Crypto Card Startups Are Paying for Growth Before Profits Arrive

Rewards first, economics later

CoinDesk reported that KAST moved from near break even into losses after increasing its growth spending. Bleap also acknowledged that customers who only spend through its Mastercard and collect cashback can be unprofitable.

The companies are treating those losses as customer acquisition costs. The assumption is that a cardholder who begins with everyday purchases may later become a more valuable financial customer. That could mean paying trading fees, borrowing against assets, staking crypto, holding a larger balance or subscribing to a membership plan.

KAST’s Reserve product illustrates the scale of the subsidy. According to the CoinDesk report, the company offers returns of 8% to 12%, depending on membership tier, while the assets backing the product generate roughly 3.5% to 4%. KAST therefore absorbs the difference between what the underlying assets earn and what customers receive.

The company said Reserve had attracted tens of millions of dollars by September and described the expense as part of its effort to gain market share. That approach can make sense if balances grow quickly and users adopt additional products. It becomes more difficult if customers deposit funds only long enough to collect the promotional yield, then withdraw when a better offer appears elsewhere.

Bleap’s own product page describes a digital account with self custody, trading and card spending features. It advertises up to 20% cashback on selected purchases, 1% cashback on general spending and higher rates for certain streaming, gaming and artificial intelligence subscriptions. The page also advertises savings returns of up to 8% AER.

The current offer shows how these businesses are combining several incentives rather than relying on card interchange alone. Bleap’s broader product set gives it more ways to earn revenue from a user, but it also makes the economics harder to evaluate. A customer receiving a high return on balances and generous cashback may still be costly unless trading, subscription or other activity offsets those payments.

Interchange limits the card alone

The card model faces a structural constraint in Europe. Interchange rules limit the fees issuers can earn from covered consumer debit transactions. That makes ordinary card spending a difficult standalone source of profit, particularly when a company returns part of its revenue to users as cashback.

The result is a funnel. The card is the most visible entry point because it connects crypto balances with familiar purchases. The financial return, however, is expected to come later through products that carry greater revenue potential.

That creates a tension between growth and risk. Trading activity can generate fees, but it also depends on market conditions and user engagement. Lending can produce interest income, while exposing the provider and customer to collateral and liquidation risks. Staking can create returns, but introduces operational, liquidity and market risks. A platform that uses all of these products to support card rewards may be building a broader financial business, not simply a payment product.

The danger is that the funnel may not work as planned. A customer could use the card, receive cashback and avoid every higher margin service. CoinDesk reported that Bleap considers such card only users unprofitable. If enough users behave that way, rapid growth can increase losses rather than improve scale economics.

Customers may follow the reward

Bybit EU has already moved in the opposite direction from the most aggressive reward programs. In its cashback update, Bybit EU said that, beginning in summer 2026, non VIP users would move from tiered cashback to a flat, uncapped 1% rate. Subscription cashback would become a one time reward for the first month, capped at €50.

The change highlights the retention problem. High rewards can acquire users quickly, but reducing them may reveal that the customer’s commitment was to the incentive rather than the platform. A lower rate could improve the company’s economics while weakening engagement at the same time.

No opposing company analysis or independent evidence challenging the subsidy concerns was included in the available material. The companies’ stated strategy is clear, however: accept weaker short term economics in pursuit of a broader relationship.

Competitors are testing other paths

Some competitors are trying to make the card part of a wider money platform without relying exclusively on cashback. Kraken’s Krak Card product page presents the service as a broader money app connecting spending with cash and crypto balances, while advertising cashback on eligible purchases.

Cero Finance is pursuing a credit linked model. Its official site describes a card connected to a growing credit line based on card spending, cash held and connected accounts. The project emphasizes self custody and future launch access, suggesting a model that seeks to monetize credit capacity rather than simply paying users to spend.

These alternatives do not eliminate risk. Credit introduces repayment and underwriting concerns, while crypto linked balances remain exposed to price volatility. Other products, including cards connected to staking or decentralized finance borrowing, face their own operational and market risks.

The larger question is whether crypto cards can create durable payment habits without continually increasing rewards. If customers become active users of trading, lending, staking or credit products, subsidies may function as an investment in a valuable relationship. If they remain cashback collectors, the industry may discover that adoption is easier to buy than to retain.