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Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Wednesday: crypto compliance cash, the DFPI’s latest move and Zip-Sezzle’s fizzle.

Off the chain

I’ve been known to natter on about the dot-com bubble, which is why I’m looking forward to our venture capital reporter Biz Carson’s upcoming event, “Lessons from Times the Bubble Burst.” The virtual panel on July 19 at 10 a.m. PDT/1 p.m. EDT includes Beezer Clarkson and Geoff Yang, who will discuss strategies for emerging managers as markets change. RSVP now to save your spot.

— Owen Thomas (email | twitter)


Android and Google Play are blank canvases. Developers are the artists who paint on them: During the past two years there has been a big debate between life and livelihood. A lot of people had to make a choice between the two. Those who could work from home didn’t have to make that hard choice because we could have both life and livelihood — and tech was the reason people could have both.

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Cashing in on crypto compliance

Crypto companies want to build new products fast. Regulators are loading them up with new requirements every day. Now many are off-loading key parts of their infrastructure to providers who see a big opportunity in helping crypto stay on the right side of the law.

Compliance is a huge challenge for startups. But fraud and anti-money-laundering checks, as well as figuring out how to convert fiat to crypto, are all necessary if customers are going to have crypto to spend in an app.

  • Stripe, which exited the crypto business in 2018, has reentered it in a big way, with FTX.US and as customers. Transak has signed up a range of customers to handle compliance and payment work. And there are a range of other players, including MoonPay, Prime Trust and Wyre, which was recently acquired by Bolt.
  • The momentum in crypto compliance shows how the infrastructure supporting many of the largest applications has splintered behind the scenes, off-loading complex, critical financial tasks to various parties for handling.

A driver of the business is the pace at which crypto regulations are changing across the globe. The EU’s proposed MiCA crypto bill, the Lummis-Gillibrand bill introduced in the U.S. Senate and even the U.K.’s CryptoSprints all require watching.

  • The provisional MiCA agreement and a related update to fund-transfer rules would extend existing regulations to digital assets and require crypto firms to collect information and personal data on transactions regardless of size.
  • The U.S. is not as far along in developing a regulatory framework for crypto, but provisions of the Lummis-Gillibrand bill would bring crypto under the oversight of existing agencies, along with their existing requirements. And the crypto industry has been developing its own compliance standards for requirements like the Travel Rule. Other jurisdictions like India, the U.K. and Singapore are moving to impose their own requirements.

There’s a host of opportunities in crypto compliance. Some companies would rather not get deeply involved in transactions and the regulatory requirements that result, which is where companies like Transak come in.

  • Transak works with about 100 applications, including unhosted wallets MetaMask and Ledger, games such as Decentraland and finance apps such as Cake DeFi. It handles the entire onboarding process for developers' new customers: KYC, AML and converting fiat to crypto so consumers can start transacting. “We have built a lot of expertise and systems in-house that can detect if a transaction is fraudulent,” said Transak CEO Sami Start. “And then we also have operations to defend against chargebacks.”
  • Stripe has focused on extending offerings popular with conventional fintech app makers, like identity checks and payouts, to crypto developers. The pitch is similar, too, with Stripe promising that customers can “stay focused on building your wallet and DeFi products.”
  • Plaid, another company catering to fintech, has also courted crypto business for payments and identity verification. It signed up Circle in September as a customer for its ACH payments service, and later added Cabital as a customer.

It’s not clear how a prolonged crypto winter might affect demand for these products, but even skeptical regulators are behaving as if they think digital assets are here to stay. That, along with the complexity of keeping up with regulations around the world, will provide a strong tailwind for companies that promise to take the chore of compliance out of customers’ hands.

A version of this story first appeared on Read it here.

— Tomio Geron (email | twitter)

On the money

On Protocol: The U.S. Treasury Department is soliciting public comments on the impact of digital assets on the lives of ordinary Americans, as part of its effort to comply with President Biden’s executive order on crypto.

Three Arrows Capital’s founders have gone missing. A New York court filing by lawyers representing creditors stated that the physical locations of co-founders Zhu Su and Kyle Davies are “currently unknown,” and that they have not meaningfully cooperated with the liquidation process. Zhu responded on Twitter that the firm’s liquidators were “baiting” him.

Also on Protocol: BlockFi is not accepting shares of Grayscale’s bitcoin fund as collateral anymore, seemingly a reaction to the now-bankrupt Three Arrows Capital’s reportedly huge holdings of GBTC.

California is investigating “crypto-interest” providers. Citing multiple firms’ moves to stop withdrawals, California’s Department of Financial Protection and Innovation called on consumers whose funds were frozen to file complaints.

France is entering phase two of its CBDC pilot. The Banque de France governor François Villeroy de Galhau announced Tuesday that the central bank has started phase two of its central bank digital currency program, with a focus on a “wholesale CBDC.”

Zip is calling off its purchase of “buy now, pay later” rival Sezzle. After confirming that the deal was still on track just three weeks ago, both firms reportedly decided to nix the acquisition due to "current macroeconomic and market conditions.”

Overheard, the GameStop NFT edition

GameStop launched its NFT marketplace Monday amid a slump in sales. The kindest thing people could say was … at least it wasn’t as bad as Coinbase.

GameStop analysis account @GMEddtweeted that the NFT marketplace reached “$1.6M in volume” in 24 hours, which got users raising eyebrows. Some compared its trade volume to Coinbase NFT, which has only garnered $2,953,077 in volume since April 20, according to Dune Analytics.

Some didn’t hold back while taking shots. “GameStop’s NFT marketplace doing $1,000,000+ volume in 24hrs proves CoinBase is the biggest NFT failure ever,” NFT influencer @notthreadguywrote.

Others thought it was just laughable that GameStop, a relative newbie in Web3, seemed to be outperforming Coinbase. “GameStop had a more successful NFT marketplace launch than Coinbase LMAO,” another influencer, @andy8052, tweeted.


Android and Google Play are blank canvases. Developers are the artists who paint on them: Many people don’t realize the many ways developers benefit from Google Play and that the core DNA of Android is open. From the minute that developers get a creative idea, they have every tool they need to build the app, understand the security policies, launch the app and gain a global audience.

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