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Feedback: As someone from India, I've hesitated to get into crypto because stablecoins like USDT typically trade at a 10-15% premium. I was interested in trying out Karsa's platform and decided to sign up. However, I got stuck in the verification process - right after entering my basic contact info (phone and email), I was immediately asked to upload my ID. I wish I could explore the platform first to see what Karsa offers before committing to a full KYC process. It would be great if you could let new users access the home screen and basic features with just an email address. Then, once we're ready to make trades, we could complete the full verification process. This would make it much easier for curious users like me to see the value proposition before sharing sensitive documents.

Hey -- thank you for this feedback. Honestly, a huge (and obvious) oversight on our part. Gonna fix this shortly.

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.

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).

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

So the app essentially offers anyone in an emerging market the "regional exchange rate" you can find for their currency ?

If I have a wad of tea shillings, how do I use this app to hold stablecoins ?

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.

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.

Weren't tether's numbers sort of shady?

Thought experiment: how much USDT is made unredeemable every year? including through lost private keys, freezing related to sanctions, etc

If you think 1% is a reasonable number, that’s 1BN per year at current market cap. Tethers been around for 10 years. Dead funds also compound.

Let’s say Tether was grossly insolvent (ie only had 50% of reserves) for the first 10BN in market cap (in other words, for the first 5 years of their existence). In addition to the 6BN+ of interest income they earn every year, there’s 1BN of reserves that will never get redeemed added every year

If Tether was insolvent before, they just need time to change that

I’m doubtful these numbers are realistic, but a more conventional explanation is that stablecoins can earn interest on conservative investments (like treasuries) but don’t pay interest, which should be profitable enough if they don’t get too greedy.

This is very roughly similar to banking. It’s an unregulated bank, but it’s not inevitable that they’ll implode.

Short answer: yes but not anymore.

They have a shady past but quickly realized they had lucked into a WILDLY profitable business. That first 10% of their existence is debated constantly and is what you see referenced constantly online when Tether is labelled as shady.

They make a disgusting amount of money and it keeps snowballing. This annoys people who want them to implode for earlier crimes.

For context they are more profitable than Blackrock.

.. how are they profitable? Market making? Tbill interest? TX fees?

> Tbill interest

or similar. They have $100bn dollars and their only job is not to lose any of it.

In this interest rate environment they’re basically printing money.

Giancarlo literally prints these tokens from his laptop. The ultimate profit scheme.

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.

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

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.

Stable coins hold dollars (bonds usually) IIRC they are amongst the largest US bond holders

In some countries its illegal to buy dollars due to currency controls.

Can't the same countries also just make all the on-ramps and off-ramps just as illegal?

It's easier and safer to use a VPN than it is to meet a man in a dark alley for some dollars.

you still have to fund your stablecoin account somehow - how do I get local currency from my pocket into the ether?

Crime. The answer is crime.

(Plus a whole bunch of pretty words to make it sound like they're saving the world.)

You'd use our platform!

User A sends local currency to User B's fiat account.

User B sends stablecoins (earned via salary, trading, mining, etc.) to User A's digital wallet (that we've created for them).

How do you demonstrate that User B earned their stablecoins via “salary, trading, mining, and etc.”; as opposed to through crime, whether the conventional crypto sort or through subverting currency controls?

What, other than money laundering, would motivate a person who had a supply of such stablecoins to want to supply them to into a market with currency controls? Is the concept there “I make my expat wages in dollars, I want to turn them back into $CURRENCY at the black market rate”?

Does user B need any sort of exchange/money transmitter license?

Do you check the laws for this in each country you are available in?

Do you notify user B of this fact and the potential legal risks?

Do you verify if they have the license?

User B is sending a peer-to-peer transaction, akin to a Zelle or Venmo. In most other countries, these peer-to-peer payments (PIX, UPI, etc.) do billions of transactions per month. And since you're sending your own funds, you're not a money transmitter. If we do work with any larger entities (e.g., an OTC desk, liquidity provider), we'd certainly be cognizant of the relevant licensing.

> And since you're sending your own funds, you're not a money transmitter.

It's MUCH more complicated than that in several countries, particularly the US.

Assuming you get banned, is your plan just "never visit any country where we do business"?

Hahaha we've had this conversation internally a couple of times.

Definitely a few places that we'd probably avoid. But also plenty of others (e.g., Kenya, LatAm, Turkey, etc.) that have been quite friendly and would be fine to visit.

And what are the legal implications for User B.

Because if you are involved in washing illegally earned money in many places that's a criminal act.

Then... just open an account in a US bank using said VPN, instead of going through a middleman who will fall over and take the lot next week

"Just open a US bank account using a VPN, duh"

It's so funny to read Americans who constantly downplay the problems that people in developing countries have

Sorry about the delay in responding - but how is "Just use a crypto wallet" any better?

