Fintech Update, 7/31- 8/7
July 31 - August 7, 2017
Leading Off
FinCEN fined one of the world’s largest digital currency exchanges over $110 million for AML violations; Singapore’s MAS announced it will regulate ICOs, following last week’s similar announcement by the U.S. SEC; Skype and PayPal teamed up to allow digital payments on Skype’s iOS and Android apps; Softbank invested $250 million in Kabbage; online purchase financing firm Bread raised $126 million; and McKinsey takes a closer look at the factors propelling China’s digital transformation.
In the News
FinCEN fines digital currency exchange for AML violations. The Financial Crimes Enforcement Network (FinCEN) assessed BTC-e, one of the world’s largest virtual currency exchanges, a penalty of over $110 million for “willfully violating U.S. [AML] laws.” FinCEN worked with several federal legal and financial bodies to bring the fine and conduct a criminal investigation.
Singapore takes position on ICO regulation. After last week’s announcement by the SEC that most Initial Coin Offerings (ICOs) will be regulated as securities offerings, the Monetary Authority of Singapore (MAS) similarly stated that “the offer or issue of digital tokens . . . will be regulated by MAS if the digital tokens constitute products regulated under the Securities and Futures Act.”
Skype partners with PayPal on digital payments. The VoIP and videochat company announced a new deal with PayPal that will allow its nearly 75 million customers to send digital payments to each other by means of Apple and Android mobile devices. The functionality launched last week to users in 22 countries and “extends PayPal's in-app reach for peer-to-peer payments.”
SoftBank invests $250M in Kabbage. The Japanese bank, which recently has made several significant investments in fintech firms, invested $250 million in small-business lender Kabbage. Kabbage had been valued at around $1 billion since its 2015 equity round, but this investment marks a “material increase” in that valuation, according to Kabbage’s CEO.
Bread raises $126M. The firm behind “customisable pay-over-time financing options for online merchants,” gained $126 million in new equity and debt financing from prominent investors including Menlo Ventures, Bessemer Venture Partners, RRE, and Victory Park Capital. Bread helps customers pay for online purchases in installments, with loans issued by Cross River Bank.
Is China poised to lead the digital frontier? A discussion paper from the McKinsey Global Institute [full text] identifies several key factors contributing to the rapid expansion of China’s digital products and services offerings, including mobile payments and AI.
JPMorgan to use robot to execute trades. JPMorgan said it will “soon” roll out an AI-enhanced trading robot to its global equities algorithms unit, following a pilot test of the software. JPMorgan has hailed“LOXM” as a “first-of-its-kind” system that is “much more efficient than traditional methods of buying and selling.”
Sweden banks pioneer new AI technology. Three of Sweden’s largest banks have launched virtual customer-service representatives that use AI technology to “handle straightforward customer requests” like providing investment advice, cancelling credit cards, and opening new savings accounts.
Fintech firms court India’s large middle class. Quartz profiles several fintech firms that are seeking partnerships with Indian banks with the goal of reaching some of the country’s 166 million middle-class households. The firms profiled include credit providers and those offering a range of digital banking services.
Revolt considers applying for a banking license. The London-based payments firm reportedly is exploring a banking license “to compete in the mainstream retail banking market . . . [and] expand into full-service current accounts.” A bank license from the British FCA would place Revolt among other U.K. “challenger” banks, such as Monzo and Starling.
Have a great week!
The Fintech Update Team