February 26, 2021
Image: TechCrunch / Protocol
Hello and welcome to Protocol | Fintech! This Friday: Coinbase pulled the trigger, the Fed's plan for a digital dollar, and Affirm has a new debit card.
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Well, Coinbase finally pulled the trigger. And the Fed seems to be getting ready to do so in its own way, too.
The crypto exchange's plan to go public via a direct listing sets the stage for the most anticipated public offering this year. It's also just the latest event to legitimize what has become a highly controversial area of fintech -- but one which the U.S. government appears to be getting ready to embrace.
The crypto craze has been propelled largely by the rapid and unpredictable rise of Bitcoin. But crypto's rising popularity goes beyond that: Coinbase, with a reported valuation of $100 billion, has been tapping into what experts agree is a broader and steadily-growing trend. And many — even the Fed — are starting to feel cautiously optimistic about parts of it.
What's behind the current crypto excitement? Cryptocurrencies are hot, obviously, but more broadly the technology has promised peer-to-peer financial markets that don't rely on big banks and financial institutions. Just as the GameStop drama showed retail investors mistrust Wall Street, crypto has long held the promise of individuals creating their own financial markets.
The act of Coinbase going public makes some experts nervous. Access to the public markets will strengthen the marketplace's position -- and that worries Santa Clara University law professor Stephen Diamond, a longtime observer of Silicon Valley.
So maybe think of Coinbase's listing as part of a broader growing legitimacy. It's going public at a time when crypto and digital currencies are actually gaining more acceptance, said R.A. Farrokhnia, a Columbia Business School professor and executive director of the Columbia Fintech Initiative.
You might not like Bitcoin, or even Coinbase, but this week's news show they're here to stay. Of course, the heated debate on the future of digital currencies and cryptocurrencies will rage on, rising and falling in intensity -- just like the value of a Bitcoin.
The future is positively digital. Ready? Consumers, investors and shareholders are savvier than ever. Everyone needs to create more engaging experiences that keep pace with today's new expectations. See how you can stay ahead with next-gen technologies that deliver on what matters most.We can help.
Niche banking is growing. Many fintechs are looking to address the banking needs of specific groups, including the LGBTQ community, African Americans, Latinx people and those with disabilities. But standing out in a crowded field can be challenging.
Banking-as-a-service: the next frontier. A race is on to supply non-fintechs with backend financial technology to help improve their customer experience, and the potential rewards are huge. But plenty of obstacles still lie in the way.
What are you most excited about in fintech?
Our regulatory system hasn't really evolved to keep up with this shift in financial services, but as the fintech sector becomes increasingly central in all of our lives, it will have to, and I think that day is getting closer. I'm excited by the opportunity to bring better protections to consumers, greater efficiency to our financial markets and greater stability to our system. Not incidentally, I'm optimistic that the quality of financial regulation will improve when regulators have a broader understanding of the financial system as a whole.
What fintech trend are you most worried about?
Too often, fintech leaders not only don't understand the public policy issues that underlie regulatory perspectives and requirements, but also don't see gaining that understanding as a priority. And the result is that fintechs and regulators talk past each other far more frequently than you would see, for example, in the banking sector. Those disconnects become increasingly worrisome to me as the fintech sector becomes increasingly central to the provision of financial services in our country. I think there's a lot of opportunity to address this issue through reform of our regulatory system, but I worry about the things that can go wrong if that reform doesn't occur.
What in fintech do you think needs to be fixed?
The fintech label is broad. You'll see different issues that need to be fixed if you look at lending versus payments, for example. But as a whole, the fintech sector needs to become more conversant with its own obligations to society, to understand that it doesn't operate in a vacuum; that its business decisions and scale have the ability to impact consumers and communities, and the financial system broadly. It's not that the sector lacks that awareness altogether, but the need is growing as the sector grows in scale and centrality.
The future is positively digital. Ready? Consumers, investors and shareholders are savvier than ever. Everyone needs to create more engaging experiences that keep pace with today's new expectations. See how you can stay ahead with next-gen technologies that deliver on what matters most. We can help.
Thanks for reading! We'll be back with Protocol | Fintech on Tuesday.