What I probably should have said was that the platform should be offering a USD (or Euro, or whatever) denominated account, much easier for trading.

Can you do that without a US postal address?

lol, I think that anything you say about not being able to open a US bank account applies to the platform that is supposed to KYC

You on-ramp/off-ramp with P2P (aka just another guy). It is illegal but how can a government control that?

The government wouldn't bother with the individuals. They would designate Karsa as a criminal organisation.

And then trigger an Interpol Red Notice for the founders.

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.

Pegged to the US Dollar, which is not stable, but maybe the least volatile Fiat currency in the world, so it's an upgrade for most people. I just worry about the nature of these pegged crypto currencies. Are they really safe?

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)

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.

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.

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.

Rigging or rugging?

Did you even read the post? They are buying dollars

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 :/

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?

Thanks!

> (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...

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.

> 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.

Stablecoins are risky because companies like Tether work offshore and don't submit to full audits. There is no guarantee your money won't disappear and no government bail out.

In some sense Bitcoin may be safer although it has volatility risk and is essentially a negative sum game requiring the "tithe" that is mining to keep being paid. So pick your poison.

If Karsa can provide effective a deposit guarantee that would be good. You may be able to sell that risk to the markets. It would be a great way for the Tether folks to extract value from developing economies and VCs!

Why not just... be a bank for them?

Hope you pivot or fail. If you stick and succeed then a lot of working class wealth will be at dire risk.

How is Bitcoin a negative sum game? Any and every currency or asset has costs associated with buying, selling, and securing it, Bitcoin included (paying the miners is one of those costs).

Fiat is also negative sum. If you HODLed a dollar in 1930 it would be worth less today. Mostly because of inflation of supply over cost of printing. But in some sense inflation is the tax that keeps money free (a hard currency would require banks to charge you to hold and then you see the cost).

Investments have costs but they produce value. NVidia of 2025 is actually doing more than Nvidia of 1999. Forgetting currency, it is actually more valuable.

Bitcoin is like a currency not an investment. In addition the $ cost of mining is huge compare to it's inflows. That is why bitcoiners love to compare this cost to the whole trad-fi cost including branches and AML and credit card issuing etc. Rather than compare it to what the federal reserves server rack does.

Bitcoin needs $50m a day paid to miners. That money needs to come from new "investments". Yet a bitcoin does the same thing as it did in 2009. And yields the same earnings per share, zero.

My friend, you are stating falsehoods, mixing metaphors, and jumbling up concepts in ways that I can't begin to untangle. But clearly you know more than the big investors getting into Bitcoin now and the finance firms offering Bitcoin ETFs, so keep at it!

Tether is risky. US based stable coins like USDC and PYUSD are much less risky.

all stable coins are risky, because the peg requires reserves to maintain. the peg break just at the point when you need it to most be in place.

Yes but US-based entities are more likely to have reserves. Tether stopped publishing their ages ago.

"more likely" is so reassuring!

After following the work of Zeke Faux I would not touch Tether with a 10 foot pole.

Likewise. It's fine for transient balances but I wouldn't hold anything in USDT for longer than a few minutes. If I was going to pick one thing that would be the next major scandal, Tether would be it.

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?

[0] https://www.wave.com/en/blog/crypto/index.html

I have no idea about Pakistan but in the US you can swap the USDC to PYUSD and send it to anyone’s PayPal account using Solana in a second. From the PayPal account account, it can be sent one to one to your bank account.

And why should people do that over just using paypal?

The parent asked:

> 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."

Just using PayPal would mean missing out all the benefits of crypto. I do it because defi yields are much higher than a bank. People in their target audience may do it because international transfers cost less than a fraction of a penny.

One of the things I have wondered about stable coins is - why bother with them, and just buy the currency that is (supposedly) underpinning the stable coin.

I mean, if currencyBob is pinned to the USd, what advantage is there to buying currencyBob, and not just USD

This is discussed in some other threads here. But basically, if you live in a jurisdiction where it’s easy and safe to get and hold substantial amounts of USD, this is not for you.

The reality in many places is that getting your hands on USD happens through grey-market street dealers who charge exorbitant conversion rates, and the only way of holding them is under your mattress because the local banking system can’t be trusted. As in, if you’re able to get a USD bank account (this is a big if), you likely won’t be able to actually withdraw your USD in any substantial amounts when the need arises.

Sorry for the late reply - and I'm not sure if this is covered in other threads... but...

I'm not seeing an argument for an account denominated in crypto as being advantageous over an account on the same platforms denominated in USD (or Euro or whatever)

The argument you seem to be putting forward is one of "digital is superior to physical" - which might be accurate, but still leaves open what currency is best.

edit: It could also be said that the crypto "wallet" is transferable amongst exchanges, but finding someone willing to trade physical goods or services for that crypto is the next problem, whereas the USD is already accepted/easily transferable to people with accounts.

