Kontigo is gaining more attention by marketing a bank model where stablecoins are at the center as a global alternative to traditional financial services.
At the same time, Kontigo's rapid growth raises skepticism in the crypto world. Many wonder if the model can grow sustainably without repeating past mistakes from previous failures in the industry.
Kontigo's rapid success attracts attention
A new bank that builds its entire identity on stablecoins is quickly climbing the rankings in the financial industry.
Kontigo sees itself as a platform with stable currency. They offer wallets where users store their capital in Bitcoin and can spend in local stablecoins, and all transactions are recorded on the blockchain.
On Tuesday, Kontigo's CEO Jesus Castillo announced that the company has raised 20 million USD in a first round of investment to try to build the world's largest bank.
Castillo also describes Kontigo as the fastest-growing stablecoin neobank globally. The platform allows individuals and businesses to receive a 10% return on digital USD, use a stablecoin card with Bitcoin cashback, and invest in tokenized U.S. stocks among other features.
Management says that Kontigo wants to provide nearly 5 billion people in the world with access to basic financial services. Large institutional investors, such as Base and Coinbase Ventures, support the company.
Despite rapid success, Kontigo has also faced doubts. Some wonder if the service merely repeats old crypto stories that previously led to significant losses for the market.
No-KYC access raises warning signals
Kontigo highlights several advantages. They emphasize that users from around the world can open an account and start using USDC or USDT without having to follow KYC regulations.
This may seem less bureaucratic at first, but it quickly creates anxiety among users and industry analysts.
KYC regulations protect banks and other financial actors from fraudsters. These require identification and confirm the customer's identity.
Without such regulations, both the platform and the users are exposed to a greater risk of fraud, money laundering, and terrorist financing.
The crypto industry has previously seen that the absence of KYC regulations has harmed users who relied on unprotected platforms.
Last week, Terraform Labs co-founder Do Kwon was sentenced to 15 years in prison for committing a cryptocurrency fraud valued at 40 billion USD. Terra's system had no real KYC controls, leading to enormous capital flows entering anonymously.
When trust in their algorithmic stablecoin disappeared, the lack of oversight exacerbated the entire situation, reducing transparency around capital and increasing losses for millions of users. The case clearly showed how the absence of simple safeguards can quickly lead to a total system collapse.
The lack of KYC is not the only concern regarding Kontigo's goals.
Yield Promises test users' trust
Castillo has explained that the promised 10% return on USDC comes from lending through the DeFi protocol Morpho, U.S. Treasury bonds, and services via Coinbase.
But critics argue that the figures do not add up. Normally, these sources provide between 3% and 7% per year, even if combined in today's market situation.
Skeptics wonder how Kontigo can offer a 10% return sustainably. They believe there may be hidden risks, leverage, or secret strategies.
At the same time, another user reported that a transfer of USDC had not been credited to their wallet several hours after the process began.
For platforms that want to be banks or payment solutions, even small delays with money are a risk to user trust. Reliability and quick payouts are fundamental requirements, regardless of the amount.
As Kontigo grows, it becomes more important that they live up to promises and build users' trust than to talk about growth.
After previous failures in the industry, the company must now show that rapid growth can occur without making the same mistakes as other cryptocurrency companies.
