Fintech Update, 8/14 - 8/20
August 14-20, 2017
Leading Off
U.S. state regulatory agencies discussed a unified regulatory regime for fintech firms; Japan’s largest bitcoin exchange plans to open a cryptocurrency exchange in the U.S.; Australia announced it will apply AML rules to digital currencies as part of upcoming financial regulatory reforms; the Independent Community Bankers of America continues to campaign against SoFi’s ILC application; and the Economist profiles China’s Ant Financial, the world’s most valuable private firm, and its global ambitions.
In the News
States contemplate unified fintech regulatory regime. State regulators reportedly are considering “drastic new steps” to harmonize state rules governing fintech firms, as they continue to combat the OCC’s proposed “fintech [bank] charter.” State regulators hope to mitigate the challenges created by individual state licenses and varied regulatory requirements.
Dramatic increase in U.K. contactless payments. Mobile tap-and-pay spending at point-of-sale terminals topped £370 million in the first half of 2017, accounting for 38% of all non-cash transactions in the U.K., according to transaction data from WorldPay. “Mobile spending . . . is breaking its own spending records virtually every month,” noted one WorldPay executive.
Ant Financial eyes global growth. The Economist profiles the Alibaba spinoff and world’s most valuable private company, noting the domestic obstacles it overcame in China and its increasing focus on global expansion. Ant’s “task now is to persuade other countries that its approach is safe, transparent and free from government interference,” reports the Economist.
Investors raise questions about online lenders. According to a new CNBC report, online lending startups are having trouble raising money, due to industry concerns about their prospects for continued growth. Investors are skittish in the wake of IPOs by Lending Club and On Deck, which have lost 80% of their value since going public in 2014.
Goldman expands use of algorithmic trading. Goldman Sachs has begun applying algorithmic trading to its fixed income division, increasing the number of bonds included in its “algo” program to 7,000. Goldman’s move echos an industry trend toward systematizing the trading process to allow human traders to “focus more on more challenging situations."
Coinbase awarded patent by USPTO. The cryptocurrency exchange was awarded a patent by the U.S. Patent and Trademark Office (USPTO) for its “method for storing and utilizing bitcoin private keys.” The patent, Coinbase’s fourth, adds to the firm’s growing stable of protected intellectual property. Coinbase recently raised $100 million, pushing its valuation over $1 billion.
Australia to apply AML rules to digital currencies. The Australian government announced it will account for digital currencies as it reforms and strengthens the country’s anti-money laundering (AML) rules. The move echoes similar measures adopted earlier this year in Japan, which required cryptocurrency exchanges to comply with AML/KYC rules and submit to annual audits.
Tail looks to capitalize on open banking. The London-based firm aims to seamlessly integrate customer bank accounts with marketing offers and discounts via API. The app, limited initially to iOS users in London, offers “heavy discounts at local places . . . linked to the card you pay with and delivered each week in the form of cashback.”
On the community bank response to SoFi’s ILC play. Camden Fine, CEO of the Independent Community Bankers of America (ICBA), says that community bankers are ready to “fight tooth and nail” to prevent SoFi from becoming an ILC. The ICBA contends that an ILC would allow SoFi to “avoid the legal prohibitions and restrictions [of] the Bank Holding Company Act.”
Have a great week!
The Fintech Update Team