The Week in Digital Wealth (10/19/21)

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By: Gerelyn Terzo 

The fintech industry has attained royal status. A bitcoin ETF is finally seeing the light of day, and crypto prices have been rallying. Legacy banks are feeling the heat from fintech, and more.  

Royal Flush 

Prince Harry and Duchess Meghan are not done conquering the world since relocating to the U.S. Most recently, the royal couple has linked up with NY-based fintech asset management firm Ethic, which

specializes in ESG investments. The royal couple were named “impact officers” at the fintech company. The royals are putting their money where their mouth is and are backers of Ethic. In addition, Ethic fund managers run a portfolio for Harry and Meghan, who learned about the fintech firm from friends. Ethic boasts $1.3 billion in AUM, and the attention that they get from the royal association

could spur more investments in the broader ESG space.

Source: Twitter 

Bitcoin Bulls 

The first bitcoin ETF is finally seeing the light of day in the U.S. The ProShares Bitcoin Strategy ETF is expected to begin trading this week. The fund, which is based on bitcoin futures, received the green light from NYSE Arca and does not require the SEC’s blessing, as long as the securities regulator doesn’t quash it. The bitcoin price rallied in response to the development, crossing the $60,000 for the first time since April 2021. The ProShares Bitcoin Strategy ETF will trade under the symbol BITO. Grayscale Investments, which has dominated this market with its Grayscale Bitcoin Trust, is not taking the competition lying down and reportedly plans to file an application for a bitcoin spot-market ETF. 

Regulators have moved at a snail’s pace in the cryptocurrency industry, and Coinbase wants to give them a nudge. The U.S.-based cryptocurrency exchange has proposed the creation of an entirely separate entity to regulate digital assets, arguing that the current framework is outdated “because it never contemplated that distributed ledger and blockchain technology could exist,” according to the proposal. Coinbase introduces four regulatory pillars: 

  • “Regulate digital assets under a separate framework”
  • “Designate one regulator for digital asset markets”
  • “Protect and empower holders of digital assets”
  • “Promote interoperability and fair competition” 

According to Coinbase, the U.S. boasts tens of millions of crypto users at last check.  

Paradigm, a VC firm led by Fred Ehrsam, a co-founder of Coinbase, is reportedly looking to raise a blockbuster cryptocurrency fund. The VC firm reportedly wants to attract $1.5 billion to its coffers that it would direct toward crypto startups. If successful, Paradigm would join the billion-dollar club alongside the likes of Andreessen Horowitz’s a16z, which oversees a mega $2.2 billion crypto fund, the industry’s largest. Cryptocurrency startups attracted $17 billion in VC in H1 2021, up from $5.5 billion last year in the same six-month stretch.  

Deal Lowdown 

Finnovate Acquisition, a SPAC, has submitted the necessary documentation with the U.S. SEC to go public in a $150 million IPO in the wake of a confidential filing in June. The company will sell 15 million units for $10 apiece. Finnovate Acquisition, which is based in the Cayman Islands, is focused on the Israeli fintech industry, including payments, wealthtech and banking apps. The blank check company is headquartered in the Cayman Islands and is eyeing a listing on the tech-heavy Nasdaq. 

Wall Street Minute 

JPMorgan could be on the acquisition trail in the near future, according to CFO Jeremy Barnum on the bank’s Q3 earnings call. JPMorgan CEO Jamie Dimon noted that the firm is up against some hefty competition from rivals that are not even banks. He addressed how buy now pay later (BNPL) companies are encroaching on the territory of banks, and JPMorgan will do whatever it has to do to fend off the competition. As the largest U.S. bank based on assets, the firm shouldn’t have any trouble finding acquisition targets. 

Speaking of BNPL, Standard Chartered has teamed up with Singapore’s Atome Financial to compete in Asia’s installment payment market. StanChart is a first-mover among the big banks in the BNPL market as startups continue to gain share and grow in popularity among consumers. According to a statement, the deal marks one of StanChart’s biggest “strategic investments in a fintech to-date.” 

Payments Push 

Payments infrastructure play Stripe is hunting crypto talent. The company’s head of engineering for crypto, Guillaume Poncin, announced on Twitter that Stripe is “hiring engineers and designers to build the future of Web3 payments.” Stripe co-founder John Collison said the company is no stranger to bitcoin and they have been keeping their eye on things. Developments such as stablecoins and DeFi got them off the sidelines. 

British consumers can tap their card at the till for higher balances going forward. Regulators have increased the contactless payment ceiling to GBP 100, up from GBP 45. Contactless payments are popular in the U.K., comprising some 60% of card transactions in the region in roughly the first half of 2021. While Great Britain’s updated contactless threshold is the highest in Europe, it trails Canada, with a contactless limit of GBP 147. 

People Moves 

Goldman Sachs has snagged fintech banker Mohit Sial from Deutsche Bank to be part of the fintech team in the EMEA region. Sial will be based in London. While at Deutsche, Sial was director of fintech banking and had been with the firm since 2019. He also had served in similar roles at Societe Generale, according to his LinkedIn profile. 

Fun Fact

In Scotland, nearly a dozen schools have turned to facial recognition technology to process payments for lunches. The technology eliminates the need for students to pay with cash, cards or even their fingerprint, all of which are frowned upon in a post-COVID world. Instead, the software identifies the students and processes payments for the lunches accordingly in about five seconds per child at the point of sale. Some of the parents are crying foul, saying that the move is an invasion of their kids’ privacy and is a form of “biometric surveillance.”  CRB Cunninghams is the company behind the tech, which is being used in the North Ayrshire school system.