Its basically a way to say "look there's no risk!" because it can never[1] go below the peg point of the currency it's linked to. You'll see that the value rises (because of course its new and sexy, and the pool is small so it doesn't take much to change the market value) but "never" goes below 1:1 or what ever the peg is.

The problem is, because its crypto, its fairly easy to trace who owns what and who trades with whom. so if you're trying to avoid local or international laws, this isnt for you. You're far better off buying assets that are reasonably easy to liquidate.

[1] pegged currencies require 1:1 reserves for it to be "safe". At some point its impossible to protect against runs, if you don't have enough reserve to buy back the coin

It's a tax dodge IIUC. You buy crypto, it increases in value. If you sell it you may have to pay capital gains tax on any materialised gains.

Swap it for another pretend token however and no tax liability since the gain isn't crystallised. Swap back to another coin when you want and rinse and repeat.

Not true - swapping is a taxable event. Doesn’t matter which coins

Stablecoins represent digital fiat when integrating with traditional financial rails or holding a currency in a regulated account is challenging or impossible.

Bro you try doing this in these places. In Sri Lanka during their civil war when I was there you couldn’t convert INR or USD to LKR for any reasonable exchange rate anywhere except for the shady black market currency exchange, e.g. on the (aptly named) Front Street in Colombo.

It’s like asking why don’t you just buy 2CB from the store instead of online on the dark web.

And the additional problem is that once you leave that location everyone knows you’re carrying around proper bills of whatever currency. Asking for trouble, mate.

It skips the intermediaries. It's a more direct accounting system.

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.

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.

Nice initiative!

However, few points to consider:

- Emerging market regulations can turn from funny to ugly to utterly ridiculous pretty fast. Problem is that most emerging markets see FIAT to stablecoin as a flight to capital and currency depreciation. Think about India, Brazil, SA, Pakistan or any other emerging market with dense population, you might see the same regulator mindset

- In any market, if this kind of pegging becomes freely available, than I am pretty sure that one currency to other in physical or digital way would also be very free flow. for example, in UAE, AEd to USD is super easy and takes 10 seconds on any banking app. So unless your goal is to trade, there is no reason to use stable coins instead of just putting in the dollar amount agianst your local currency

- Lastly, exchanges have a very large KYCed audience, and they have a very hardcore focus on the P2P markets where they can. If regulators & local volume permit, they will be the first to jump in with heavy marketing budgets.

I would be closely following this, and wish you success

If you need any help or advice, drop me an email a.rafay@disrupt.com. Best of luck!

Hey Rafay -- this is super thoughtful advice. Will reach out, would love to talk more about this.

> 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.

"Circumvent government interference" sounds like a euphemism for "we're illegal but we make law enforcement hard".

Yes and: "Circumvent government interference" to me means no accountability, no transparency, no correction of mistaken & contested transactions.

They are still subject to US law I presume (like Ftx).

(As someone who spent most of his life in a country with capital controls (South Africa which calls it exchange control), I like this product)

This makes sense. If I live in a country with hyperinflation, I'd want to have my money in a more stable currency like the USD.

Congrats on the launch. I wanted to note that I'm using mobile safari on an iPhone Pro 15 and the header text collides with the tagline to the point that it's illegible.

https://www.ycombinator.com/companies/nsave

https://www.nsave.com/

(no affiliation, no crypto)

Curious, what would be the motivation of the sellers to trade high inflation currency?.

It make sense for buyers as they want to move to stabe currency. But how about sellers?. What are they gonna do with the high inflation currency ?.

One motivation could be of very high margin due to high risk involved.

Shahryar, have any of your relatives in Pakistan bought stablecoins through this platform? How do you do KYC for a Pakistani customer?

So your only use for stablecoins is to avoid regulation so you can kind of look like a bank but without any proper regulation/security just with lots of more potential issues (looking forward to find you on https://www.web3isgoinggreat.com/ ) while the poor users should know as little as possible (abstracted away) that they actually do not have dollars but just IOUs from some random startup?

I can totally see where you're coming from on this, but I think the way users on these countries see it is entirely different—-a couple notes in response:

- Users in these countries already use exchanges like Binance almost like a dollar checking account — this, as you probably know, is far more risky (past AML violations, entirely centralized point of failure, etc.). There's no better or safer alternative at the moment, and these people aren't typically huge fans of the current banks they're using, nor the regulation that they have to deal with.

- We don't have any intention to hide how the product works, or claim that it's a real bank.'Abstraction' in this case means minimizing wallet, key, and asset management during the user flow.

