Crypto platform Kraken plans to launch competitor to Venmo, block’s Cash App
Crypto exchange Kraken is developing a financial services app targeting remittances and payments, further diversifying the company’s revenue streams ahead of a potential stock market debut.
The new app, named Krak, will allow businesses and consumers globally to send and receive both crypto and traditional currencies across borders at little to no cost, Kraken said in a statement Thursday. At launch the app will support more than 300 assets, but will operate in a partially closed system where customers can only send cash to other Krak users or withdraw to their own bank account.
Physical and virtual debit cards allowing Krak users to spend the money in their accounts will be launched in the coming weeks, Kraken Co-Chief Executive Officer Arjun Sethi said in an interview. The company is also planning a range of credit services, including loans and credit card programs.
“One of the reasons why I invested in Kraken and came here was around how to be able to make much more evenly distributed products,” said Sethi, who is also chairman of venture capital firm Tribe Capital Partners LLC.
The app deepens Kraken’s expansion into financial services, and puts the company in closer competition with other neobanks and money transfer apps like Revolut Ltd., Block Inc.’s Cash App and PayPal Holdings Inc.’s Venmo. The crypto exchange, which plans to go public early next year, rolled out commission-free trading for US-listed stocks and exchange-traded funds in April, after acquiring retail futures platform NinjaTrader for $1.5 billion a month earlier.
Crypto companies are increasingly focused on developing more bank-like services, blurring the lines between digital assets and fintech. Coinbase Global Inc. launched an e-commerce payments platform earlier this month, partnering with Shopify to allow merchants to accept the Circle Internet Group Inc. stablecoin USDC. Circle also launched a payments network for cross-border transactions in April.
Krak will allow users to earn rewards of up to 10% on certain digital assets, the company said in its statement. For example, eligible users will earn up to 4.1% on balances of USDG, a stablecoin issued by the Global Dollar Network consortium of which Kraken is a member.
Kraken won’t be charging fees for transactions, Sethi said, or lending against customer assets. Instead he sees Krak as another avenue to acquiring customers who don’t already trade crypto, but want to reap the benefits that digital assets can bring.
“I’m able to leverage my exchange and my liquidity to be able to offer these products to a larger distribution base,” Sethi said.
“In the same vein as YouTube being free and monetizing it another way - at least for their first, formative years before they went into premium TV - I’m doing the same thing here, which is these products already exist for my customers for free, and I monetize them differently,” he added. “I want to make this free to every customer worldwide for this very specific value proposition. There’s no reason why we can’t.”