Launch HN: Karsa (YC W25) – Buy and save stablecoins internationally
142 comments
·January 30, 2025wruza
Knowing and living in one of these markets, I’m pretty sure your business model is to just re-advertise random p2p sellers as trusted. Cause if p2p markets were manageable and could swallow any sizeable amounts at a reasonable price, the problem wouldn’t exist in the first place. Please explain why I’m wrong and this business idea isn’t to just leave a buyer holding the bag.
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desireco42
Look, as soon as you said "smart contract" I stopped listening. Not that your idea is not solid, but since those things got hacked so many times, I just can't trust it.
And if you lose money for those people you want to help, it will hurt them really badly.
dgfitz
“Stablecoin” is probably the most hilarious term that came out of the 2010s.
A fool their money are soon parted.
nothrowaways
This is money laundering a.k.a black market and is illegal in many countries.
Shasnani
We're fully pursuing all KYC/AML/Sanctions restrictions. Couldn't operate as a US fintech company without doing this.
pjc50
The pitch is to do things that are specifically illegal in other countries and hide behind the US not extraditing you.
I suppose it fits the zeitgeist.
wbl
Other than the seller being someone able and willing to break the law in Pakistan to get dollars to people who want them, yes.
epa
Thats not fully true. These flows do have regulation that can be solved.
michaelt
This is a product for people who live in countries with severe inflation and are unable to protect their wealth due to strict capital controls.
If the government makes it illegal for the financial system let people store their wealth in dollars, how would they - a part of the financial system - be able to let people store their wealth in dollars?
dgfitz
So, support a failing government?
Team America, world police, crypto version.
threeseed
Can you be more specific about how this can be solved.
Because I fail to see how countries e.g. Venezuela are going to allow some US startup to undermine their currency and distort their financial system.
It's amazing to me that people think they can disrupt a government without them retaliating.
JamilD
> allow some US startup to undermine their currency and distort their financial system
How is it undermining a currency and distorting a financial system to allow people to exchange their OWN hard-earned money for another currency?
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jgilias
How does the self-custody part work if all the crypto stuff is abstracted away as much as possible? Will people realize that if they mess something up you won’t be able to help them? What’s the chance of messing it up?
Kudos for getting this out, serves a real need for a huge amount of people.
Shasnani
Thank you, we hope it does help a lot of people.
We use privy, one of the best-in-class wallet providers that basically creates a self-custody wallet, but uses email/phone/social auth (and encrypts/shards the actual keys). So you wouldn't be at risk of losing them like you would with a vanilla wallet (you can of course export the keys if you're more crypto-savvy)
We're doing a pretty slow and steady rollout to catch where users are running into issues, but it's a pretty controlled environment re: messing up. You could accidentally send money to the wrong address if you wanted to transfer to another wallet, but that's not a core functionality (located on a side page) and certainly not one that the average person is using. Outside of that, there isn't really anything else you could severely mess up.
MagicMoonlight
If they want stable currency they could just buy dollars. Why would they want to buy a high risk currency instead? The only possible outcome of this is you rigging them.
Shasnani
So the entire premise is that you really can't just 'buy dollars' in the majority. of these countries, hence the need for stablecoins.
And I don't think I would characterize this as a high-risk currency; it's essentially a digital receipt for a dollar, backed by US treasuries (https://www.circle.com/transparency).
davidlee1435
adding onto this, i as a citizen of <high inflation country> who buys dollars from the national bank are probably holding digital dollar receipt anyways, since most foreign dollar holdings are held in nostro accounts at US correspondent banks.
if you trust your banking system to be a better custodian of your money than Circle, you're one of the lucky ones. billions of people in the world don't have that kind of luxury (see: https://www.bbc.com/news/world-asia-68778636), hence a part of the reason why stablecoins have grown to a little under a quarter trillion
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maxilevi
In some countries its illegal to buy dollars due to currency controls.
roywiggins
ymmv on that, unless you're buying physical cash to put under the mattress: https://www.aljazeera.com/economy/2022/2/3/lebanon-us-dollar...