- The stablecoins we're offering (USDC & USDT) are more widely used and known in these countries than in the US. I actually don't even have to explain it to half the folks because they already understand the value prop and are comfortable with them (FWIW, USDC is a fully audited and soon-to-be-public US company).

Binance breaks every single financial law in the developing country I live. Many users have lost money in their P2P scheme. Not really a great reference.

I'm an expat in a developing country and Binance p2p is widely used here to change USDT to the local currency and back. Haven't heard of too many issues and have used it a lot.

It is very much illegal though, I'll give you that one.

USDT is pretty shady :p

But yeah USDC is as good as it gets.

Thats the point. This is a usecase for people living in countries with shitty governments.

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.

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.

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.

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.

This sounds really cool!

I know Stellar used to/is quite active in this space, though probably without a lot of the abstractions still. Are you implementing an entirely new smart contract or protocol for the order matching or relying on existing systems in this space?

Thanks!

Frankly, the order matching will be pretty simple at the beginning: Match buyer/seller payment methods, make sure buyer order ≥ seller's available amount, then pick lowest price option. We just have to query the escrow contract on chain to make sure the seller amount is available.

What countries do you operate in? Seems like in the US you'd be considered an MSB.

We're serving customers in Africa, LatAm, & South Asia at the moment — but yes, nonetheless, we'll be pursuing an MSB and are planning on using infrastructure providers with MTLs to make sure we're fully licensed to handle this activity.

Isn't the entire pitch that you're going to be doing unlicensed things in the non US countries?

Forgive me for asking but don't crypto currencies amplify the causes of inflation while mostly benefitting majority shareholders of non-stablecoins?

I'm about to start making good money and have started to think about how to properly set up myself for a hopefully non-DeepImpact future and as much as I liked the original idea of the Bitcoin and the Blockchain, what it resulted in - so it appears to me - is mostly a bunch of schemes amplifying the damaging effects of financial institutions that we have not been able to integrate solutions for yet.

>don't crypto currencies amplify the causes of inflation

How so? Isn't the risk rather that central banks would lose the ability to fight deflation if something like bitcoin were to replace fiat currencies?

In this particular case we're talking about stablecoins though, which are a wholly different beast. I think the potential problems (and benefits) for countries where the local currency is replaced by a dollar linked stablecoin are exactly the same as the problems caused by other forms of dollarisation.

https://www.elibrary.imf.org/display/book/9781589061767/ch03...

Stablecoins are not a different beast. I'm going to assume they are heavily regulated in the US and Europe now but in the past they were used to amplify speculative bubbles in cypto by operating as unbacked fractional crypto dollars that only received value once a retail investor exchanged their currency for a stablecoin. I will also assume that not every country has enacted regulations that would restrict this kind of behavior and that there are still loopholes that money launderers and scammer can use.

Stablecoins linked to USD do not reduce the effectiveness of US monetary policy. In that sense they are fundamentally different from Bitcoin.

Things look very different from the point of view of all other countries of course.

Bitcoin does not reduce the effectiveness of US monetary policy either. It has been described as a hedge against inflationary monetary policy but that is only true of Bitcoin if you only buy below the median trend price and have a long > 2 year time horizon. If you have a 6 month time horizon, then you can only really afford to buy Bitcoin at the bottom and should really be using risk free assets like CDs to hedge against inflation.

Speculative gain in Bitcoin does not make it a hedge against inflation, it makes it a speculative vehicle. As Bitcoin becomes less speculative, I really don't even see it being able to sustain enough interest to be a hedge against anything.

>Bitcoin does not reduce the effectiveness of US monetary policy either.

IF Bitcoin were to replace the dollar (and that was the premise if you look further up in this thread) then by definition US monetary policy would cease to exist and therefore lose its effectiveness.

This has absolutely nothing to do with the price of Bitcoin. It's a structural feature of Bitcoin because governments do not have the power to increase the supply of Bitcoin.

A dollar linked stablecoin on the other hand does not have this structural feature (for the US). This is the difference I'm talking about.

For other countries the situation is quite different because dollarisation in any form (stablecoin or otherwise) means giving up their own monetary policy.

Please keep mansplaining your ponzi scheme as if everyone on this planet hasn't already heard the same weak sales pitch.

How do you intend to bring liquidity to this? In India, if you buy USDT/USDC, the bid-ask spreads are calamitous - to the tune of 5-6% per side. So going on-ramp and off-ramp is quite costly!

This looks cool! Stablecoin on-ramps are still not perfect. I think it's important to meet customers where they're at, so a lot of the banking-centric onboarding options won't work everywhere. Don't really understand a lot of the criticism on this thread, seems to mostly be caused by the "crypto = bad" opinion. Good luck with Karsa, keep up the good work!

I'm pretty sure this is what Airtm started out doing years back but it looks like they since pivoted to focusing more on paying contractors with stablecoins: https://www.airtm.com/en/

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.

