Fintech Update, 8/9 - 8/15
Hi! It’s Monday, August 16, 2021.
Leading Off
The Biden administration’s infrastructure bill passed the Senate without amendment to its broad definition of a “broker;” if passed by the House in this form, almost any cryptocurrency company could fall under this scope. // In other news, hackers stole $600M in one of the largest crypto heists ever, then returned nearly half the funds; neobank Chime raised a $750M Series G, which values the firm at a massive $25B; JPMorgan launched a real-time payments service; and Circle applied for a banking license with the SEC amid questions about the makeup of assets backing its USDC stablecoin. // Plus, Robinhood acquired Say Technologies, Venmo is now allowing users to automatically buy crypto with cash back earned from purchases on their Venmo credit cards, and U.S. Bank announced its intention to acquire Bento Technologies. // All this + more below!
Heavy Hitters
Infrastructure bill gets through Senate, crypto community shudders. Updating you on the Heavy Hitter we wrote about last week, the Biden Administration’s infrastructure bill passed through the Senate with an expanded definition of a “broker,” which would “open a door for almost any entity within the cryptocurrency ecosystem to be considered [one].” The revised definition is intended to increase the IRS’s ability to tax cryptocurrencies and related services, and would also require significantly more data on participants in the crypto industry, including individuals’ names and addresses. Industry advocates will now take their arguments to the House of Representatives, where the “entire infrastructure bill faces a formidable fight.”
Quick Takes
Hackers steal $600M, return nearly half. In what was likely one of the biggest cryptocurrency thefts ever, cyber criminals exploited a vulnerability in Poly Network and stole over $600 million in cryptocurrency. However, the hackers have now returned almost half of the funds they stole. Tom Robinson, chief scientist of blockchain analytics firm Elliptic said “I think this demonstrates that even if you can steal crypto assets, laundering them and cashing out is extremely difficult, due to the transparency of the blockchain and the use of blockchain analytics.”
Chime raises $750M at $25B valuation. User-friendly neobank Chime raised $750 million in a Series G round led by Sequoia at a staggering $25 billion valuation ($10 billion higher than their valuation in October 2020). According to their CEO, Chime is adding hundreds of thousands of accounts on a monthly basis and became profitable on an EBITDA basis during the pandemic.
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JPMorgan launches real-time payments service. The giant global bank launched a product called ‘request for pay,’ which allows corporate clients to send payment requests to the ~57M retail clients who use JPM’s app or website. These corporate and merchant-focused digital payments can occur in less than 30 seconds.
Circle files for banking license with the SEC. The cryptocurrency app is looking to become a full-reserve national bank. The license would not allow it to lend out consumers’ deposits - instead, deposits will be entirely backed by Circle’s popular USDC stablecoin, and can be withdrawn at any time. In related news, crypto exchange Coinbase dropped the guarantee that every USDC is backed by an equivalent dollar amount amid questions about the composition of the assets backing USDC.
Robinhood acquires Say Technologies. The digital brokerage will purchase the investor communications firm for approximately $140 million in cash, adding new proxy processing, voting, and shareholder access tools to their product, along with a Q&A platform allowing shareholders to “participate in events like earnings [calls] by asking and upvoting questions.”
Venmo expands crypto offerings. The PayPal-owned payments app is now allowing users to automatically buy crypto with cash back earned from purchases on their Venmo credit cards. Venmo views the “Cash Back to Crypto” offering as a set-it-and-forget-it tool that will introduce newcomers to the cryptocurrency market, as well as a feature that can drive sign ups for its credit card.
U.S. Bank to acquire Bento Technologies. U.S. Bank entered an agreement to acquire SMB payment and expense management service provider Bento Technologies. The acquisition is part of U.S. Bank’s plan to “bring payments and banking services together to simplify cash flow and money management for small businesses.”
Nova Credit and SoFi partner to improve credit modeling. The immigrant-focused credit firm and the online lender are developing a new “income identification model using bank transaction data, enabling SoFi to reduce its underwriting costs through automation.” The partnership also improves SoFi’s ability to work with underserved “consumers who do not have traditional employment, such as gig workers.”
Coinbase releases Q2 results. The largest crypto exchange announced impressive Q2 earnings, including $2.23 billion of revenue, $1.6 billion in net profit (up 4900% from a year earlier), and $460 billion in trading volume (a 16x YoY increase).
Pop Flies
Canadian bank Scotiabank announced that it will allow its customers to convert credit card repayments into BNPL plans, with “with the option to pay off debt in three, six or 12-month fixed installment payments.”
Movie theater chain AMC announced that it will allow patrons to pay for tickets and concessions online and in-person using Bitcoin. Because memes gonna meme.
Plaid settled a $58M class action lawsuit claiming that it shared personal banking data to third parties without user consent.
Nubank has hired “Morgan Stanley, Goldman Sachs and Citigroup to help lead its U.S. initial public offering,” which could value the company at over $40 billion (🦄x40).
Corporate credit card and cash management solution provider Brex announced that it has withdrawn its its applications to form an industrial loan company (ILC) and gain deposit insurance. A Brex spokesperson said that the withdrawals “will permit us to modify and strengthen our application and resubmit at a later date.”
Lionel Messi, one of the biggest names in soccer and sports globally, signed a new mega contract with Paris Saint Germain that included cryptocurrency tokens in his "welcome package", which are estimated to be worth €25-30 million (£21-25 million).
More Fundings!
Wealth management
Argentine personal finance app Ualá raised a $350M Series D led by Softbank and Tencent, valuing the company at $2.45B. 🦄🦄
Lending
Online lending platform Upgrade raised $105 million in Series E funding at a $3.3 billion valuation. 🦄🦄🦄
African vehicle financing provider Moove raised $23 million in Series A funding.
Personalized credit line provider Keebo raised £5 million in seed funding.
Loan servicing company Canopy raised $15 million in Series A funding.
Banking
London-based “social bank” Kroo raised $24.5 million in Series A funding.
Crypto & Blockchain
Cryptocurrency tax and accounting software provider Taxbit raised $130 million in a Series B funding round co-led by Insight at a $1.33 billion valuation, only five months after raising $100 million in Series A funding. 🦄
Corporate
HR software provider Gusto raised $175 million in new funding at a valuation of $9.5 billion. 🦄🦄🦄🦄🦄🦄🦄🦄🦄
Canadian SMB accounting platform FreshBooks raised $80.75 million in Series E funding along with $50 million in debt financing.
Insurtech
Vehicle insurtech Jerry raised $75 million in Series C funding at a $450 million valuation.