The Summer in Digital Wealth (9/8/21)

397

By: Gerelyn Terzo 

After a blockbuster summer in the fintech and digital wealth space, we thought it would be a good opportunity to do a highlight reel of some of the most memorable developments. For those who prefer to look ahead instead of the rear-view window, Christmas is just 108 days away and counting!  

The buy now pay later (BNPL) space made a splash that is likely to persist long after the summer is over. 

E-commerce giant Amazon.com has inked a partnership deal with Affirm that will give U.S. customers the opportunity to participate in this growing trend if buying now and paying in installments. 

Square revealed that it is acquiring Aussie startup Afterpay, catching hold of the BNPL. Square is doling out $29 billion for the company in an all-stock deal. As a result of the acquisition, Afterpay will be available on more merchant platforms. 

Sweden-based BNPL startup Klarna, which has been speculated as a takeover candidate since Square’s acquisition of Affirm, is on the offensive. The startup could reportedly be eyeing a public listing as soon as next year. Klarna chief Sebastian Siemiatkowski told Bloomberg that while a deal is not imminent, the company is exploring a possible IPO to stick it to legacy banks.

The M&A and IPO pipelines continue to fill up. 

Visa might not exactly evoke feelings of a nimble fintech, but that is not stopping the company from evolving. The card giant made a splash with its acquisition of U.K.-based payments startup Currencycloud in a deal that attaches a $962 million valuation on the fintech play.  

Wall Street bank JPMorgan is expanding its footprint in the fintech space and is planning to scoop up OpenInvest, a San Francisco-based fintech company dedicated to ESG investing. OpenInvest supports wealth managers with tools to strengthen, oversee and report on their carbon footprint. OpenInvest is backed by Andreessen Horowitz, Y Combinator, and QED.  

Robinhood shares are being compared to meme stocks, such as GameStop or AMC Entertainment. After a rocky start on the trading debut, Robinhood’s stock has rallied to above the IPO price of $38, but investors are buckling up for what is expected to be more volatility ahead. One reason is that early investors in the company have filed to unload close to 100 million Robinhood shares in the near term.

Nubank may be a Latin American challenger bank, but it could soon be making a splash in the U.S. The neobank, which has the backing of billionaire investor Warren Buffett, is exploring a U.S. listing on the tech-heavy Nasdaq in an IPO that could value the startup at $2 billion. 

Cryptocurrencies are officially impossible to ignore. 

Cryptocurrency exchange Coinbase can’t get enough crypto. CEO Brian Armstrong announced plans to buy more than $500 million in cryptocurrency assets for Coinbase’s balance sheet on top of its existing portfolio. In addition, they will invest 10% of future profits in cryptocurrencies, which Armstrong expects will increase over time as the market moves into its next phase of growth.

PayPal has expanded its cryptocurrency support across the pond. Now U.K.-based users can buy, sell and hold bitcoin as well as other digital assets on the payments platform. PayPal first introduced crypto transactions to the U.S., and the latest offering represents its first international expansion of the service.

Cryptocurrency asset manager Grayscale has caught decentralized finance (DeFi) fever and has launched a new fund dedicated to the burgeoning space in the cryptocurrency industry. The new fund will allocate to some of the top protocols in the DeFi. 

Circle, a fintech run by Jeremy Allaire that has evolved into a blockchain company, wants to become a crypto bank. Allaire announced on the company’s blog that now that the company’s stablecoin, USDC, has “$27.5 billion in circulation,” the time is right to pursue becoming a “U.S. federally-chartered national commercial bank.”

The Fed’s Lael Brainard believes now is the time to act on a central bank digital currency (CBDC). She points to other jurisdictions, such as China, that are ahead of the U.S. on the development of a CBDC. For the U.S. to continue to do nothing baffles Brainard and “doesn’t sound like a sustainable future, reports reveal.

SPACs started off the year white hot and despite fears of the contrary they are still going strong.  

Tidjane Thiam, who was previously at the helm of Credit Suisse, is getting closer to finding a home for his SPAC. Thiam, who is behind the Freedom Acquisition 1 blank-check company, is in discussions with Credijusto, a Mexico-based financial technology company, and CIAL Dun & Bradstreet to combine the companies and list them in New York, according to the Financial Times. The new company would likely have a value of $1.5 billion attached.  

Aspiration, a Los Angeles-based fintech company, is exploring going public via a SPAC deal. The “green fintech,” as it’s known, could jump onto Ahmed Fattouh’s blank check company InterPrivate III Financial Partners Inc, as reported by Bloomberg. The SPAC deal could attach a valuation of $2 billion on the fintech. 

Fintech company Acorns, which helps users to save money for retirement, has snagged Rich Sullivan, an alum of Twitter and DreamWorks, as its finance chief. Acorns is planning a public listing sometime in 2021. It plans to do so via a SPAC with white check company Pioneer Merger Corp. 

What’s a summer wrap-up without a bit of drama?   

Wealth management firm Bessemer Trust wants to remove itself from the controversial Britney Spears conservatorship situation. The firm has asked to be removed as a co-conservator from the pop sensation’s financial life. Bessemer reportedly made the request with the court in response to Britney’s recent testimony documenting her turmoil from a 13-year conservatorship that made her feel “left out and alone.” An LA court has agreed to hear Bessemer’s petition.

San Francisco-based activist hedge fund ValueAct Capital has set its sights on payments company Fiserv. The investment firm now owns 6.2 million shares of the fintech play after tacking on another 5.3 million shares in Q2, as per a regulatory filing. With the added shares, ValueAct bolstered its position in Fiserv by 600% vs. Q1 levels.  The hedge fund’s combined stake in Fiserv is now worth $1.2 billion. 

San Francisco-based fintech Plaid, which is behind the technology that links financial apps to bank accounts, has reached a settlement in a privacy case. The company, which at one time was set to merge with Visa, will pay $58 million to settle claims that it accessed the financial data of consumers without their permission. 

Cathie Wood, who is at the helm of Ark Invest, has joined the board at fintech company Tifin. According to reports, Wood will support the expansion of Tifin company Magnifi into commission-free trading. Popular trading app Robinhood also offers commission-free trading. Wood’s Ark Innovation ETF owns shares of Robinhood.