As silly as so much of the cryptocurrency/blockchain space is, I am intrigued by these use cases where political instability and lack of monetary infrastructure genuinely calls for some of the properties of blockchains.

So what’s the story behind the name ‘Karsa’? Also congrats with the launch!

Maybe a big assumption, but perhaps one of the founders is a fan of Malazan Book of the Fallen. Karsa Orlong is a character in the book series. A solid character, not sure if I would name a company after him though, so maybe the name is from somewhere else.

From what I understand, it’s a centralized peer-to-peer escrow service for stablecoins, primarily targeting emerging markets. Best of luck! You might also consider incentivizing users by introducing staking services, which could make converting USD-backed stablecoins even more practical.

The new SEC management should enable treasury bonds to be tradable and issuable across chains. When that happens, this sector is likely to thrive.

I am hyper negative on all things crypto but I actually like this. People living with hyperinflation are being screwed by their governments and this gives them a chance to keep what they earn.

Hopefully you find a way to balance ease of use and availability with legal controls. The disaster situation is someone puts their savings in, government blocks you, and that person can’t get their savings out.

Is this compliant with US sanctions and AMl policies?

Obviously yes. They just use USDC and USDT, and both of those regularly freeze addresses attributed to OFAC-sanctioned persons and entities.

Absolutely following all US Sanctions and AML policies (setting up more rigorous KYC, transaction screening, MTLs etc. as we speak). We're a US company and intend on doing this the right way.

How do you ensure AML and CFTC compliance? Aren't self-custodial wallets private by nature?

A number of onchain forensics companies (Chainalysis, TRM Labs) have gotten pretty good at detecting suspicious activity

The Chief Compliance Officer of Circle, makers of the USDC stablecoin, sits on the board of the Illicit Virtual Asset Network alongside U.S. government representatives from the FBI, DEA, etc. https://www.businesswire.com/news/home/20241002200546/en/Cir...

So obviously yes.

Obviously not. I wonder why this stablecoin scam still exists, it violates every possible financial regulation out there.

I LOVE the idea. This helps a lot of people who want to make a dollar transaction but cannot just because they live in middle east. I am worried US government might come after you because this is essentially a way to get around banking system.

Congratulations on the launch.

My question is that how will you deal with future government regulations. In developing world, the government does not like crypto and may impose laws like upfront taxation to discourage people from investing.

Thanks!

While we want to have constructive conversations with some of these governments (I actually believe it's possible), ultimately we can't stop hostility / regulations against crypto. What we can do is offer our service and be transparent about what it is — and then users in those countries can make decisions for themselves about whether they can/should engage.

I'm hopeful, however, seeing countries like Turkey and a couple in LatAm that have significant crypto adoption without overt government hostility — when adoption reaches a critical mass, I expect to see more governments relax restrictions.

If a government in a country you operate in explicitly makes services like yours illegal for people to use, will you stop operating in that country?

Please answer this question, the response is phrased like a yes without explicitly saying it.

The developing world governments lack the resources to impose and execute laws successfully against crypto (or any other area).

Good old straight to the point we want to be criminals because we can.

No. We just want fruits of our labor not to evaporate next day.

If finding a way to have less of your money and labor stolen by the government makes you a criminal then lock me up

Said the bank robber.

People commit crime because the risk/reward is worth it here. Most of crimes go unpunished in my country, Mexico.

They only want the profits, but you're on the right trail.

It's quite weird you wrote in Hindi for INR but in Roman Urdu for PKR. ChatGPT could help you to come up with a decent Urdu text.

And that Roman Urdu is not correct either.

عالمی ڈالر اکاؤنٹ۔

اپنی رقم ڈالر میں محفوظ کریں۔ تیز، محفوظ اور بغیر سرحدوں کی حد بندی۔

And don't wrote in Hindi for INR

Hindi is a central aka standard language for India, just like Urdu in Pakistan. Technically Urdu is an Indian language too

Hindi is spoken by only around 40% of the total population, and is very regional. Using Hindi as a catch all for Indian users alienates around 800M people. English makes much more sense.

Sure sounds like an easy way to get yourself on a financial fraud watchlist if this starts operating where I live. I'd stay far away from Europe.

Why are some countries missing? For example Tunisia?

Hey! We're adding countries as we hear from users that have demand there — are you from Tunisia / would you like to see it supported? If so, please reach out at shahryar@gokarsa.com and I'd love to chat

congrats! this can be useful to many people who see their savings lost through inflation. Wish you the best!

Even more power to the US, why not gold?

Self-custody crypto wallets are such a horrible idea for your average user that it’s cruel to even provide this service. (Especially for people who may not have access to reliable devices.)

I would seriously reconsider this part of your value add.

