Peak XV and HongShan, two investment firms from India and China that spun off from the influential Sequoia last year, have jointly led a $10 million seed funding round for KAST. This platform operates similarly to a neobank, allowing users to hold and spend stablecoins through conventional payment systems.
Kast also offers credit cards compatible with standard merchant networks, enabling users to utilize their stablecoin balances at retailers that do not accept cryptocurrencies.
The startup aims to serve emerging markets where access to U.S. dollars is limited and remittance fees are high. Though KAST does not operate in India or China due to regulatory issues, it caters to the substantial offshore workforce from these countries.
Raagulan Pathy, co-founder and former head of Circle’s Asia Pacific operations, shared with TechCrunch that the banking systems in numerous nations are severely lacking in cross-border functionality. The platform seeks to minimize obstacles in international payments by circumventing conventional banking networks.
KAST is launching at a time when the adoption of stablecoins is experiencing a surge. Monthly usage exceeds 20 million people globally, with much of this growth occurring in emerging markets. Stripe’s recent $1.1 billion acquisition of Bridge, a stablecoin infrastructure provider, further highlights the escalating corporate interest in this technology.
The startup faces competition from both crypto-centric companies and established fintech firms that are entering the stablecoin space. PayPal has introduced its own dollar-pegged token, while other companies, such as Revolut and Ripple, also plan to launch stablecoins. The market remains highly concentrated, with Tether holding roughly 75% of the supply.
Co-founder Daniel Bertoli, a former partner at Quona Capital, contends that current neobanks face challenges in integrating blockchain, as their foundational systems were not designed for cryptocurrency. “The future of digital banks will be inherently global and will be built on stablecoins from the outset,” he stated.
The funding round also saw contributions from investors like DST Global and Goodwater Capital. Although KAST has not disclosed its user numbers or valuation, it reported that its growth has surpassed expectations in its first four months of operations.
KAST has plans to introduce savings solutions and broaden its remittance services while focusing on stablecoin-related infrastructure.
Since KAST operates solely with stablecoins, it provides its users with “a safe haven for hard-earned income when local currencies are depreciating,” according to Alex Svanevik, co-founder and CEO of analytics firm Nansen.ai and an early investor in KAST.
“As more digital nomads receive payments in stablecoins, they can now avoid the inconveniences of traditional banking systems. Transfers that once took weeks can be completed instantly and at minimal cost,” he remarked.
For Peak XV and HongShan, this marks their first collaborative investment since they parted ways with Sequoia in June 2023. The firms are increasingly extending their reach beyond traditional markets — HongShan is venturing into Europe and North Asia while managing its $9 billion capital pool, and Peak XV has established a foothold in the U.S.
Former parent Sequoia is reportedly in the advanced stages of evaluating an investment in fintech Vance, which would mark its first investment in India since the split, according to TechCrunch’s report last month.
Compiled by Techarena.au.
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