Fintech Update, 10/16 - 10/22
Hi! It’s Monday, October 23rd, 2023.
The Rundown
The CFPB announced its much-anticipated open banking rule. The Notice of Proposed Rulemaking for Dodd Frank Section 1033 details how banks, fintechs, and aggregators need to make financial data available to consumers. Our take? The proposed rule is about what we expected, with the CFPB prohibiting banks from “hoarding a person’s data,” restricting them from charging consumers or aggregators for data access, and making it easier for consumers to break up with banks that are providing poor service. That being said, the rule imposes responsibilities on fintechs, requiring them to disclose how data is used and refrain from selling customer information. Open for comment and likely to be finalized in 2024, there are still many questions about the potential impact of the rule, namely on big-bank data consortiums like Akoya, who are taking actions to limit data sharing outside of their network.
BaaS platform Solid pushed back against its investor FTV Capital, filing a lawsuit against the “aggressive private equity firm” that it claims is “resorting to made-up claims of fraud, threats, and strong-armed tactics to try to get its money back.” FTV, which claims that Solid “lied to FTV concerning the company’s revenues, customer churn, and business generally” recently filed a lawsuit to recoup its $61M Series B investment.
Metropolitan Commercial Bank agreed to pay a $15M penalty after an investigation from the New York Department of Financial Services that found the bank failed to properly oversee its digital prepaid card program, leading to fraud actors diverting pandemic employee benefits.
The SEC dropped its lawsuit against Ripple Labs. The suit, originally filed back in December 2020, accused Ripple of illegally raising funds in the unregistered securities offering of the crypto company’s token, XRP. Our take? The SEC has bigger fish to fry with active lawsuits against Coinbase and Binance. Ripple was already handed a partial victory back in June when a federal judge ruled that XRP is not a security in all cases. Rather than indicating a change of heart from the regulator, the news signals that the SEC is pooling its resources into higher-stakes legal battles. We don’t expect this pattern to repeat with Coinbase and Binance.
As of last Monday, Binance no longer allows US dollar withdrawals from its platform. The crypto exchange, which halted dollar deposits back in June, has struggled to find banking partners in the wake of its ongoing lawsuit against the SEC. In connection to the news, Binance.US wallets will no longer be FDIC insured.
Citi and Navan partnered to launch a co-branded travel and expense system for Citi’s commercial cardholders. The partnership represents a significant distribution opportunity for Navan, as Citi “supports more than 25,000 global commercial card programs and 7 million cardholders.”
Plaid hired its first Chief Financial Officer as it eyes an IPO. Former Expedia exec Eric Hart will take the fintech’s financial reins. The company has not specifically discussed IPO plans, nor has it shared any sort of timeline, but the hire has pundits interested.
JP Morgan and Mastercard launched their long-awaited pay-by-bank service. The solution uses open banking technology to allow financial data to be shared between permissioned parties, enabling customers to pay bills without entering their routing and account numbers.
The U.S. Treasury is looking to treat crypto anonymity services (also known as “mixers”) as suspected money launderers, in light of Hamas and other terrorist groups’ use of cryptocurrency. The proposed rule targets services that blend one user’s crypto among many others to obfuscate its origin and destination.
Catch is back! The healthcare benefits provider for gig workers, which was shut down in March by its original co-founders, has reemerged under new ownership ahead of the November open enrollment period. Alexa Irish and Laura Speyer, who started working on their own insurance startup after leaving CLEAR in 2022, acquired the startup from Kristen Anderson and Andrew Ambrosino the same month that Catch shuttered.
Google partnered with a number of banks and lenders to offer loans to both Indian consumers and merchants via the Google Pay app.
Controversial stablecoin Tether is working towards real-time tracking of reserves in 2024 but doesn’t have a target date. We’ll believe it when we see it.
Selected fundings
Cross-border credit reporting firm Nova Credit raised $45 million in a Series C funding round led by Canapi Ventures.
Digital identity solution provider Prove raised $40 million in a new funding round by MassMutual Ventures and Capital One Ventures.
Property insurance claim lending startup iink raised a $12 million Series A funding round led by Headline.
Cash flow management platform for enterprises, Statement, raised $12 million in a seed funding round.
AI platform for accounting firms Basis raised $3.6 million in a seed funding round led by Better Tomorrow Ventures.