If there was any doubt that the world is in the midst of a stablecoin craze – we hesitate to use that loaded term “bubble” – it should be dispelled by the recent launch of a stablecoin by buy now, pay later (BNPL) behemoth Klarna.
In a news release, Klarna explains its rationale for the issuance of KlarnaUSD, which is currently in a testing phase and will be available to the public on mainnet in 2026 – likely the middle of the year. Citing consultancy McKinsey, the Swedish fintech giant says that stablecoin transactions now exceed US$27 trillion a year and could overtake legacy payment networks before the end of the decade.
“With 114 million customers and $118 billion in annual GMV, Klarna has the scale to change payments globally: with Klarna’s scale and Tempo’s infrastructure, we can challenge old networks and make payments faster and cheaper for everyone,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in the news release. Klarna is the first company to launch a stablecoin on Tempo, a new independent blockchain started by Stripe and Paradigm that’s purpose-built for payments.
We aren’t holding our breath for stablecoins to relegate legacy payment networks to the dustbin of history, but we can see why Klarna’s leadership is latching onto stablecoins at this moment. With its core BNPL product facing intensifying competition, Klarna needs new engines for growth now that it is a public company that has to stand up to widespread investor scrutiny.
After several years of delays, the Swedish company finally went public on the New York Stock Exchange (NYSE) in September at a valuation of US$15.1 billion, which is about 1/3 of what it was worth in private markets back in 2021. Although the IPO itself was considered successful, the company’s share price has dropped 33% since September as investors worry about Klarna’s ability to generate sustained profits.
While Klarna’s third-quarter revenue reached a record US$903 million, its net loss widened to $95 million. Klarna says that it posted a loss mainly due to a US$235 million provision for credit losses, an accounting requirement tied to the rapid growth of its expanding Fair Financing product.
The U.S. is a key growth area for Klarna, but its credit loss rates are higher there than in its core European markets. This is partly because Klarna must compete more directly with traditional credit cards in the U.S., where its primary users tend to be consumers who need more time to pay.
Launching a stablecoin does not fundamentally address the issues with Klarna’s current business model, but it could reduce the US$32.7 billion in cross-border fees the company pays, lowering its costs and allowing it to make faster payouts to merchants.
But will this be a gamechanger?
Maybe not.
Indeed, we are skeptical that stablecoins traveling on blockchain-based payment rails – Tempo’s or anyone else’s – are going to pose a serious challenge to the interbank messaging network SWIFT, which has significantly improved the speed of transactions in recent years. Currently, 75% of payments travelling over the SWIFT network reach beneficiary banks within just 10 minutes. The interbank messaging network does acknowledge that “more work is needed at the final stage of a payment’s journey—the last mile—to address friction that delays funds from being delivered to end beneficiaries.”
At the same time, stablecoins lack a single, globally accepted regulatory framework. Rules vary significantly by country, creating complexity and uncertainty for large institutions operating across multiple jurisdictions. SWIFT, on the other hand, operates within mature and well-understood legal frameworks.
Sweden’s central bank notes that the use of stablecoins outside decentralized finance, for example for buying and selling of crypto-assets and use as collateral, is still limited but is growing rapidly in some areas. Whether this development will lead to wider use remains uncertain.
Time will tell if Klarna’s stablecoin bet pays off.