Would love to hear more from you on this — why do you feel self-custody is a concern? For context, we're using Privy (https://docs.privy.io/guide/security/), which encrypts (and never stores) the private keys, and users simply log in with email/phone etc. auth (so no need for key management).

Keep in mind any centralized authority is subject to disclosure laws like the patriot act.

i.e. people can jack your phone/sms line for around $23, or access any email server on US soil for free.

https://www.youtube.com/watch?v=wVyu7NB7W6Y

This is why 2FA is actually more dangerous in some situations.

We're planning on enabling passkeys! Agreed that phone 2FA is not ideal, just the current setup.

Unless people are using a public key system like Kyber hardened gpg public keys its mostly security theater.

i.e. people may feel safe in the complexity, but are open to the same shenanigans of any unregulated exchange.

Children in Japan figured out magazine faces worked on cigarette machines too.

Have a nice day =)

To me this is a centralized take.

The alternative is just trusting someone in the space. With that you have stuff like FTX, MtGox, and even ones that haven’t failed where there are plenty of stories of KYC trouble on Reddit.

> people who may not have access to reliable devices

A very good point but that’s where education comes in. I’m glad Karsa seems to be teaching people to fish rather than just giving people fish.

Hi, Can you elaborate on this.I am new to crypto

Crypto is a dollar backed fiat currency substitute, or outright scrip.

https://en.wikipedia.org/wiki/Scrip

Precious metals like gold are also a terrible investment, but do offer liquidity when currencies fail. For a single person, no more than 1.7% of your portfolio should contain such leaky holdings.

In terms of investment, wait till the market crashes and buy freehold residential real-estate in larger growth cities with cash. This is the safest investment for amateurs. =3

>Precious metals like gold are also a terrible investment

Both gold and silver have appreciated more in value than the S&P 500 since the start of this millennium.

Typically, it tracks around inflation... but some people have cultural traditions around bullionism.

Keep in mind I heavily invested in ubiquiti at $12/share after their early legal trouble, so am probably not the type of investor you'd want to study. lol =)

Uh. Gold and silver were near 20 year lows at the start of the millennium.

Yes, this is an example of different asset classes performing differently over different periods. The S&P 500 performed extremely well in the 1990s, and while the S&P 500 has performed very well since, it has not kept up the same level of returns as were seen in the 1990s, nor did it usually perform as well before the 1990s. I similarly didn't say that gold and silver always outperformed the S&P 500, nor that the performance of gold and silver vs the S&P 500 over the last 25 years is predictive of future periods. All that I referenced was that over the mentioned stretch of the last 25 years, gold and silver have been a sound investment. The story is obviously a little different since the start of post-GFC quantitative easing.

Most index funds tend to have relatively stable growth... it is kind of the point.

Personally not bullish on bullion, but good luck =3

Indeed, met a few bears from the silver futures market over the years too.

I would lol... but some people lost everything, and that's never funny =3

"Self-custody [...] wallets are such a horrible idea..."

And yet, billions of people do this everyday with (non-crypto) wallets holding banknotes in their pants pockets. And for the most part, it's fine. A crypto wallet on your phone in your other pants pockets is similar. It's actually superior because at least you can make a backup to protect from loss/destruction.

Self-custody wallets are fine.

I bet the guy who can't dig in the dump to find his Bitcoin would say otherwise

I get that the US Dollar is a more stable currency than many, if not all, others. I don't understand why, if you're getting into cryptocurrency to avoid inflation, you would chose one based on any fiat currency. Invest in one that is tried and tested and has a limited supply that is actually inflation proof: Bitcoin.

The point is people don't want to get into crypto, they want to get into USD. But capital controls make it difficult, so USD stable coins are a good enough alternative.

Bitcoin is extremely volatile.

"Stable coins" tethered to fiat are an enigma --- like a duck out of water. Their existence is an open admission of what everyone knows --- that crypto is not functioning currency.

They offer no protection from inflation in the underlying fiat while incurring high transaction fees and opaque accountability and security.

> They offer no protection from inflation

They actually do, though. As an example, a Paki rupee in 2018 was trading at 130 to 1 USD. It's now down to 85 to 1 USD. Meanwhile, USDT was trading at 1:1USD in 2018 and is currently trading at 1:1.

You ignored part of my statement.

They offer no protection from inflation in the underlying fiat. $ is the underlying fiat, not rupee.

In other words, if you bought USDT in 2018 and sold it today, you actually lost over 20%.

Congrats on inventing money laundering

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.

Surprised to see this backed by YC.

Trillion dollar industry with interesting problems. What’s the issue?

Every single crypto thing is ultimately a scam. Even if the owners don’t intend it to be a scam, somebody somewhere is getting scammed.

In this case, YC is probably getting scammed and possibly the founders of this startup. But I’m sure if you dig deeper there is plenty of other shady crap too.

