May 9, 2022
Photo: Federal Reserve System
Good morning, and welcome to Protocol Fintech. This Monday: rethinking the Community Reinvestment Act, Stripe vs. Plaid, and the earnings to watch, including Coinbase and Marqeta.
The oddest investor in Elon Musk’s bid for Twitter may be Binance. Sure, Twitter’s been dabbling with crypto tips and payouts, but it seems far afield from Binance’s core business. Does Binance just have more money than it knows what to do with? I’m reminded of its recent investment in Forbes. Maybe we should get worried when the decentralized firm starts buying up real estate.
Also, some news on our team! Veronica Irwin has joined Protocol Fintech. She’ll be contributing to the newsletter, writing about fintech and a bit of VC, and overseeing our weekly “Deal flow” section. Enjoy her look at the Community Reinvestment Act in today’s edition.
Since 1995, the internet, smartphones and even social media have upended the way we save, spend and invest. That’s also the year the Community Reinvestment Act, which is meant to encourage fair lending in low- and middle-income communities and was first passed in 1977, was last updated. Finance looks a lot different today.
The OCC, Federal Reserve and FDIC issued a joint proposal Thursday for revamping the law, which was structured around the idea of banks with branches, to take into account new realities like mobile and internet banking. People are already starting to ask how it will affect neobanks — and the small banks that have a thriving business catering to them.
The CRA has been a charged issue for decades. Critics say it limits financial institutions without bringing forth the equity it promises, while supporters say it’s essential in making sure all Americans can generate wealth over time.
The OCC tried to go it alone, but now agencies are showing a coordinated front to force CRA regulations on neobanks and fintechs. CRA as it currently stands regulates banks by where their physical branches are located, which doesn’t make a lot of sense in the internet age.
It’s still early days, but some people have begun to weigh in. Fellow regulators support the proposal (no shock there), while some think tanks and fintechs are concerned that added regulation could either be too restrictive or encourage risky loans.
Whatever the outcome, it looks like the country’s top banking regulators will be exerting more control over an area of the industry that has, up until this point, been mostly free to roam. The agencies are accepting comments on the proposal until August 5.— Veronica Irwin (email | twitter)
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Mining Capital Coin’s CEO was indicted in a $62 million crypto fraud scheme. Luiz Capuci Jr. allegedly misled investors, and pocketed investor funds instead of mining crypto as promised.
Argentina’s central bank banned banks from offering crypto services. The central bank said that banks cannot offer services for unregulated assets, and since digital assets are not regulated in the country, that includes crypto.
OpenSea’s Discord was hacked, with hackers promoting a fake project. The attackers sent links in the Discord servers pointing to an NFT minting project, which in reality led to a phishing site. Fewer than 10 wallets were compromised, and all NFTs stolen were valued under 10 ether.
Robinhood added two Grayscale crypto trusts. Users of the app can now buy and sell Grayscale Bitcoin Trust and Grayscale Ethereum Trust, a move by Robinhood to further establish itself in the crypto world.
The Stripe vs. Plaid fintech feud may have been short-lived, but it sure was juicy. After Stripe Financial Connections launched on Wednesday, offering direct competition to Plaid’s core product, Plaid CEO Zach Perret accused Stripe’s Jay Shah of using meetings and interviews with Plaid to help build the new tool.
Of course, Bolt co-founder Ryan Breslow (of “Stripe is the mafia of Silicon Valley” fame) couldn’t help but chime in. “Bummed that this happened to you Zach. Thank you for speaking up. Stripe does this because they can; most are too afraid to call it out. But the tide is turning,” he tweeted.
Breslow may have tweeted too soon. Perret removed his original tweet, saying it all might have been a crazy mixup! “Deleted tweet. Misunderstanding or different styles perhaps. Presuming positive intent,” he tweeted. (Which is exactly what you’d say if an actual mafia were threatening you. Blink twice if this is a hostage situation, Zach.)
Stripe CEO Patrick Collison sent an internal email noting that Shah interviewed with Plaid before working for Stripe, and met with Plaid only at Perret’s request.
“We should certainly be open to the possibility that we could have handled things better… We’ll try to learn what we can by reaching out to the people at Plaid and will retro this week,” Collison said in the email.
Coinbase’s earnings call is set for Tuesday. COIN’s average estimated EPS is at $0.17, down 95% from last quarter.
Marqeta’s earnings call is on Wednesday. MQ’s average estimated EPS is at -$0.09, down 29% from last quarter.
The Fintech Talents North America conference is on Thursday. The conference will feature speakers from Revolut, J.P. Morgan, Marqeta and others. Marqeta is also the headline sponsor for the event.
Affirm’s earnings call is scheduled for Thursday. AFRM’s average estimated EPS is at -$0.54, up about 5% from last quarter.
A U.S. House hearing on the use of AI for regtech is happening on Friday. The U.S. House Committee on Financial Services will discuss the usefulness of artificial intelligence for effective automated regulation.
Nubank’s earnings call is set for next Monday, May 16. NU’s average estimated EPS is at -$0.01, down 200% from last quarter’s average estimated EPS.
The Payments Forum conference also starts next Monday. The three-day conference in Phoenix, Arizona, will feature speakers from Visa, Mastercard, Walmart, Santander Bank and others.
In order to be successful in Flatiron, a restaurant will need to draw a weekday lunch crowd with healthy offerings and a work-friendly setting for professionals; to stand out among nearly double the restaurants in SoHo, a new restaurant should lean into arts and culture with a design-forward setting.
Thanks for reading — see you tomorrow!