Sweden's Klarna launches cryptocurrency

Swedish financial firm Klarna said Tuesday it was launching its own cryptocurrency for the first time, and would announce new partners in the coming weeks.

"Crypto is finally at a stage where it is fast, low-cost, secure, and built for scale. This is the beginning of Klarna in crypto," Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in a statement.

Klarna said the announcement was the start of it "publicly sharing crypto initiatives," adding it would "reveal our next partner in the coming weeks."

The financial firm said that KlarnaUSD was a so-called stablecoin -- meaning it is backed by conventional assets such as cash or US government bonds.

It would be launched on the blockchain -- a decentralised database, with data kept across multiple computers -- Tempo which was started by US payment firm Stripe and crypto investment firm Paradigm.

"The move makes Klarna the first bank to launch a stablecoin on Tempo," the company said.

The cryptocurrency was currently being tested on Tempo's "testnet" and therefore not publicly available, but it would launch to the public in 2026.

"Klarna sees stablecoins as a way to dramatically reduce costs for both consumers and merchants," it added, spotlighting the potential to bypass cross-border transaction fees.

The company also noted that analyst firm McKinsey estimated that "stablecoin transactions now top $27 trillion a year" and that they "could overtake legacy payment networks" before the end of the decade.

Klarna, founded by three students in 2004, allows shoppers to pay up to 30 days after placing an order or make purchases in four instalments without interest.

In recent years, the company has expanded its financial services to include services like digital wallets and allowing customers to earn cashback rewards, thereby competing with retail banks.

In September, Klarna was listed on the New York Stock Exchange and currently has a market capitalisation of about $11 billion.