(even if you can set up dollar-denominated accounts at a domestic bank, that doesn't mean your claim will be honored. stablecoins aren't dollars but they might be more stable than your average dollar-denominated bank account in some countries)
Jolter
TBF I think 1% is less than most currency exchanges charge.
Plus what the post says about restrictions on foreign currencies for a lot of people in developing nations.
thaumasiotes
Well, if you're going to a little booth in the airport, or having a foreign cashier bill you in your native currency, sure, you're going to get fleeced.
I have a Capital One credit card that was advertised as "no foreign exchange fees", and its exchange fee is 1%. I wish it would stop lying about the absence of fees, but I can live with the 1% fee.
jjallen
You really think it’s trivial to buy AND hold dollars safely in every country around the world?
Even I as an American has known so many people from countries like Argentina where just maintaining your bank balance is basically impossible due to inflation and currency controls.
Believing that this is easy or solved is a very Americentric viewpoint.
Unfortunately with money there will always be good and bad guys with it. We all need it. Have to do the best we can with not assuming everyone is a criminal re money laundering.
benatkin
The word stable doesn’t appear once in the post except for within the word stablecoin. It’s important to get past the name. It’s a pegged coin, the attempted stability is in terms of it being pegged, and people need to do their research on how well a coin achieves that just like with all of DeFi.
echelon
As I understand it, stablecoins are three things:
1. a means of bypassing US sanctions
2. a means of bypassing the US dollar / Western order during international trade
3. a means of transacting without Visa, Mastercard, Chase; cutting out banks and fintechs and their margins.
Stablecoins are pitched to investors as #3, but are more frequently used as #1 and #2.
If stablecoins catch on and can build a large network, it poses a real threat to American hegemony. You wouldn't need the dollar for international trade or settlement. You could trade, move large balances, etc. in stablecoins and never need to hold dollar reserves.
It's wild to see the US funding and developing this tech.
Shasnani
I see this take a lot, and there's some truths to it, but I'd like to take the other side of the argument.
These stablecoin issuers are enormous buyers of US treasuries: "Tether Holdings owned $97.6 billion worth of US Treasuries in June 2024, a new high. Hence, Tether now owns more US Treasuries than the governments of Germany, the United Arab Emirates (UAE), and Australia. Hence, Tether is now the 18th largest holder of US Treasury bonds" (https://medium.com/coinmonks/tether-usdt-is-the-third-larges...)
Dollars are also more dominant as a reserve currency in stablecoins (~97%) than they are in real-world trade (https://digitalchamber.org/stablecoinreport/).
I.e., we see stablecoins as extending dollar dominance, not reducing it.
bonzini
Weren't tether's numbers sort of shady?
benatkin
It’s individualism. Wild, but not so surprising to me. For instance, I want people to be able to choose what OS they use on their computers and I’d be happy to see more desktop and laptop computers sold without Windows included even if it hurts the US economy.
nurumaik
So, you take a cryptocurrency with a parent company able to freeze any account with all the funds instantly because they don't like it
And this company is US-based
And you use it to avoid US-sanctions
I'm really not sure that it works like that
alfiedotwtf
That’s a bad take.
The biggest usage of stablecoins would be as a hedge on crypto itself. Don’t like where the current market, park it without needing to off-ramp and then on-ramp again when the conditions change.
And now that you’re in crypto-land 24/7, no need to skip weekend movements because offices are closed or accounts don’t get updated until Monday morning.
Gothmog69
Stable coins hold dollars (bonds usually) IIRC they are amongst the largest US bond holders
ThePowerOfFuet
Rigging or rugging?
mariocesar
Not available for Bolivia!
