Good morning, and welcome to Protocol Fintech. This Wednesday: Google and Coinbase partner up, Brex enacts layoffs, and SBF talks policy.
Google and Coinbase strike a deal
Google and Coinbase announced a deal Tuesday to help each other out: Google wants to get into crypto, while Coinbase wants more large institutional customers.
As part of the deal, Google Cloud will start using Coinbase to accept crypto payments from some customers, while Coinbase will start using Google’s cloud services for its blockchain infrastructure.
More traditional companies are moving into crypto, which is fueling competition among a number of crypto infrastructure providers seeking to land clients.
Google’s crypto moves. While Alphabet hasn’t been as active as others, it now looks to be jumping in. As part of its new partnership, Google Cloud is piloting crypto payments using Coinbase with select customers and plans to open up to more customers in 2023.
Coinbase, meanwhile, will use Google Cloud to store and manage blockchain data. Coinbase — and crypto more generally — is not yet a massive client base for Google Cloud, but the move to accepting crypto payments is meant to make Google Cloud more attractive to Web3 and crypto companies. Google clearly believes it represents a growth opportunity.
Last month, Richard Widmann, Google’s head of strategy, Web3, and cloud, called Google’s cloud offering a foundational piece of crypto: “The Cloud provision — we’re a layer zero,” he told Decrypt.
Coinbase is also moving some data applications from AWS to Google Cloud — though it’s not clear how much is being switched over.
In addition, Google’s BigQuery crypto public data sets will be powered by Coinbase’s Node product for developers to build crypto applications.
This is a big step for Coinbase, as it seeks to diversify its business.
Signing up Google fits into Coinbase’s goal of working with more institutional customers and dropping its reliance on crypto trading for revenue — an aspiration that’s taken on more urgency since crypto markets crashed earlier this year, denting Coinbase’s revenue and stock price. Coinbase in August announced a deal with BlackRock to give access to crypto trading, custody, and prime broker services for institutional investors.
The competition to sign up large clients for crypto products is intense, from a range of crypto custody and technology providers. Coinbase’s answer to the competition is to offer a broad range of services, including custody, payments, staking, and prime brokerage services. This along with its existing crypto exchange is meant to be a one-stop shop for large customers.
At the same time, Coinbase has been building out developer-friendly tools to make building crypto products easier, such as its Node product for self-service API connections to the Ethereum blockchain. In fact, like Google Cloud, Coinbase has its own software-as-a-service offering called Coinbase Cloud, though it targets crypto developers and isn’t meant to compete with Google.
— Tomio Geron (email | twitter)A MESSAGE FROM FIREBLOCKS
Today’s cross-border payment infrastructure is slow, expensive, and inefficient. But digital assets have the ability to make delayed settlement times and high transaction fees a thing of the past.
On the money
The Treasury Department has fined Bittrex.The crypto exchange will pay $29 million in fines for “apparent violations” of sanctions on certain countries and anti-money-laundering law.
The SEC is investigating Yuga Labs. The SEC is examining whether certain NFTs from the company behind Bored Ape Yacht Club are more like stocks and should follow the same disclosure rules, Bloomberg reports.
Brex has laid off 11% of its staff. The layoffs — which the company blamed on shifting economic conditions — will leave the corporate card and spend-management company with about 1,100 employees.
The SEC has rejected another spot bitcoin ETF. The regulator turned down the latest proposal from WisdomTree, citing insufficient protections from fraud and manipulation. Grayscale earlier this year sued the SEC over a similar ruling.
On Protocol:Meet the SEC veteran leading Coinbase’s new think tank.
The young and rich don’t trust the stock market. People between 21 and 42 years old with investable assets of more than $3 million see more potential in cryptocurrency, real estate, and private equity, according to a Bank of America survey.
Overheard
It might be time to look a little more closely at Sam Bankman-Fried’s political donations. When asked about potentially running for office at SmartCon 2022, his reply was hardly cryptic (pun intended): “It’s not something I’m actively thinking about,” he said, “but I’d be excited to get more involved in policy.”
Deal flow
Fintech company Jiko raised $40 million in series B funding. Jiko is the first fintech to acquire a nationally regulated American bank and helps businesses put their cash in T-bills.
Airwallex raised $100 million in additional series E funding. The company is still at the same $5.5 billion valuation it had when the funding round first closed in 2021.
New York investment platform Equi raised $15 million in series A funding. The company provides investors access to hedge fund and private credit strategies.
Real estate investing platform PropHero raised 8 million Australian dollars ($5.2 million) in seed funding. Fifth Wall and Samaipata co-led the round.
London-based embedded finance company Railsr raised $26 million in series C equity funding. Railsr, which was formerly called Railsbank, raised an additional $20 million in debt.
Nigerian property management company Spleet raised $2.6 million in seed funding in a round led by MaC VC. Noemis Ventures, Plug and Play Ventures, Francis Fund, and Ajim Capital also participated in the round.A MESSAGE FROM FIREBLOCKS
Today’s cross-border payment infrastructure is slow, expensive, and inefficient. But digital assets have the ability to make delayed settlement times and high transaction fees a thing of the past.
Thanks for reading — see you tomorrow!