Sebastian Siemiatkowski spent years dismissing cryptocurrency as hype that could not deliver on its promises. The Klarna Co-Founder and CEO made no secret of his scepticism, questioning whether blockchain technology could ever match the speed, security and scale that mainstream payments demand.
Now, he seems to have changed his mind. Klarna has launched KlarnaUSD, a stablecoin that runs on Tempo, the blockchain platform owned by Stripe and venture capital firm Paradigm, putting the Swedish buy-now-pay-later provider – which handles US$118bn in annual gross merchandise value across 114 million customers – into direct competition with the card networks it has been chipping away at for over a decade.
The GENIUS Act in the US has established regulatory requirements for stablecoin issuers, giving financial institutions clearer rules to work within.
McKinsey estimates annual stablecoin transaction volumes at US$27tn, a number large enough to pull payment processors away from traditional banking rails and into blockchain territory.
Sebastian’s history with cryptocurrency has been one of public doubt. For years, he publicly questioned whether digital currencies could work at the scale and security levels required for mainstream payments.
That stance appears to have shifted as blockchain infrastructure has matured and regulatory frameworks have taken shape.
“With 114 million customers and US$118bn 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 says.
“Crypto is finally at a stage where it is fast, low-cost, secure and built for scale.” Sebastian says.
Klarna operates across 26 markets, offering instalment payment options that let consumers split purchases into smaller payments over time.
The company is in competition with Affirm, Afterpay and PayPal in the buy-now-pay-later sector, which has grown as an alternative to credit cards for managing purchases.
KlarnaUSD runs on Open Issuance, the stablecoin platform built by Bridge after Stripe acquired the company. The system lets Klarna issue dollar-denominated tokens that hold a fixed exchange rate with US currency.
The full mainnet launch is scheduled for 2026, after Klarna completes its current testing phase.
Tempo gives Klarna early access to its infrastructure, which means the buy-now-pay-later provider can test transaction speeds, costs and security without exposing the system to live consumer transactions.
This testnet phase will determine how KlarnaUSD performs before Klarna opens it up to merchants and customers.
Klarna and Stripe have worked together since 2021, when they struck a deal to handle payment processing across Klarna’s markets. That relationship has deepened over time, bringing Klarna’s instalment payment services to merchants in 25 countries through Stripe’s infrastructure.
Merchants using Stripe can now offer Klarna’s payment options without building separate integrations and the two companies handle payment processing across all 26 of Klarna’s operating markets.
The stablecoin project extends this partnership into blockchain territory, with Klarna choosing Stripe’s platform over other options as its entry point into cryptocurrency markets.
Stablecoins hold their value against traditional currencies and settle transactions in minutes or seconds, depending on which network processes them.
Cross-border payments expose the advantage most clearly: traditional banking systems route money through multiple correspondent banks, adding days to settlement times and fees at each step.
Payment providers have started building stablecoin capabilities into their platforms. Equals Money partnered with Railsr to add stablecoin functionality, while BVNK has rolled out services that let businesses accept stablecoin payments.
These companies are betting that merchants will choose blockchain-based settlement over card networks if the cost difference is significant enough.
USDC, the stablecoin issued by Circle, backs each token with cash and short-term government securities, maintaining a one-to-one ratio with the US dollar.
Payment providers use USDC and similar tokens to move money between parties without touching traditional banking infrastructure, which means fewer intermediaries taking cuts and faster settlement times.
Klarna says it will announce more cryptocurrency partnerships as it builds out its digital asset strategy.
The company processes payments across e-commerce platforms including Shopify and WooCommerce and adding stablecoin functionality to that infrastructure would let it offer merchants lower processing fees than credit card networks, which charge between 1.5% and 3.5% per transaction.
Klarna has not disclosed what it will charge merchants for stablecoin transactions, nor has it specified which types of payments will support KlarnaUSD when the system goes live. Those details will emerge from the testnet phase, which lets Klarna evaluate costs before committing to a fee structure for 2026.
Regulatory frameworks for stablecoins are taking shape across Europe, the UK and the US. The GENIUS Act in America sets out requirements for issuers around reserve maintenance, redemption processes and disclosure obligations.
Klarna’s partnership with Stripe gives it access to the compliance frameworks and technical systems that Bridge developed for stablecoin operations, smoothing the path to launching across multiple jurisdictions.
“This is the beginning of Klarna in crypto and I’m excited to work with Stripe and Tempo to continue to shape the future of payments,” Sebastian says.
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