July 25, 2022
Illustration: Christopher T. Fong/Protocol
Good morning, and welcome to Protocol Fintech. This Monday: Earned wage access comes under fire, Capital One goes shopping for fintechs, and Zelle scams find a simple explanation.
For sale: one neobank, never used. American Challenger and Patriot National Bank called off their merger in the latest sign of trouble in the neobank business. American Challenger is now hawking its cost-saving technology and a catchy brand name, Cache.
— Owen Thomas (email | twitter)
Federal and state regulators are taking a closer look at how to regulate a fast-growing fintech field, earned wage access. These products allow employees to obtain pay they have earned ahead of their regular payday. As the industry has grown, so has the debate about whether the products should be considered extensions of credit and regulated accordingly.
The Consumer Financial Protection Bureau is on the case. Tucked away in a recent announcement revoking a sandbox letter for EWA provider Payactiv was a warning that the agency would soon “issue further guidance.”
Industry officials say earned wage products are a cheaper alternative to payday loans. Some employers even see faster pay options as a recruitment tool.
The states are watching, too. Since early wage access involves pay, state wage and hour laws could shape which products are offered.
New regulation may not be a bad thing for the industry. "The main issue, regardless of which side you are on, is there is a lack of clarity," said Moorari Shah, a partner with the law firm Sheppard Mullin. "The regulators, the industry, the employers all acknowledge it: It is unclear how this should be treated."
— Ryan Deffenbaugh (email | twitter) and Veronica Irwin (email | twitter)
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines co-founder and CEO Greg Cross and his co-founder Mark Sagar, Ph.D., FRSNZ are leading their Auckland and San Francisco-based teams to create AI-enabled Digital People to populate the internet, at first, and soon the metaverse.
Politicians can accept crypto again in California. The state’s Fair Political Practices Commission voted unanimously to repeal a ban on crypto donations and adopt new rules for how to accept the funds.
On Protocol: Sam Bankman-Fried has a plan to partially bail out customers of Voyager. But Voyager’s attorneys are calling it a “low-ball bid.”
Zipmex has resumed withdrawals. The crypto exchange lifted a withdrawal block after about 48 hours, but is still restricting deposits, transfers and trades.
Capital One is going fintech discount shopping. Asked by analysts about potential fintech acquisition, CEO Rich Fairbank said on the company’s earnings call that “as the pricing has crashed in that marketplace, we continue to watch the market carefully.” The firm is an “ideal buyer for fintechs,” he said.
Investment bank Moelis & Co. has some crypto plans. Moelis is starting a group to focus on global blockchain deals.Tesla recorded a $170 million impairment charge on its bitcoin holdings. The electric car maker also logged $64 million in gains from certain sales of its bitcoin holdings, the company said in its 10-Q filing with the SEC on Monday.
Zelle is attracting scammers because of the Willie Sutton effect. “They’re attracted to these apps like moths to a flame because there’s just so much money flowing through them and because transfers happen so quickly,” Matt Schulz, chief credit analyst at LendingTree, told CNBC.
Visa and Fiserv both have earnings calls on Tuesday. Visa’s EPS forecast is $1.74, up from $1.49 in the same quarter last year. Fiserv meanwhile has an EPS forecast of $1.54, up from $1.37.
The Senate Committee on Banking, Housing, and Urban Affairs will have a hearing on discriminatory banking Tuesday. The hearing is titled “Fairness in Financial Services: Racism and Discrimination in Banking” and will feature witnesses from the Center for Responsible Lending and Center for Equal Opportunity as well as NYU professor Jacob Faber.
Shopify also has an earnings call on Wednesday. SHOP’s EPS estimate has dropped to - $0.1, after a reported EPS of $0.15 for the same quarter last year.The Senate Banking Committee will also have a hearing on crypto scams and other risks Thursday. The Federal Trade Commission reported earlier this year that consumers lost over $1 billion between January 2021 and March 2022. And a CertiK report this month estimated over $2 billion has been lost due to fraud in DeFi and Web3 projects internationally in 2022 alone.
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines is at the cutting edge of AGI research with its unique Digital Brain, based on the latest neuroscience and developmental psychology research.
Thanks for reading — see you tomorrow!