people pay,” said Klarna CEO Sebastian Siemiatkowski in a statement.”KLarnaCoin will provide our customers with a more convenient, transparent, and cost-effective way to manage their finances and make purchases.”
The stablecoin market has faced increased regulatory scrutiny following the collapse of TerraUSD (UST) in 2022, highlighting the importance of robust backing and transparency. Klarna emphasizes that KNC will be fully backed by U.S. dollar reserves held in custody by Fidelity Digital Assets, aiming to address those concerns and build trust with users. The company will publish monthly attestation reports verifying the reserves.