Tweet of the week 🦉🏆
With the Bitcoin 2021 Conference in Miami this week, news in the fintech space was crypto focused. At the conference Square’s Jack Dorsey spoke about the company’s plans for crypto and his personal interest which include developing a hardware wallet, funding for solar-powered mining operations and defending crypto patents against trolls.
El Salvador legalised bitcoin as legal tender in a wild move, catapulting one of the world’s poorest countries into the limelight. Businesses have to accept bitcoin as a payment method, taxes can be paid in bitcoin and the asset is excluded from capital gains tax. Not only that but the country that is rich in geothermal power from its volcanoes is looking to encourage miners to relocate with the promise of cheap renewable energy. Great threat from Caitlin Long below.
Despite this, the price of bitcoin is still volatile which is NOT the best attribute for method of payment. Business value certainty. Why spend an asset whose value might be worth much more in the near future? Whilst discussing bitcoin as a payment mechanism, you can’t skip over the heavy influence of one man on the price of BTC. While the US dollar reacts to the every word of Jerome Powell, Chair of the Fed, bitcoin has Elon Musk. His every crypto tweet results in dramatic price action and someone that influential is a cause for concern for a decentralised asset.
While the focus was Miami, CB Insights highlighted them 25% of all 120 fintech unicorns globally are in Europe. Sifted provided a useful map of them all.
If you enjoy reading this, please subscribe and share! 🙏
There were 38 deals in the fintech space across the US and Europe with a total investment of $1.82bn. Some highlights are below.
🇪🇺 Scalable Capital raised €150m in Series E led by Tencent and included N26, Blackrock and others.
🇪🇺 Nordigen raised a €2.1m from Black Pearls VC, Id4 Ventures, Highgoal Capital and angel investors.
🇪🇺 Klarna raised $639m at a $45.6bn valuation led by SoftBank and included WestCap Group, Honeycomb Asset Management and ADIT Ventures.
🇪🇺 Wajve raised a €5m seed round led by EQT Ventures and included 468 Capital.
🇪🇺 Ledger raised a $380m Series C led by 10T Holdings and included Crypto.com, Digital Currency Group, Draper Esprit, Fabric Ventures, Felix Capital and more.
🇬🇧 Climb8 raised £1.26m via crowdfunding, beating its target by 168%.
🇬🇧 10x Future Technologies is rumoured to be raising £130m at a £500m valuation from Blackrock and others.
🇬🇧 LemonEdge raised $2.5m from Sidekick Partners and angel investors.
🇬🇧 TreasurySpring raised $10m in a round led by MMC Ventures and Anthemis.
🇬🇧 Copper extended its May Series B with a $25m investment from Alan Howard, a British fund manager previous with hedge fund Brevan Howard.
🇬🇧 Collegia, a UK first combined auto-enrolment and personal pension provide raised £500,000 from angel investors.
🇺🇸 Socure secured an undisclosed investment from Capital One Ventures.
🇺🇸 Dave is set to go public at a $4bn valuation through a SPAC sponsored by Victory Park Capital.
🇺🇸 Credit Sesame raised $51m in a round that included IA Capital Group, Inventus Capital, ATW Partners and more.
🇺🇸 Blockdaemon raised a $28m Series A led by Greenspring Associates and included Goldman Sachs, CoinFund, BlockFi, Uphold and others.
🇺🇸 Gemini acquired Shard X, to utilise its multi-party computation technology to increase customer asset transfers.
🇺🇸 Clair raised a ¢15m Series A led by Thrive Capital.
Challenger Banking 🚀
🇪🇺 AideXa, a SME challenger bank, has received a full banking license from the ECB.
🇬🇧 Savings app Plum has launched a SIPP, a self-invested pension plan, expanding into the pension and retirement space. Look out for stock trading and crypto to come.
🇬🇧 Collegia, mentioned above with its first fund raise, is the first pension in the UK that is both personal and auto-enrolment. The company worked with the FCA to merge two different pensions, allowing automatic contributions into a personal pension.
🙌🏻 FATP Take - Whilst the UK has done well with auto-enrolment, a market worth $100bn annually serving 10m employees and 1.6m businesses, once access is almost ubiquitous, innovation will be at making products more suitable to individuals to include apps, real-time data and richer functionality. Collegia is leading the charge here in the exciting new frontier in UK pensions.
🇺🇸 MoneyLion reported near 100% increase it net revenues in Q1 2021 vs Q1 2020, +80% customer growth and +213% payments volume over that period.
Digital Assets ₿
🇪🇺 Banque de France and Swiss National Bank are partnering with the private sector to trial CBDC-based cross border payments for the wholesale market.
🇬🇧 The BOE says stablecoins should face the same regulatory standards as those of bank deposits.
🇺🇸 Coinbase users can now borrow up to 40% of bitcoin holdings in cash.
🇺🇸 Zabo and Kubera have teamed up to focus on estate planning for cryptocurrency assets.
🇺🇸 Anchorage has rolled out a new lending product in partnership with BankProv, allowing institutions to draw on lines of credit in USD which is backed by their ETH that is in custody.
🇺🇸 Amazon is seeking a Head of Product, Blockchain for Amazon Managed Blockchain. While the original posting has been removed, it reported Amazon was interested in both DeFi and traditional financial services.
🇺🇸 Pyth Network, a data project led by a high-speed trading firm, recruited GTS, one of the largest market-makers on NYSE, to join its platform to aggregate Wall Street market data on the Solana blockchain.
