The description of the whole "copy something, but ignore the regulation" scheme is missing the most important part: Make sure that the extra risk you are undert

The description of the whole "copy something, but ignore the regulation" scheme is missing the most important part: Make sure that the extra risk you are undertaking be eaten by someone else, while you get most of the upside of the bet. It's not even tech related at that point: It's also how synthetic CDOs were supposed to work for those issuing them in the financial crisis. If your innovation is only to eat the risk that before was illegal, then you are taking a gamble with is unlikely to pay off. It's also why private equity is using loans from third parties as part of their purchases: if the company they bought goes under because the fees were too high, or the intervention was too aggressive, the loan goes into default, and they didn't make the loan, so it's someone else's problem. Most crypto schemes end up like that too: The issuer offloads much of the risk. What is the real wonder of tokenized shares in a startup, if not for the venture capitalist to be able to offload risks into unsophisticated investors well before an IPO? Any place that is creating bonus risk is sticking most of it to someone else, capturing just the upside. If Klarna wants to have a chance, it has to charge a whole lot more fees to the merchant, and then find a way to offload as much of the credit risk as possible, probably doing some kind of complicated scheme to make others underestimate the risk. Otherwise they are just WeWork, grabbing pennies in front of a steam roller until a bad recession destroys them.