Peak XV and HongShan, leading investors from India and China respectively, have collaborated to inject $10 million in seed funding into KAST, a pioneering digital banking platform that enables users to manage and spend stablecoins via traditional payment channels.
Additionally, a range of point-of-sale bank cards are available, which seamlessly integrate with mainstream payment provider networks, empowering customers to utilize their stablecoin balances for transactions at merchants that do not currently accept cryptocurrency payments.
The startup is focusing on emerging markets where access to USD is limited and remittance costs are high. Despite regulatory hurdles in India and China, KAST still caters effectively to the large expatriate workforce from these markets.
Raagulan Pathy, co-founder and former head of Circle’s Asia-Pacific operations, told TechCrunch that many countries’ banking infrastructures are woefully inadequate when it comes to facilitating cross-border transactions. The platform aims to significantly reduce friction when sending global payments by circumventing traditional banking systems.
As the pace of stablecoin adoption accelerates, KAST’s launch marks a significant milestone. More than 20 million people worldwide utilize stablecoins monthly, with a significant proportion found in emerging economies. Stripe’s IPO in October has signaled a growing mainstream interest in technology.
The startup encounters stiff competition from both crypto-natively born companies and established fintech firms that are rapidly entering the stablecoin space. PayPal has trailed behind its fintech peers in embracing digital currencies, while Revolut and Ripple are poised to launch their own versions of stablecoins. The tethered network appears highly consolidated, with Tether dominating a significant market share of approximately 75%.
Daniel Bertoli, co-founder of KAST, a former associate at Quona Capital, suggests that current neobanks struggle to integrate blockchain technology because their fundamental systems were not built with cryptocurrency in mind? “The future of digital banking may well be inherently global, with a foundation built upon stablecoins from the ground up,” he said.
Companions from DST Global and Goodwater Capital also participated in the round. Although KAST remains tight-lipped about its customer base and valuation, the company did disclose that its growth surpassed expectations during its initial four-month period of operation.
The startup intends to introduce a range of financial savings products and expand its remittance services while prioritizing the development of robust, stablecoin-based infrastructure.
According to Alex Svanevik, co-founder and CEO of analytics platform Nansen.ai and an early supporter of KAST, the company’s exclusive focus on stablecoins allows it to offer clients a secure refuge for their hard-earned funds when native currencies experience downturns.
As more digital nomads start receiving salaries in stablecoins, they will effortlessly sidestep traditional payment systems. With digital transactions, what once took weeks to process can now be completed instantly, essentially valueless.
Peak XV and HongShan have reunited for their inaugural collaboration since departing from Sequoia in June 2023. Companies are increasingly transcending traditional geographic limitations, with HongShan venturing into Europe and North Asia as it leverages its substantial $9 billion capital pool, while Peak XV has successfully established a foothold in the U.S.
Sequoia’s founders are reportedly in advanced stages of discussion about their future plans. If the deal materializes, it may mark the agency’s inaugural investment in India since its split.
