Klarna, a payments company, has introduced a stablecoin, establishing itself as the first digital bank to issue a token on Tempo, a new layer-1 blockchain created by Stripe and Paradigm.

The announcement revealed that the stablecoin, dubbed KlarnaUSD, is pegged to the US dollar and is presently operational on Tempo’s testnet, with a mainnet launch anticipated in 2026.

Built in collaboration with Bridge, a stablecoin infrastructure provider also under Stripe’s umbrella, this move strengthens Klarna’s ongoing payments partnership with Stripe across 26 countries.

“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,” stated Sebastian Siemiatkowski, the CEO of Klarna.

Klarna is a Swedish fintech firm known for its online checkout innovations, payments solutions, and short-term consumer credit offers, especially its buy now, pay later (BNPL) service. A company spokesperson mentioned that Klarna is just beginning to explore stablecoin technology, initially focusing on “internal uses,” such as lowering the costs of international payments. There are no current plans to incorporate stablecoins into Klarna’s installment-payment services.

Related: South Korea stablecoin framework stalls as regulators split over banks’ role

The Year of Stablecoins

The recently passed GENIUS Act in the United States established clear regulations for stablecoins, igniting a surge in new issuances. In August, MetaMask unveiled a stablecoin in collaboration with Bridge and liquidity platform M0, launching mUSD in September with a market cap of $844 million. October saw Western Union announce plans to utilize Solana for a new stablecoin settlement system tied to its US Dollar Payment Token (USDPT), with a slated launch in early 2026.

Stablecoin market capitalization. Source: DefiLlama

Amid increasing competition among stablecoin operators, traditional payment systems are stepping in as well. In July, Visa expanded its stablecoin settlement network to include the Global Dollar (USDG) token, allowing transactions over platforms like Stellar and Avalanche.

Currently, the overall stablecoin market is approximately valued at $304 billion, with Tether (USDT) leading at $184 billion, followed by Circle’s USDC at $74.3 billion, according to data from DefiLlama.