The Week in Digital Wealth (11/9/21)

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By: Gerelyn Terzo 

Fintechs are flooding the publicly traded markets, and SPAC deals will persist at least until 2022. A leading crypto investment firm is expanding into wealth management for high-net-worth investors. Banks are strengthening their tech stacks, and consumers are gearing up for holiday shopping. 

Deal Pipeline 

NerdWallet last Thursday made its debut in the publicly traded markets in a successful IPO. The stock soared some 90% in its debut trading session, triggering several trading halts on the Nasdaq in response. NerdWallet started trading mid-range at $18 and shares quickly rose to the $23 level before eventually rising as high as $34.44. The new stock is off those highs to start its first full week of trading. The warm welcome on Wall Street could pave the way for other personal finance companies to dip their toes in the IPO waters. NerdWallet trades under the symbol NRDS. 

Source: Twitter 

TradeStation, a fintech company that specializes in being an online broker, plans to go public via a SPAC deal. TradeStation is preparing to combine with blank check company Quantum FinTech Acquisition Corporation in a $1.4 billion deal that will thrust it into the public markets. The fintech will use the proceeds to bolster its marketing investments on its path to hiring more R&D talent and attracting new users. In addition to stocks and options, TradeStation’s brokerage services extend to cryptocurrencies. The deal is expected to be finalized in H1 2022, and the stock will trade on the Big Board under the symbol TRDE. In addition, a PIPE deal involving Tokyo’s Monex Group and Mike Novogratz’s Galaxy Digital will provide approximately $115 million in financing for the deal.  

Payments & Crypto 

Payments company Square reported its Q3 earnings, and profits rose to the tune of almost 60% to $1.13 billion. Bitcoin transactions buoyed the results, as investors turned to Square’s Cash App to buy more of the leading cryptocurrency. Cash App’s Bitcoin revenue came in at $1.8 billion, an increase of 11% YoY.  Square chief Jack Dorsey is sold out to bitcoin, which he said he is committed to making “the native currency of the internet.” Square is also in the process of scooping up buy now pay later (BNPL) company Afterpay in a blockbuster deal.  

The cryptocurrency market is rallying to start the week. Ethereum, the second-biggest cryptocurrency, has hit a new all-time high of $4,700, leaving even the biggest market bulls in awe. Bitcoin is also rallying toward a new record as of Monday morning and is expected to surpass its former high of about 67,000 that it reached last month. The recent introduction of a bitcoin futures ETF has lifted sentiment in the markets, and both BTC and ETH have advanced by more than 50% since early October.

Holiday shopping is looking up for 2021, and consumers are increasingly planning to turn to BNPL options to increase their spending power. A new report by GoCardless reveals that 42% of Americans will turn to BNPL platforms for their holiday shopping this year. More than half, or 60% of millennials will use BNPL options. Apparel is the most popular item on the shopping list for BNPL, with computers and gaming rounding out the top three categories. ZipCo, which was formerly known as QuadPay, is launching a physical BNPL card known as the Zip Card in collaboration with WebBank to make it easier for shoppers to use its platform. 

Banking 

Tech-focused NJ-based Cross River Bank is acquiring Betterfin, which specializes in the software as a service (SaaS) for small businesses. Cross River says the addition of Betterfin’s “tech stack and market intelligence” combined with its own “core infrastructure and small business offerings” will be able to overhaul the “traditional SBA loan process” to be more tech-centric, including “digitizing the entire flow.”  

PayPal and JPMorgan are backing Laika, a compliance as a service startup. Laika completed a $35 million Series B round in which J.P. Morgan Growth Equity Partners was the lead investor. PayPal Ventures also participated alongside existing investors, a list that extends to Bain Capital Ventures, among others. 

Mastercard has introduced a new card designed for visually impaired users. The new Touch Cards, as they’re called, contain notches in a variety of shapes that are embedded into the side of the cards to help visually impaired users access the right card from their wallets. There are different sized notches for debit and prepaid cards. Mastercard noted that more than 2 billion people globally suffer from visual impairments and digging for the right card can be problematic for them. The new cards are also more secure because visually impaired consumers won’t have to ask strangers for help in identifying the right card to use. 

Investment Push 

Digital Currency Group (DCG), the parent company of Grayscale Investments, is launching a wealth management division next year, according to The Block. The company will be hiring fund managers instead of going the robo advisory route. DCG’s new wealth management arm will target high-net-worth cryptocurrency investors and has its sights set on collaborating with blockchain and DeFi experts. DCG is looking to hire nearly a dozen wealth management professionals.  

Greenlight Financial Technology is launching an app to help parents invest on behalf of their kids. The company introduced the Investing for Parents platform, which delivers educational resources and also offers users access to their earnings as needed. A Greenlight poll revealed that more than half of parents refrain from investing because they lack the knowledge to do so, while another 52% say that they have zero to little money set aside for upcoming milestones in their kids’ lives.  

Fun Fact 

Billionaire Elon Musk polled his Twitter followers to decide whether to offload 10% of his Tesla stock said to be worth some $20 billion. Musk, who is a co-founder of PayPal, pointed to the issue of “unrealized gains being a means of tax avoidance,” and vowed to stick by the results of the poll. The majority of poll participants voted “yes” at 58% vs. 42% who voted “no.” Reports suggest Musk is facing a $15 billion bill to Uncle Sam and that he was planning on selling the shares regardless.