🌍 Influential global bank regulator The Bank for International Settlements (BIS) proposed splitting crypto assets into two categories, those that are eligible for treatment under existing frameworks i.e. tokenized assets and stablecoins, and those that are not and pose higher risk i.e. bitcoin. Suggesting a 1250% risk weighting on higher risk crypto assets seems excessive.
Traditional Banking 🏦
🇬🇧 HSBC has created an API portal for developers who are looking to integrate with the banks suite of APIs.
🇺🇸 Citi secured a renewed partnership with AT&T for the co-branded credit cards
🇺🇸 Capital One is offering their customers the ability to get their paycheck 2 days early, putting them on a more equal footing with challenger banks like Chime where this is pretty common and has been for a while. Better late than never!
Fintech Infrastructure 🚧
🇬🇧 OneBanks, a shared bank branch startup has partnered with G4S to enable cash and bill payment solutions at its pop up kiosks that are on trial.
🇬🇧 Bud has partnered with Enfuce to bring its carbon tracking capabilities to the UK.
🇺🇸 SoFi-owned payments platform Galileo has hired the head of Google Cloud’s Financial Services business as its new CEO after only a year at Google.
🇺🇸 Marqeta had a successful IPO this week and closed its first day of trading +13% with a $16bn market cap.
🇺🇸 Stripe released Stripe Tax, aiming to extract away complexities of calculating and collecting sales tax globally, something that prevents businesses from selling in additional countries. The product was developed outside the US.
🇺🇸 Unit has integrated with Plaid Exchange, making Unit’s customers discoverable throughout the Plaid network on services such as Venmo and Robinhood. Plaid also signed an open finance partnership with Capital One this week.
🇺🇸 Silvergate Bank has cut its ties with Binance, stopping USD deposits and withdrawals. No reason was given but it could be tied to regulatory issues at Binance.
🇪🇺 Klarna’s UK shopping app now allows users to split any purchases over three monthly instalments. These capabilities were already live in US, Australia and Sweden and was launched alongside a marketing campaign #WhyPayInterest. It also looks to favour the US over the UK for its inevitable IPO.
🇬🇧 The biometric payment space hotted up this week with Walletmor launching a payment device implanted under the skin.
🇺🇸 JP Morgan reported +17% ytd increase in credit card spending vs 2019, focused on services sector such as entertainment, dining and lodging.
🇺🇸 Goldman Sachs and Visa are partnering up to support Goldman’s corporate clients to move funds quickly around the globe with Visa B2B Connect and Visa Direct Payouts.
🇺🇸 Facebook has added QR codes and payment links to Messenger, letting users send or request money with Facebook Pay. Expect this to be rolled out across the Facebook ecosystem as it increases its efforts to expand into financial services.
🇺🇸 Affirm and Shopify extended their partnership with Shop Pay Instalments being available at all eligible sellers in the US
🇺🇸 A pay with Cash App button has been seen on some Square online store sellers according to John Street Capital in an unsurprising move by Square.
🇺🇸 Citigroup is launching a 5% cashback credit card in a bid to capture the expected deluge in consumer spending as the world comes out of the pandemic.
🇺🇸 Amazon is seeking bids to replace JPMorgan as their co-branded credit card provider, a contract that is likely to be worth a lot!
Regulatory Corner 🔎
🇺🇸 A recent increase in ransomware attacks with crypto demanded in return has caused quite a stir with both regulators and the crypto community.
🙌🏻 FATP Take - The DOJ announced this week it recovered most of Colonial Pipeline’s ~$5m ransom payment to Darkside because the FBI had the private key to a wallet the coins ended up in, essentially they had their online banking password. The Biden administration is launching a review of ransomware investigations as well as “expanding cryptocurrency analysis to find and pursue criminal transactions”. The recovery of the bitcoins prompted a fall in the price of bitcoin with concerns the technology had been hacked and was not private. Transparency is built into blockchain technology given blockchain is public so that shouldn’t have been a surprise.
🇺🇸 The IRS is looking for additional funding to boost its crypto and cyber operations which should filter down to tax returns and enforcement in an unwelcome move for enthusiasts. That is of course if you self-report …
🇺🇸 Texas is the latest state to embrace crypto as it green lights state-chartered banks to custody cryptoassets.
Crypto 101 🏫
DeFi - DeFi, or decentralised finance, is a term used to describe certain financial applications in cryptocurrency or blockchain. It is a form of finance that doesn’t rely on central intermediary institutions (i.e. banks, brokerages or exchanges). Instead it uses smart contracts (something I wrote about last week) to perform functions previously performed by a bank.
For example, you can deposit crypto assets in a “vault” to earn interest. This is similar to depositing fiat currency in a bank account to earn interest. A “vault” is basically a crypto wallet where you can store your crypto which are then used for various activities to earn the asset owner an income. One such activity is staking, where the crypto assets you pledge are used to validate blocks on the blockchain for which the native cryptoasset is earned as a reward. These rewards are shared with people who “stake” their assets which is how the income/interest is earned.
I’ll dig into more DeFi concepts at a later date.
Longer reads 📜
The importance of values in the staking economy - Chris Remus
The Federal Reserve Payment Processor - Lex Sokolin
Fintech 3.0 Re-Architecting Financial Market Infrastructure and DeFi - John Street Capital
Case for CBDC - Market Efficiency - Tom Noyes
Open Source Monetary Policy - Richard Burton
The rise of crypto laundries - Hannah Murphy, FT
Your feedback is a 🎁, please give below 🙏
Good || Bad || Needs Improving