November 12, 2021
Photo: Robert Nickelsberg/Getty Images
Hello and welcome to Protocol | Fintech! This Friday: Coinbase's wild ride, why a fintech exec shaved his head, and why bank regulators might take on stablecoin rules.
Coinbase shares tanked this week after the company reported weaker-than-expected revenue. The sales miss coincided with the slump that hit crypto last summer when trading and crypto prices took a dip.
The downswing, which hit rivals Robinhood and Square, made it increasingly clear how Coinbase's fortunes are tied to what is still an unpredictable, highly volatile asset class.
In other words, crypto's very nature guarantees Coinbase will have a wild ride.
It's an unpredictable market. "We never know exactly what's going to be happening this quarter in crypto," CEO Brian Armstrong told analysts on the company's earnings call. That's reassuring!
"Coinbase's revenue will ride the same rollercoaster as cryptos," Denier of Webull told Protocol.
Yes, the ride is wild, but it's also long. Wedbush analyst Dan Ives remains "bullish" on Coinbase largely because he's optimistic about the future of crypto. Despite the selloff, he has a buy rating on COIN. "It's a blip on a long-term growth story," he told Protocol.
— Benjamin Pimentel
We are giving businesses the power to predict when customers are at a high risk of churn and send them to customer service before there's a problem. Instead of waiting, you're reaching out, fixing problems and putting smiles on faces. It's insight and analytics on a strategic level. It helps you better understand your business and drive efficiency across the entire organization.
Expensify's CEO thinks "enterprise sucks."David Barrett, whose expense management fintech just went public, explains the company's laser focus on smaller businesses.
Affirm scores a big Amazon win. Following a test this summer, the tech giant has signed an exclusive "buy now, pay later" partnership with the BNPL leader.
"Twitter is our superpower." The head of a major crypto trade association talks about the Blockchain Association's gains and challenges in Washington, D.C.
Speaking of Twitter, the company has a new crypto team. The social network is forming a crypto team led by blockchain expert Tess Rinearson.
"There might be specific facts and circumstances that would suggest that something is within our jurisdiction. But generally speaking, I don't have an issue with bank regulators taking stablecoins into their jurisdiction." — Hester Peirce, a Republican commissioner at the SEC, on banking regulators overseeing stablecoins.
"We allege American CryptoFed made materially misleading statements and failed to provide legally required information in its registration form." —Kristina Littman, the SEC enforcement division's cyber unit's chief, talking about American CryptoFed DAO LLC's attempted token registration. American CryptoFed became the first decentralized autonomous organization to be legally registered when Wyoming recognized it in July.
What fintech trend are you most excited about (besides your own sector)?
If adopted quickly, niche banking is a pivot that many community financial institutions may find advantageous. We've seen many fintechs serving historically underserved populations, and I predict that community banks and credit unions can do the same thing in order to differentiate themselves.
What fintech trend is most troubling for you?
I don't judge fintechs for getting into marketplace lending, but I worry that the influx is closing the door on community financial institutions' ability to — on their own or with a fintech partner — reach the velocity they need to make quicker decisions on to whom to lend, who is creditworthy and how much risk to take on. I hope borrowers aren't bedazzled by algorithms and fancy design and can continue to count on credit unions and community banks for their loans.
What's been your biggest professional blunder and how did it help you?
In 2006, we had $1 million left in the bank and a $300,000 monthly burn. I had been CEO for eight months and the Federal Reserve told us our product was illegal. I called my mentor, our chairman, and he said, "Hallelujah! ... another chance to show how awesome we are!" Immediately my mood switched from despair to laughter and then hope.
I transferred that energy to our employees as best I could. I shaved my head to demonstrate that I was battle-ready, I moved my desk so it was central to all employees, and every day the team heard me on the phone, seeking every possible way to reinvent our program. No one quit, and three months later, we had a favorable solution from the Fed. We would have failed without that burst of humor and hope — it's what leaders must provide in a crisis.
Ripple launched a new crypto product. Liquidity Hub enables financial companies to get access to buying and selling cryptocurrencies.Morgan Stanley is offering startup investments to wealthy clients. The a la carte private-share service requires $20 million in assets.
Tonio DeSorrento steps down as CEO of Vemo. He's handing the reins of the ISA provider to Renée Mang and Jeff Weinstein.Jake Chervinsky joins the Blockchain Association as head of Policy. He was previously general counsel at Compound Labs, the company behind DeFi lending system Compound.
Zilch is valued at $2 billion more than its name. The London "buy now, pay later" provider's round was led by Ventura Capital and Gauss Venture.Cacheflow raised $6 million. The startup gives software-as-a-service companies the ability to offer "buy now, pay later" at checkout.
That's the amount of options derivatives on DeFi platforms that crypto firm QCP Capital is trading per month, up from zero earlier this year.