Currently, we have restrictions, as there’s a limit of 50 USD on USD transactions per week for each bank. There is a constant growing interest in USDT and crypto here, especially since the middle class is quite aware of it due to the limited availability of USD in the country! It would be nice to explore this further, but it's a bit disappointing that it's not an option right now :/
Shasnani
Hey, I'm going to add support for this immediately! I'd love to chat a bit more and hear about the situation there; do you mind reaching out with your contact to shahryar@gokarsa.com?
mariocesar
Thanks!
rich_sasha
> (2) A buyer gets matched with that order upon setting their criteria, and has to send a fiat payment [...] to the sellerʼs local account + upload a photo for verification.
It is quite neat... But since you don't handle the cash, how will you deal with fraud? Or even normal bad luck? Bank transfers do get lost and require chasing banks, and you will be out of the loop here.
Also, I guess bank transfers between poorly banked countries are probably a constraint? If I live in a country with hyperinflation, am I definitely able to send fiat to a seller?
AML would seem basically impossible, but I guess that's no different to Binance...
Shasnani
Yeah, there's definitely edge cases that make this difficult — though these are the same problems that users may already face on existing P2P exchanges — now we're just getting more involved in the customer service and support :D.
The best risk mitigation here is having trusted, verified sellers that we've met + a robust support functionality that allows users to indicate any issues. To be honest though, in some of these countries, the domestic payment systems (e.g., UPI in India) are quite reliable.
Re AML -- we do KYC, and we discourage / don't present cash as an option. That way the payments happen through more transparent channels.
ADeerAppeared
> we do KYC
And what then, is stopping governments from simply demanding you hand over a list of your customers? They will seek to enforce those currency controls you are subverting.
Your entire sales pitch here is based on a lack of transparency to "evil oppressive governments", whereas the US government (at least, once it gets it's shit together again in a few years), will just delete your company for helping the North Koreans evade sanctions if you don't have quite robust AML.
setgree
I wish you luck with this. Stablecoin adoption in the developing world is a potentially large and legitimate use case for cryptocurrency.
An essay by Ben Kuhn [0], ex-CTO of Wave, raises the most salient objection here. Of the four problems Wave needs to solve, the hardest is providing "an easy way for users to exchange their balance for cash and vice versa." But "Cryptocurrency actually makes this harder."
Say your uncle in Pakistan buys some USDC. What can he do with it? Just hold on until he needs to cash out for a house or whatever? Will any stores accept it as currency? Are you imagining a Venmo/Zelle-like application on top where users can then exchange them among themselves?
There are already plenty of ways to buy stablecoins. Adoption as a means of exchange is the hard problem. Do you envision this coming about organically? If so, how?
Hatchback7599
>Karsa makes it easy for anyone in emerging markets to buy and save in stablecoins to protect against currency instability and inflation
Insurance against your entire country's economy is one of the most dystopian services I've seen in awhile. Don't let YC's funding of this influence your opinion.
zachthewf
what do you think people should do when their countries experience hyperinflation?
Hatchback7599
They should ask why it's happening so regularly that startups are springing up to insure against it.
aradox66
Seems kind of silly, would you have this kind of moralizing argument against people in the US buying treasury bonds right now?
setgree
The causes of, and solutions to, hyperinflation are well understood [0]. Solving the problem might require a political revolution. When you have a playbook for doing that in a peaceful way, please let us know!
[0] https://mru.org/courses/principles-economics-macroeconomics/...
nicce
Even gold isn’t completely immune. Yet, I would use my money on gold instead. Bold claims.
mjamil
Shahryar, have any of your relatives in Pakistan bought stablecoins through this platform? How do you do KYC for a Pakistani customer?
tombert
I fell for GUSD with Gemini Earn years ago. It wasn't so stable for me, considering I wasn't able to get my funds for almost two years.
