September 10, 2021
Coinbase's Brian Armstrong (left) and Ripple's Brad Garlinghouse (right) share an enemy in the SEC.
Hello and welcome to Protocol | Fintech! This Friday: Coinbase and Ripple face a common foe, James Baldwin's lesson for fintech, and Sheila Bair on payment for order flow.
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A dispute between Coinbase and the SEC over crypto lending triggered an intriguing response from another fintech company that's been embroiled in its own legal fight with the federal regulator: Ripple.
In response to Coinbase CEO Brian Armstrong's 21-tweet thread, Ripple CEO Brad Garlinghouse playfully posted a Bruce Willis GIF with the caption, "Welcome to the party, pal!"
But he followed up the tweet with something more serious: a call for a united front against the SEC's "warfare on crypto."
"We're ready to work with responsible actors, pro-innovation members of Congress, and others in paving a path to clarity and certainty with U.S. regulators," Garlinghouse said.
Is it a currency or a security? The Coinbase-SEC battle turned the spotlight on the longstanding debate about the crypto industry: Should cryptocurrencies be viewed as currencies or securities?
Asking permission has its own costs. The dispute highlighted a key criticism of the SEC — that it does a terrible job explaining its decisions and policies, and instead resorts to threats of legal action or actual lawsuits.
But the "attacks on the SEC are unusual," Diamond also said. And the combative tone suggests Coinbase is gearing up for battle. Garlinghouse is signaling that he'd be a willing ally.
"If you want to go fast, go alone," he tweeted. "If you want to go far, go together."
— Ben Pimentel
Over the last two years, many retailers have seen the benefit of investing in new, flexible payments. Despite the low-hanging fruit this opportunity presents, our research shows 60% of ecommerce merchants globally do not feel they receive enough payment insight to allow them to innovate their models. So how can businesses turn their ships around before it's too late?
El Salvador bungled its bitcoin debut. The bold experiment by the Central American nation to remake its economy around cryptocurrency had a rocky launch.
Affirm has traders buying now. The company posted strong results as "buy now, pay later" plans continue to attract consumers. The stock surged.
Facebook's crypto chief spoke to Protocol. David Marcus outlined to David Pierce how the social networking giant plans to reinvent money.
PayPal is buying Paidy. The payments giant is acquiring the Japanese "buy now, pay later" company for $2.7 billion.
What fintech trend is most troubling for you?
Payday lending masquerading under the guise of "fintech." On-demand pay has emerged as a safe alternative to predatory payday loans and the vicious cycle of borrowing and accumulating debt, but as with any new industry, there are companies masquerading as legitimate providers while employing tactics that are traditionally used by payday loan lenders. These wolves in sheep's clothing have relabeled their interest as "tips" and "membership fees" while marketing their loans as "cashouts" and "extra cash." Fortunately, regulators are taking notice and action ー loans in the amount of earned wages aren't the same as access to earned wages.
What's been your biggest professional blunder and how did it help you?
Early in my career, I didn't recognize the value of building and investing in teams and culture rather than just the product. I quickly learned that everything begins and ends with people, and your product is only as good as the people who build it. Now, my philosophy is to "build generationally" by focusing on investment in talent and putting the team first.
What fintech company have you been most impressed with this past year?
I've really enjoyed following MoCaFi, which seeks to provide banking services to underserved communities, eliminate predatory financial services and offer resources like access to credit-building tools and financial literacy programs. Sixty years ago, James Baldwin described "how extremely expensive it is to be poor." Since then, big bank "innovations" like overdraft have only made it more expensive. Finally, we are seeing fintech offer real solutions that promote financial equity and inclusion.
That's the number of bitcoins mined this year by five U.S.-listed mining companies, which have benefited from reduced Chinese competition amid that country's crackdown, per the Block.