The Week in Digital Wealth (9/14/21)

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By: Gerelyn Terzo 

Seasons change and so does the fintech landscape. Since our last update, one major cryptocurrency exchange is calling out the SEC, Europe does not want to get left behind on digital currencies, investors have some remorse over buy now pay later, and SPACs are still popular.  

Valuation Talk 

Fidelity Investments wants a do-over on its valuation of Jack Ma’s Ant Group. For the second time this year so far, Fidelity has seemingly lowered its valuation projection on the fintech giant amid China’s crackdown on technology companies in the country. The other possibility is that Fidelity reduced its allocation to the company in its portfolios. Based on the scarce information available in regulatory filings, Fidelity most recently has a valuation of $67 billion attached to Ant Group. In early 2021, Fidelity’s valuation on Ant was $144 billion before it cut it down to approximately $78 billion at the half-year mark.  

In the latest round of SPAC activity, Forge Global, a platform that gives investors access to pre-IPO companies, has announced plans to go public via a combination with Motive Capital, a blank-check firm. The new entity will boast a valuation of $2 billion and will position Forge as a first-mover among a private-shares platform to enter the publicly traded markets. Forge is targeting $500 million in the IPO, comprising SPAC cash plus PIPE proceeds. Motive Capital is the sponsor of the Motive Capital SPAC, and it is dedicated to the fintech space. The deal is expected to close at year-end 2021 or in early 2022. 

Crypto Roundup 

The Bank for International Settlements (BIS) has warned central banks to advance digital currency initiatives now or forever “hodl” their peace. BIS is urging central banks to move forward with their digital plans or risk being left in the dust by private sector innovation in the payments arena. In particular, the BIS mentioned central bank digital currencies (CBDCs), which can take years to implement while bitcoin and stablecoins are already becoming more widely adopted. China is a first mover with its CBDC, the digital yuan, beating out the United States, the EU and the U.K.  

Cryptocurrency exchange Coinbase is prepared to go toe-to-toe with the U.S. SEC.  Coinbase CEO Brian Armstrong revealed that the securities regulator has a problem with the company’s new lending product. The SEC via a Wells notice warned the exchange to hold off on launching its lending program or the regulator will sue. Coinbase’s lend product is designed to give users a chance to earn interest for lending their cryptocurrency assets, including a 4% annual percentage yield on stablecoin USD Coin. Armstrong argues that there are other lending products on the market now, and he just wants a level playing field. Coinbase will hold off on launching its lending program until October or later as it seeks greater clarity on the matter. 

Fintech startup FlyCoin has introduced a different kind of loyalty program centered around cryptocurrencies. While airlines traditionally reward frequent fliers with miles and points tied to a single airline, Flycoin is gifting its users with tokens that can be used toward flights at participating airlines or converted into dollars or bitcoin. Airline loyalty members are used to getting benefits such as better seats, no fees, or just a better overall experience while waiting for a flight. At FlyCoin, the more travelers fly, the more tokens they will rack up. And the best part is that the tokens won’t expire. So far, Ravn Alaska and Northern Pacific Airways have signed up with more businesses including airlines and beyond potentially in the pipeline.  

Neobank That Owns Brokerage App Makes Robo Advisor Push 

Australia-based neobank Douugh has expanded into wealth management and introduced a robo-advisor product. Wealth Jars, the name of the new app, gives users the opportunity to grow their savings through the firm’s investment portfolios, which they call Portfolio Jars. Other features include a checking account and debit card. 

As a fintech, Douugh combines technology with a human component to help customers reach their financial goals regardless of the market conditions. Douugh’s portfolios are focused on environmentally friendly and disruptive technologies, giving investors exposure to companies like “Tesla, Square, Coinbase, Netflix, Beyond Meat, and First Solar.” Commission-free brokerage app Goodments recently became part of Douugh.   

BNPL Across the Pond 

Now that Square and Amazon have given their stamp of approval on the buy now pay later (BNPL) model, other companies are catching the delayed payments fever. According to reports, UK-based Monzo Bank plans to expand into BNPL, which would make it an early adopter of the structure for registered banks. No official announcement has come yet but could at any time. In addition, neobank Revolut is also in the midst of crafting its own BNPL offering for European countries in which its card would include a feature for consumers to split the payment tally into a trio of installments. 

Survey Says 

Not everybody is thrilled with the buy now pay later revolution. According to a DealAid.org survey, close to half, or 46.2%, of American consumers are kicking themselves for making purchases via BNPL during the 2020 holiday season. That won’t stop shoppers from doing it again, however, as nearly 14% of U.S. consumers are planning to rely on the BNPL option during this year’s holiday rush vs. less than 13% a year ago. 

U.S. shoppers will dole out an average of $279 using the latest payment installment feature, up more than 7% vs. year-ago levels. Overall, consumers intend to spend $670 on e-commerce purchases more broadly this holiday season. Some 25% of those polled will use PayPal for in-store buys. DealAid.org polled more than 1,000 U.S. shoppers for its survey on spending trends. 

People Moves

Evercore, an independent investment bank, has snagged Citigroup alum Adi Jayaraman for its fintech team. Jayaraman was hired as a senior managing director and will spearhead the financial technology division out of New York. He spent half a decade at Citi most recently in fintech and information services investment banking and was also previously employed by JPMorgan and Morgan Stanley.