Maybe you should read more widely than articles written in 2018.

So is cooking meth, writing malware, or illegal arms trading. Surely we should expect YC to have slightly higher standard than "we'll fund literally anything which can make a profit"?

I can totally understand being interested in crypto in 2010. It was a genuinely novel use of technology, which seemingly had a lot of potential. But it's 2025 now, and the primary use has turned out to be crime. I mined some Bitcoin back then, and even sold it on Mt. Gox. But these days? Wouldn't touch it with a ten foot pole.

If you think the majority of crypto is in crime, then I can't help you.

Think of it this way - 500 years from now, will societies still be using paper/polymer notes along with silver/tin/brass alloys for coins, or will they be 100% by then? If digital, would you want sovereign control over your assets via open source solutions, or would you be happy that the government with its closed source systems, made by backchannel private no-contest contracts, controls your ability to pay and get paid?

i had some savings in a stablecoin on a platform that got a huge interest rate and then i realized that was a bad idea. the interest rate was too good to be true but the last straw was when i tried to move the stablecoin funds one time during a bear panic and the platform wouldn't let me move the money. so i exchanged it to USD and put it in a bank then used the cash for the down payment on some land. exchanging the value from crypto to a hard asset was one of the best financial decisions i've made, because a year or two later i would've never been able to access the funds again due to a hack on the defi stablecoin website.

dunno how this shit is legal.

sorry for the snark on your launch, just being an HN caricature.

genuinely, how do y'all protect the consumer from your smart contracts having a bug or security vulnerability? will you ever freeze funds in the event of a crypto bank run?

How do I invest?

Witness

global from day one and circumvent government interference

--- There are banking laws all over the world that need to be considered and followed, the US in particular has a set of banking laws that differ in each state unless you are an actual bank that follows federal regulations.

Ignoring or being purposefully ignorant of the laws is a bad path.

They are not holding people’s money. That’s the whole point of it. So most of the banking stuff really wouldn’t apply to them.

Now, when it comes to facilitating money transfers, or facilitating forex. Yeah, this they’d need to look into. But the idea seems to be that they’re a P2P marketplace bringing individual sellers and buyers together, but not really touching any of that money themselves.

Sort of like, is Uber a taxi firm? Different jurisdictions see this differently.

> They are not holding people’s money

If you are facilitating the movement of money you are still governed by financial regulations.

Regulators aren't stupid. Trying to be clever will not get you anywhere.

It's not a case of stupidity but rather a judge's interpretation of current law as argued by a barrister.

In a very simplified example, accountants have to follow the same tax laws for their clients. Some firms cost _significantly_ more than others because they have an army of lawyers who find legal loopholes that can reduce the tax bill.

Karsa will likely use their YC cash to fund these lawyers in different countries when issues arise. They might decide to stop fighting and close business in that country.

Correct! There's certainly a lot of regulations to navigate, but we are strict about NEVER touching the fiat in any country; just connecting buyers and sellers.

This is money laundering a.k.a black market and is illegal in many countries.

We're fully pursuing all KYC/AML/Sanctions restrictions. Couldn't operate as a US fintech company without doing this.

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.

This is the main selling point of crypto. You could go one step further, learn how to manage your own wallet and cut the middle man (in this case, the OP).

Other than the seller being someone able and willing to break the law in Pakistan to get dollars to people who want them, yes.

I love how you're doing it after you launch.

That sort of nonchalant attitude will serve you well in the future I am sure.

Thats not fully true. These flows do have regulation that can be solved.

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?

So, support a failing government?

Team America, world police, crypto version.

If the law strictly controls capital flows to US dollars, why do you think capital flows to US dollar stablecoins is legal?

Or is the business plan to make it easier to do crimes?

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.

> 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?

Trading currencies is basically zero-sum. A VEF/USD seller needs a USD/VEF buyer. That buyer demands some VEF for each USD i.e. the floating exchange rate. In a free market, imbalance in the foreign exchange flows either reduces the exchange rate, or forces the issuer to take action by supporting the market at the desired rate with USD reserves, or offering higher interest rates to attract more dollar demand, etc. All of those are expensive, so some issuers might try to prohibit foreign exchange at rates less advantageous than the desired rate. Circumventing that prohibition (i.e. capital control) lessens its effectiveness.

None of which is to say that capital controls are a good thing, but you can understand how a government might want them, and might view circumventions as 'distortions'

> How is it undermining a currency and distorting a financial system to allow people to exchange their OWN hard-earned money for another currency?

In practice, it's because the government of that country says that it is.

I don't agree with capital controls either, but it's still illegal in some countries. Basically any country where, in my opinion, it would be a good idea to use such services.

