Launch HN: Karsa (YC W25) – Buy and save stablecoins internationally
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!
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.
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.
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.
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?
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 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.
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
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?
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).
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 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.
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.
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)
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.
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.
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.
Rigging or rugging?
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?
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.
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
Stable coins hold dollars (bonds usually) IIRC they are amongst the largest US bond holders
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.
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.
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
Shahryar, have any of your relatives in Pakistan bought stablecoins through this platform? How do you do KYC for a Pakistani customer?
So what’s the story behind the name ‘Karsa’? Also congrats with the launch!
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.
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
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.
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.
Surprised to see this backed by YC.
Trillion dollar industry with interesting problems. What’s the issue?
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)
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.
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.
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.
Even more power to the US, why not gold?
congrats! this can be useful to many people who see their savings lost through inflation. Wish you the best!
How do I invest?
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.
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.
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 last 25 years, gold and silver have been a sound investment.
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
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 =)
"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.
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?
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.
If finding a way to have less of your money and labor stolen by the government makes you a criminal then lock me up
No. We just want fruits of our labor not to evaporate next day.
They only want the profits, but you're on the right trail.
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).
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.
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The crypto grift continues.
milady
So YC digs cryptoshit now huh? Shameful.
scammers be scamming
Did you not get the memo? We doing AI now.