Fintech Update, 10/11 - 10/17
Hi! It’s Monday, October 18, 2021.
Leading Off
The CFTC levied fines against Tether (for misleading customers about the dollars backing its USDT stablecoin) and Bitfinex (for engaging in unlawful retail commodity transactions with investors); Coinbase published a white paper following its legal battle against the SEC that includes calls for a new federal regulator focused specifically on crypto; and Stripe announced that it is getting back into crypto, building a new team to help build “the future of Web 3.0 payments.” // In other news, Coinbase is launching an NFT marketplace, the SEC will allow the first Bitcoin futures-based ETFs to begin trading, and British banking API provider GPS announced $300 million in new funding. // All this + more below!
Heavy Hitters
CFTC hits Tether and Bitfinex with fines. The Commodity Futures Trading Commission (CFTC) fined stablecoin issuer Tether $41 million for “making untrue or misleading statements . . . in connection with the U.S. dollar tether token (USDT) stablecoin,” and concurrently fined and settled with Bitfinex for $1.5 million for “illegal, off-exchange retail commodity transactions in digital assets with U.S persons.” The Tether fine comes after years of scrutiny over the company’s books, during which it was discovered that the firm lied to customers about backing each token 1:1 with a dollar despite holding “equivalent dollar reserves in its accounts ‘for only 27.6% of the days in a 26-month sample time period.’” Alongside the Bitfinex fine, the CFTC’s action against Tether indicates the U.S. government’s growing interest in the `crypto space and the Biden Administration’s growing desire to “impose banklike regulations on stablecoin issuers.”
Coinbase calls for a new crypto regulator. The crypto exchange firm published a policy paper calling for digital assets to be regulated under a separate framework and to create a new federal regulator dedicated to such issues. The suggestions were broken down into four key pillars:
Regulating digital assets under a separate framework;
Designating one regulator for digital asset markets;
Protecting and empowering holders of digital assets; and
Promoting interoperability and fair competition.
In the policy proposal, Coinbase stated that “failure to regulate appropriately could leave the country even further ‘behind’ other governments.”
Stripe announces new crypto team. The payments giant is developing a new team focused on crypto, posting several job openings for engineers and designers that can help the company prepare for and lead the “future of Web3 payments.” Stripe had supported Bitcoin payments starting in 2014, but ended the program in 2018 after insufficient adoption and rising transaction costs. Although the company has declined to spell out its full vision for this new team, a Stripe spokesman noted that “crypto holds the potential of faster and less expensive payments, particularly in underserved markets,” and that “[the] time has come” for crypto to be a valuable medium of exchange.
Quick Takes
Coinbase is launching an NFT marketplace. The crypto exchange is expanding into non-fungible tokens (NFTs), preparing to launch a new feature that “will make minting, purchasing, showcasing, and discovering NFTs easier than ever.” The waitlist for the new service has reportedly crossed over 1 million customers in less than a week.
The first bitcoin ETFs are about to start trading. The SEC indicated that it will not block futures-based bitcoin ETFs from ProShares and Invesco from going live, allowing investors to bet on the future price of Bitcoin for the first time. The price of BTC rose to over $60,000 after the announcement.
SumUp acquires Fivestars. The British mobile POS vendor purchased the American e-commerce network for local businesses for $317 million in cash and stock. It’s SumUp’s first acquisition since raising €750 million in March and helps further its goal of international expansion.
Digital Pound Foundation launches in UK. Backed by several firms including Accenture (also a backer of the U.S.’s Digital Dollar Project) and Ripple, a group of London-based financial services veterans created a new industry group to “push for the implementation of a digital pound and digital money ecosystem.”
Selected Fundings
Wealth Management
British money management app Plum raised $14 million in Series A funding.
Lending
Tala, which makes loans and helps expand financial access to underserved populations around the world, raised $145 million in Series E funding from investors including PayPal Ventures, GV, and Revolution Growth.
Recently minted Mexican BNPL provider Nelo raised $20 million in new funding.
Banking
Bangalore-based neobank Open raised $100 million in Series C funding.
Nigerian neobank Sparkle raised $3.1 million in seed funding.
Payments
Payment intelligence infrastructure startup Pagos raised $10 million in seed funding.
Checkout experience platform Bolt raised $393 million in new funding, $333 million in Series D funding and $60 million in follow-on capital.
Crypto & Blockchain
Polish crypto company Ramp, which helps customers move fiat money into crypto-assets, raised $30 million in Series A funding.
Corporate
HSA provider Lively raised $80 million in Series C funding.
Payroll data provider Atomic raised $22 million in Series A funding.
Infrastructure
API banking infrastructure provider Global Processing Services (or “GPS”) raised $300 million in new funding (at an undisclosed valuation), which will finance the firm’s international expansion.
Embedded fintech provider Alivere raised $70 million in new funding across a $20 million Series A funding round and $50 million Series B funding round.