Klarna to Go Crypto as Part of $15 Billion IPO Plans

Klarna, one of the world’s largest fintech companies, has confirmed it will offer cryptocurrency services, a big shift for the Buy Now, Pay Later (BNPL) space. The news comes as the company prepares for its highly anticipated IPO in April this year with a $15 billion valuation.

Klarna CEO Sebastian Siemiatkowski made the announcement via X, formerly Twitter:

“Ok. I give up. Klarna and me will go crypto! More to come… Last big fintech in the world to go crypto. Someone had to be last.”

The tweet sparked a ‘lot of responses from the crypto and fintech communities, with ideas ranging from crypto payments to on-chain lending and DeFi integrations. But what does Klarna’s crypto pivot mean for the overall financial system and traditional finance (TradFi) players who have been slow to enter the space?

Why Klarna’s Crypto Matters

Based on available data, per Fintech and Crypto Adoption, Klarna has a massive global reach with 85 million users across multiple markets, Over $100 billion in transaction volume annually, 500,000+ merchants that take Klarna as a form of payment, and 1 million Klarna-issued cards.

This can drive mainstream adoption with crypto integrated into Klarna and can give access to millions of users to use digital assets for payments, lending and investing.

Fintech’s Changing View on Crypto

This is big, as most traditional fintech companies have been slow to crypto. This is a sign that the big fintech players can no longer ignore digital assets.

“Klarna has a $14.6B valuation and $96B GMV in 2023. This impacts its 85M+ users and the broader fintech space,” said Frank Schuil, co-founder of Nordic crypto exchange Safello AB.

Schuil, the co-founder, thinks Klarna could offer crypto payments within its buy-now-pay-later ecosystem, let merchants accept Bitcoin and other cryptocurrencies, and integrate a crypto wallet into its mobile app.

If Klarna does indeed integrate crypto lending and DeFi features, that would change how users interact with digital payments.

What Klarna Crypto Could Look Like

While Klarna hasn’t revealed its crypto roadmap, possible offerings could be:

1. Crypto Payments for Merchants

– Merchants using Klarna’s payment gateway can accept Bitcoin (BTC), Ethereum (ETH) and stablecoins.

– This would reduce transaction fees compared to traditional credit card processing.

2. BNPL for Crypto Transactions

– Klarna can extend its BNPL model to crypto purchases by allowing users to split payments for digital assets.

– This would lead to wider crypto adoption among retail users.

3. Integrated Crypto Wallets

– Klarna may introduce a secure, non-custodial wallet for storing, sending and receiving crypto.

– Like PayPal’s recent crypto integration, this would give access to Web3 applications.

4. Crypto Yield & Staking

– Klarna could offer staking rewards or crypto-backed savings accounts à la Nexo or BlockFi.

– This would attract yield-seeking investors.

5. Cross-Border Crypto Payments

– Klarna’s global reach can offer faster, lower-cost international payments via blockchain networks.

– This would be for merchants and consumers in high-fee remittance markets.

Regulatory Headaches Ahead

Despite the excitement, ‘Klarna’s crypto adoption may attract regulatory attention, even more so with its IPO around the corner. Financial regulators in ‘Europe and the US are cracking down on fintech companies offering crypto services, demanding:

– AML (Anti-Money Laundering) compliance.

– Licensing for crypto custody and trading.

– Consumer protection measures for digital asset transactions.

Klarna will have to walk this tightrope carefully if it’s to avoid regulator pushback ahead of its April IPO.

The Bigger Picture: What This Means for Fintech & Crypto

Klarna’s move could be the green light for many serious fintechs who need to get into crypto. Companies like PayPal already allow the buying and selling of crypto. Stripe is expanding crypto payment options. Revolut and Cash App have introduced Bitcoin services. With Klarna in, other BNPL and digital banking services may follow suit.

Also, Klarna’s crypto expansion will add to its $15 billion IPO valuation as investors see new revenue streams through digital assets, as noted. Crypto-friendly fintechs like Robinhood and Coinbase are hot with investors, and Klarna could try to cash in on this trend.

With Klarna, hundreds of thousands of merchants will overnight be able to accept crypto. Crypto adoption for payments is expected to accelerate, lower business transaction costs and open up new markets for cross-border commerce.

Conclusion

Klarna going all-in on crypto before a $15 billion IPO is a big change of heart towards digital assets for fintech. As one of the biggest BNPL providers in the world, this could make Klarna a serious driver of crypto adoption.

Regulatory hurdles are still ahead but Klarna’s move may be the playbook other fintechs follow to integrate digital payments and lending with Web3 functionality. The next few months will be telling for Klarna’s crypto plan and its IPO will be a test case for how investors perceive crypto-enabled fintech models.

Stay updated with Deythere as we’re available around the clock, providing you with updated information about the state of the crypto world.

FAQ

1. Why is Klarna getting into crypto now?

Klarna is getting into crypto because of 85M+ users asking for it and to expand its payment platform before its $15 billion IPO.

2. How will Klarna use crypto in its BNPL?

Klarna can offer crypto purchases in installments where users can buy crypto and pay later just like traditional BNPL.

3. What are the regulatory risks to the impending crypto plans of Klarna

Klarna was bound to follow all the AML laws, consumer protection measures, and financial licensing of Europe and the United States – all before the IPO.

4. Does Klarna’s crypto move affect the wider fintech sector?

Yes. Klarna’s move will further increase competition among the big fintech majors like Revolut, Stripe, and PayPal in terms of increasing their crypto offering ten times and then encouraging even more mainstream adoption.

5. How will crypto value add to the IPO of Klarna?

Adding crypto payments and services will convert Klarna even more appealing to new investors seeking in on the budding growth of crypto-enabled fin-tech and ramp up its valuation in the IPO.

Glossary

Buy Now, Pay Later (BNPL): A financing ‘option that allows consumers to buy now and pay later.

Crypto Wallet: A digital tool to ‘store, send and receive cryptocurrencies safely.

Initial Public Offering (IPO): The process’ by which a private company offers shares to the public for the first time.

AML Compliance: Regulations ‘imposed on financial institutions to prevent money laundering and other fraudulent activities.

Web3: A ‘decentralized internet ecosystem that uses blockchain for payments, identity and applications.

References

1. Klarna CEO’s announcement on X (formerly Twitter): Twitter/X
2. CoinMarketCap
3. Bybit analysis
4. Bloomberg
5. Financial Times