Colossus is building its own sovereign credit card network on an Ethereum layer-2, seeking to replace Visa and Mastercard. The company claims it can operate without traditional Know Your Customer (KYC) or Anti-Money Laundering (AML) requirements by leveraging its interpretation of the GENIUS Act. This venture follows the shutdown of a similar startup, UnCash.
Joseph Delong, former SushiSwap CTO, leads the four-person team. Colossus's network is designed to treat users' account addresses as their sole identity, replacing traditional bank settlement with cryptographic signatures for instant stablecoin transfers. The startup has raised $500,000 in pre-seed funding, valuing it at $10 million.
While traditional credit card networks involve multiple intermediaries like issuers, processors, and networks such as Mastercard and Visa, Colossus aims to vertically integrate these functions. This streamlined approach, utilizing stablecoin transfers on its layer-2 network, could potentially reduce fees. The company plans to preserve the merchant acquirer role for distributing point-of-sale terminals and liquidating stablecoin transfers into traditional wire transfers.
Colossus's interpretation of the GENIUS Act suggests it is not obligated to adhere to financial crime compliance protocols requiring personal information. Delong indicated that the network's sequencer might incorporate design features to comply with U.S. Treasury sanctions, acting as a centralized filter without embedding banking rules into the core code.
Previous attempts at KYC-less crypto cards have faced challenges. UnCash, for instance, reportedly ceased operations after its card issuers, primarily Mastercard, terminated their relationship. Delong acknowledges that while partnerships with incumbent networks offer faster momentum, Colossus's more ambitious approach promises greater long-term benefits.
Despite regulatory concerns regarding illicit finance, Delong believes Colossus can make crypto more akin to cash and enable fully on-chain living. He aims to provide users with greater financial liberty, having personally moved away from traditional bank accounts years ago.