Currency crisis are quite debilitating

https://catalogue.nla.gov.au/catalog/3070732 - The Malaysian currency crisis : how and why it happened / Mahathir Mohamad

edit: Sorry that first link is for a book

This might be better https://www.investopedia.com/articles/economics/08/currency-...

second edit - I'll add the relevant paragraph

> Anatomy of a Currency Crisis

> Investors often attempt to withdraw their money en masse if there is an overall erosion in confidence in an economy's stability. This is referred to as capital flight. Once investors sell their domestic currency-denominated investments, they convert those investments into foreign currency.

> This causes the exchange rate to get even worse, resulting in a run on the currency, which can then make it nearly impossible for the country to finance its capital spending.

That's fine and dandy, and I agree. But it's still illegal to provide means to circumvent the law. Well, depends on the country and enforcement I guess. It's pretty hard to do so.

Is that rhetorical, or have you never heard of currency controls and money laundering?

you will be surprised, but it's all about corruption oportunities.

In venezuela right now, there's a YC startup (2023), "Kontigo" [1], who's part of it, they went all in with this "stablecoin" bullsh*t and manage to get a license to operate in US (stripe) and with Venezuelans users with absolutely NO KYC, fully connected and "licensed" by the venezuelan "National Superintendence of Cryptoassets and Related Activities" a.k.a SUNACRIP

Take note that this SUNACRIP had closed operations since 2020 when a huge corruption scandal hit the govt, they used crypto to run corruption operations and money laundering [2][3][4] and somehow SUNACRIP, an organization that is not even working or functioning, this january licensed "Kontigo" to operated in the country, the founders themselves made a bragging video on instagram about "noone expecting it", wich is hillarious, you can find the video at https://www.instagram.com/p/DFd8ouoNKuI/

Anyways, the corrupted govt, approved a YC startup to exchange instantly USDC to VEF using venezuelans banks APIs and USA banking system (plaid, stripe, etc), without any KYC, without any sanctions screening, nothing, the reason for this approval is pretty simple, they doing the money laundering process super easy for them lol, they helping venezuelan corrupts officials bypass sanctions and easy money laundering.

I'm absolutely baffled at the situation and wondering how the fuck this happened, I myself know lower/mid size venezuelan corrupt officials using Kontigo to instantly wash money into USDC, and all of this is backed by YC itself.

And inbefore any user comes here telling me that "venezuela is sanctioned" and whatever other random thing, this company absolutely doesnt help venezuelans, it only helps corruption and launder money from corruption and drugs

[1] https://www.ycombinator.com/companies/kontigo [2] https://es.wikipedia.org/wiki/Caso_PDVSA-Cripto [3] https://news.bitcoin.com/how-crypto-ended-up-at-the-center-o... [4] https://www.criptonoticias.com/judicial/fiscal-venezuela-con...

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> A fool their money are soon parted.

You mind elaborating and substantiating your claim? Stablecoins are, in fact, a different class of crypto, and in my experience, actually VERY useful. I’ve owned some DAI for years now, and unlike your average meme coin, nothing about it is sketchy—it’s fully auditable on the blockchain and censorship-resistant. Why’s someone like me a fool?

How do you audit that the issuer is printing coins backed 1-to-1 by USD reserves?

> How do you audit that the issuer is printing coins backed 1-to-1 by USD reserves?

You’re asking the wrong question, since DAI isn’t backed 1:1 by USD reserves like fiat-backed stablecoins (e.g., USDC). It’s a decentralized crypto-collateralized stablecoin—it’s backed by a variety of assets, including cryptocurrencies and real-world assets, with mechanisms to ensure over-collateralization.

I’m on mobile and it’d take forever to explain the entire protocol to you here, so I recommend you read the white paper [0] if you’re interested in understanding how it all works.

[0]: https://makerdao.com/en/whitepaper/

https://chainsec.io/failed-stablecoins/

23 failed “stablecoins” and counting.

I don’t think the people most at risk of losing their money in inflation have the luxury of holding it in crypto. They need food and water, not NFTs and shitcoins.

The countries with the highest inflation rates [1] aren't necessarily the same with high rates of poverty [2]. For example Lebanon has the highest inflation rate in the world, but has poverty rates lower than Mexico (which itself has relatively low inflation).

[1] https://en.wikipedia.org/wiki/List_of_countries_by_inflation...

[2] https://worldpopulationreview.com/country-rankings/poverty-r...

Tell me you never lived in a high inflation country without telling me

So YC digs cryptoshit now huh? Shameful.

https://en.wikipedia.org/wiki/Coinbase is a YC company so it's been a thing for a while.

Congratulations on the launch! Stablecoins are a powerful use of blockchains and it’s great to see a novel means of distributing them.

A lot of commenters on HN are deeply biased against anything to do with blockchain, so best to ignore the noise here and keep shipping.

Launch HN: Karsa (YC W25) – Buy and save stablecoins internationally