Fintech Update, 7/3 - 7/9
July 3-9, 2017
Leading Off
Members of the U.S. House of Representatives launched a caucus dedicated to issues in AI; SoFi announced it will shut down its recently acquired Zenbanx subsidiary; the CFTC approved a DLT firm for registration as a swap execution facility; the U.K. PRA instructed insurers to run “stress tests” on their cybersecurity preparedness; Vantiv is close to completing a $10B acquisition of Worldpay; and PayPal made a strategic investment in LendUp.
In the News
Congressmen launch AI caucus. Representatives John Delaney (D-MD) and Pete Olson (R-TX) founded and will co-chair the Congressional Artificial Intelligence Caucus, which aims to educate policymakers on “the technological, economic and social impacts of advances in AI” to help ensure that it “benefits Americans as fully as possible.”
SoFi to close Zenbanx. The online lender, which acquired the Delaware-based Zenbanx in February, will terminate the online bank’s accounts at the end of the month. SoFi is currently pursuing an ILC application and, with Zenbanx’s relationship with WSFS set to expire, the firm decided to shutter accounts rather than renew the partnership or find a new bank partner.
D.C. taxis try Square tactics. By the end of August, all taxis in Washington, D.C. will have new digital meters powered by payments firm Square. The move is a “step to help the city’s taxis remain relevant and compete with ride-hailing apps like Uber and Lyft.” Passengers will get fare estimates, GPS route tracking, and electronic receipts as with a ride-sharing service.
CFTC approves LedgerX for swaps. The Commodity Futures Trading Commission (CFTC) granted the blockchain startup formal registration as a swap execution facility. LedgerX becomes the second company with the legal ability to trade digital currency derivatives. The firm must now comply with the Commodity Exchange Act (CEA) and other CFTC regulations.
Delaware amends state law to account for blockchain. Delaware’s House of Representatives approved amendments to the state’s law that “make explicit the right to trade stocks on a blockchain.” The chair of the Delaware Bar Association’s corporate division said the vote "keeps Delaware at the forefront of corporate law and in the lead in terms [DLT-enabled] shares."
PRA calls for cyber “stress tests” for insurers. The U.K.’s Prudential Regulation Authority (PRA), “directed insurers to conduct ‘stress tests’ tied to cyber attacks,” following a number of recent high-profile cases of ransomware and other cyber attacks. The PRA instructed insurers to have “Board-level oversight of cyber risk exposure” and conduct regular stress tests of their systems.
BBVA supports Alipay’s entry into Spain. The Spanish bank announced it will “add Alipay as a payment option on its SmartPay mobile app” and assist merchants in modifying their registers to accept Alipay. The agreement is the latest deal between Alipay owner Ant Financial and European banks and payment processors to increase Alipay’s footprint in the EU.
Vantiv to acquire Worldpay for $10B. The U.S. card processing firm bid $10 billion to purchase the British payments company. Vantiv beat several other bids, including that of JPMorgan, which said it will not make a counter-offer. The cash and stock deal represents an 18.9% premium over Worldpay’s pre-announcement closing price; but Worldpay shares fell 8% after the news broke.
Paypal invests in LendUp. PayPal invested an undisclosed amount in online lender LendUp, which aims to serve borrowers traditionally overlooked by the banking system. LendUp CEO Sasha Orloff said the company plans to use the new cash to “expand its customer base and . . . ways it could work with PayPal."
Omise raises $25M via ICO. The Thai startup, which enables online payments in Thailand, Japan, and Indonesia, brought in $25 million in new financing thanks to its recent Initial Coin Offering (ICO). Omise is the most recent in a string of ICOs, though the company is “one of the more established tech companies to take the ICO route.”
Have a great week!
The Fintech Update Team