Stablecoin crypto startup Coala Pay, which connects humanitarian aid organizations with potential donors, has raised $3.5 million. The seed round was led by Castle Island Ventures with participation from Lattice Fund, Factor Capital and the founders of The Giving Block, a crypto charity platform.
Stablecoins, a type of cryptocurrency that maintains a value in line with the U.S. dollar, are often used to make cross border payments. Founder Melyn McKay says that by using stablecoins to facilitate donations across borders, Coala Pay can save up to 25% of donation money that would otherwise be eaten up by transaction fees.
“If that were just a business story, it would be an incredible metric,” she said. “The fact that that metric translates into lives saved and people served is all the more compelling.”
McKay says she discovered stablecoins in 2021 while advising an European Union in Myanmar. Her job at the time involved facilitating aid after a military coup restricted access to the private banking system. Unable to get cash to those in need without being targeted by the authoritarian regime, she says she started building Coala Pay to facilitate smart contracts between donors and on-the-ground programs to shield the identity of sender and recipient.
Coala Pay helps vet both donors and local aid organizations, according to McKay, requiring thorough documentation from members of both groups to prove their legitimacy. Once both entities are white-listed, each entity can access the other’s documentation as needed.
These entities can then agree on the terms of the donation. Instead of signing a physical contract, Coala Pay creates a smart contract for the stablecoin transaction and a token that will store information and track how the money is spent.
Coala Pay creates revenue for itself by charging a service fee for facilitating each smart contract. McKay declined to disclose the company’s annual revenue or overall valuation.
She said the company will use money from this funding round to expand the team by hiring employees with experience at the United Nations and within the U.S. government.
