Crypto card startups are racking up losses just to buy your loyalty with big rewards
Crypto card startups like KAST and Bleap are incurring significant losses by offering high rewards to attract customers, betting that these users will eventually engage in other profitable services. This strategy is leading to near break-even or loss-making operations for growth.
Why it matters
This trend highlights the financial challenges and potentially unsustainable business models within the crypto fintech sector, raising questions about long-term viability and investor expectations for profitability.
The problem for some card providers is that the price they’re paying for growth is more than the customers they attract bring in.
Consider KAST. The stablecoin-powered financial platform, which issues cards on the Visa network, moved from near break-even into losses as it increased spending on growth, CEO Raagulan Pathy told CoinDesk in an interview.
Or Bleap, which offers up to 15% on returns on crypto holdings and 20% cashback on purchases. If all customers do is spend on its Mastercard and collect cashback, they can be unprofitable, Bleap Latvia CEO Eduards Timofejevs said in a separate interview.
The companies are betting that, eventually, those customers will trade, borrow or pay for extra services, turning the promotional spend into a lasting source of revenue. Until then, more users and higher outlays mean a bigger subsidy bill.
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