At this point I'm pretty sure that stable coins really shouldn't exist. I mean, I'm not sure any crypto should exist but I think stablecoins like DAI are just a bad idea.
latchkey
The problem wasn't stablecoins, it was that you gave your coins to someone else to manage and they did a poor job at that. That high rate of interest you thought you were getting also came with a high rate of risk. The education around that was intentionally deceiving, which cast a poor light on crypto as a whole, which is unfortunate, at best.
tombert
Yeah, they kind of made it seem like GUSD was backed by FDIC. I should have been more skeptical of that, certainly, but I feel that the marketing was misleading.
That said, I still think they're probably a bad idea.
arccy
if you use a real stablecoin like USDC where they don't promise magic yield rates, then you'd be safe. otherwise you're just lending money to some questionable people.
Hey HN, weʼre Shahryar and Dale, the co-founders of Karsa (https://gokarsa.com). Karsa makes it easy for anyone in emerging markets to buy and save in stablecoins to protect against currency instability and inflation. Here’s a quick demo: https://www.youtube.com/watch?v=C160H4yB08w#t=11.
Over a billion people live in countries with severe inflation and are unable to protect their wealth due to strict capital controls. The banking systems in most of these countries are designed to prevent access to assets like dollars—good luck getting a foreign currency account.
Working in the crypto industry, we spent a lot of time thinking about how it can solve problems for people in the real world. Eventually, we saw a real, grassroots use-case emerge—one outside of the US entirely: people in developing countries started to use crypto exchanges like Binance to hold dollar-denominated stablecoins, which preserved their wealth from inflation. However, these exchanges primarily cater to traders and are still too complex (and crypto-focused) for average users, hindering mass-market adoption.
We knew this was a problem we wanted to work on after speaking to our family and friends: when Shahryar tried explaining crypto to his uncle in Pakistan, it was all jargon until he explained stablecoins, which immediately clicked. For someone who is (1) earning in a currency thatʼs inflating 20-30% year-over-year, (2) whoʼs structurally limited from dollar access, and (3) makes payments abroad regularly, this makes a massive difference.
Karsa looks and feels like a bank/currency exchange to an average user—they choose an amount and buy dollar-denominated stablecoins at a market price. But under the hood, we route our supply from a network of verified peer-to-peer stablecoin traders, whom buyers are making their deposit payments to.
(1) A seller sets their price and deposits money in an escrow smart contract (programmable rules-based code, can only return or release funds between seller and buyer).
(2) A buyer gets matched with that order upon setting their criteria, and has to send a fiat payment (e.g., bank transfer, payment app, etc.) to the sellerʼs local account + upload a photo for verification.
(3) We verify the fiat payment with the seller directly, handle any disputes, etc., and then release the escrowed stablecoins to a digital wallet weʼve created for the buyer.
How is this different? Structuring it as peer-to-peer allows us to actually be global from day one and circumvent government interference—in most of these markets, centralized products (i.e., requiring a bank account in the relevant country) often get shut down. This means that in many of the regions we operate in, weʼre the only way anyone can reasonably get access to stablecoins.
However, weʼve abstracted away the ‘P2P partʼ. In other exchanges, buyers and sellers engage in chats for each transaction (to confirm details, etc.). This is onerous for sellers and off-putting for new buyers. Instead, we sit in the middle, matching price orders and managing verification, appeals, etc. with sellers directly—much less work for sellers, and a simple process for buyers.
Weʼve also abstracted away as much about crypto as possible—no crypto knowledge, wallet / key management, etc. is needed. User funds are held in self-custody crypto wallets, meaning your money is always yours—unlike a centralized exchange (e.g., FTX) thereʼs no way for us to access, freeze, or lose your funds.
We currently take a 1% transaction fee, though we eventually intend to adjust it proportionally to regional FX rates. Over time, we want to support more of the average personʼs financial stack, and are exploring highly-requested features including freelancer payouts, spending via a card, US treasury yield, etc.
You can check us out at https://gokarsa.com. We would love to hear any feedback, questions, or ideas. And if you know anyone in emerging markets whoʼd be interested (naturally, weʼre not really focused on serving US users), feel free to connect us with them at shahryar@gokarsa.com!