Fintech Update, 11/5 - 11/11
November 5-11, 2016
Leading Off
The IRS’ inspector general recommended that the agency develop new tax rules for digital currencies; LendingClub announced that its loan volume stabilized, producing a strong uptick in its stock price; IBM will help yet another international bank develop a blockchain network; China worried foreign businesses with its stringent new cybersecurity legislation; the U.K.’s FCA announced its first regulatory sandbox cohort; and the Wall Street Journal offered its take on what President Trump may mean for fintech.
Policy & Regulation
IRS urged to address digital currencies. The Internal Revenue Service’s (IRS) inspector general released a report recommending that the agency develop a strategy to combat the potential for digital currencies to be used in tax evasion or money laundering schemes. Per the report, the IRS does not currently have any tax compliance initiatives or guidelines specific to virtual currencies.
Marketplace Lending & Credit
Good news for LendingClub. During this week’s third-quarter earnings call, LendingClub announced that its loan volume has stabilized and that it has entered into a loan-sale arrangement with a subsidiary of National Bank of Canada, one of Canada’s largest banks. LendingClub’s shares jumped 15%, the company’s largest-ever single-day percentage gain.
Banking & Markets
Citi announces mobile wallet. The new Citi Pay digital wallet will “provide customers with a mobile option for online, in-app, and in-store payment needs” across mobile platforms, similar to rival Chase Pay. Citi has partnered with MasterCard's MasterPass service for online and in-app transactions, making it a payment option for merchants in 33 countries upon launch.
Payments
Stripe launches “Works with Stripe.” The firm, which allows businesses to add payment services to their apps and websites with a few lines of code, released a new directory of over “300 apps that integrate with Stripe.” The Works with Stripe directory points to Stripe’s “ambition to position itself . . . [as] a wider platform for business services.”
Digital Currency & Blockchain
Deloitte to open its smart contracts platform. The firm plans to make Smart Identity, its ethereum-based smart contracts platform, open source. Mike Robinson, CTO of Deloitte Digital UK, said that “scaling adoption [and] scaling consensus” is critical to blockchain’s success, and that “no one organization is going to be able to own it."
Thai bank partners with IBM on blockchain initiative. Thailand's Kasikornbank (KBank) announced it will work with IBM to build a blockchain network “to reduce complexity in its corporate credit business.” The bank hopes to “fast-track traditionally lengthy procedures such as Letters of Guarantee” using IBM's Bluemix (cloud) and Hyperledger (blockchain) platforms.
Privacy & Cybersecurity
China approves new cyber law. The Chinese parliament passed a new cybersecurity law aimed at “tightening and centralizing state control over information flows.” Among its provisions, the law calls on organizations to improve their defenses against network intrusions and requires that network operators assist authorities in national security and criminal investigations.
Personal Finance
“Hey Siri, send Austin $50 using PayPal.” iPhone and iPad users running Apple iOS 10 can now ask Siri to transfer money via PayPal. The new functionality comes after PayPal subsidiary Venmo and competitor Square Cash added Siri support in September. The tool allows users to make P2P transfers using voice commands in 30 countries and a variety of languages.
International News
BoE FinTech Accelerator proves valuable. Since announcing its accelerator program in June, the Bank of England (BoE) has worked with startups to develop “proof-of-concepts in data analytics, information security and distributed ledgers.” According to COO Charlotte Hogg, the accelerator is a valuable part of the BoE’s “experience and research” approach to fintech regulation.
FCA selects first regulatory sandbox cohort. The British Financial Conduct Authority (FCA) announced the first 24 fintech firms to participate in its Project Innovate regulatory sandbox initiative. The firms will be able to test their products in an FCA-supervised “safe space,” allowing for product development without immediate concern for regulatory compliance.
Denmark opens new fintech hub. Copenhagen Fintech bills itself as “Scandinavia's first coworking space dedicated to fintech entrepreneurs.” The lab is a “joint initiative by Financial Services Union Denmark, the City of Copenhagen and the Danish Bankers Association.”
Company Spotlight
Online loans for travel: it’s a thing. Startup lender UpLift announced new deals with Golden Nugget, Southwest, and United, adding to its stable of travel company partnerships. UpLift offers “12-month loans to consumers who [book] vacations online,” allowing them to pay for travel on partner websites with monthly UpLift loan repayments rather than with a credit or debit card.
Events
Reminder: SEC hosting Fintech Forum on Monday. As previously shared, the Securities and Exchange Commission (SEC) is hosting a fintech forum in Washington, D.C., this coming Monday, November 13. The schedule of events and panelists can be found here.
Commentary & Miscellaneous
Interest in blockchain applications may be narrowing? As some of the hype around blockchain wears off, the American Banker suggests that bankers and technology experts may be focusing their attention on a narrower set of blockchain use cases, such as a common architecture for payments and settlements, rather than “euphoric discussions of wide-ranging possibilities.”
Fintech, thy name is bipartisan? Per the American Banker, fintech legislation could be one of the few “regulatory efforts [with] a clear bipartisan mandate” in the Trump administration. Several House Republicans have proposed fintech legislation in recent months, but Democrats may also support fintech measures “as a way to reach underbanked and unbanked customers.”
What Trump may mean for fintech. The Wall Street Journal speculates that the Trump administration’s expected deregulation agenda could be bad news for fintech startups. Trump has vowed to cut down on financial regulation, including a repeal of the Dodd-Frank Act, which could put fintech firms on a more level playing field with banks “that feel unleashed.”
Have a great weekend!
The Fintech Update Team