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It’s time to get some deals done

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Thursday: the outlook for fintech M&A, FTX’s derivatives debate, and the luna reboot plan.

Off the chain

Look, the Bored Apes left me disenchanted, CryptoPunks struck me as 8-bit novelties, and Meebits? More like “meh.” But now you’re telling me that there are Buff Bear NFTs with “5K swole bears”? Suddenly I see the wisdom in how digital art is helping people establish communities and find their tribes.

— Owen Thomas (email | twitter)

The fintech world trembles

San Francisco was once the hub of global tech conferences. It’s still trying to find its footing as business travel picks up. The attendees at Finovate’s spring conference — the fintech event series’ second in-person gathering since the pandemic — had a tentative, transactional vibe: Many seemed to be diving in for one panel or one meeting and then taking off.

The sense of unease was palpable: Nobody’s quite sure whether startup funding is dead or just in brief decline, whether they need to extend their runway six months or two years or if their boss is getting ready to lay them off next week. Even as people practiced their conference smiles and handshakes, it was hard to ignore the elephant in the room — the changing funding environment for fintech.

“If you’re looking to invest, our booth is in the back.” More than 50 companies demoed their products at the conference, and more than a handful of those presentations ended with a call-out to investors.

  • Founders were trying to project optimism, but when I pressed some about how fundraising was going, they got skittish. The question wasn’t whether VC funding was drying up but how long the drought might last.
  • Plenty of investors who spoke with Protocol must have been reading from the same VC manual, which apparently has a line about how startups with good founders and strong fundamentals will do just fine. Few were willing to admit outright that the good times were gone. A pleasantly frank exception was Mercedes Bent at Lightspeed. “The growth markets are virtually closed,” she said confidently at a Finovate panel on investing.
  • Early-stage startups, however, are still sizzling. According to PitchBook data, early-stage VC valuations were up in the first quarter, while late-stage deal sizes fell.

A new period of consolidation might be on the horizon. If those highly valued startups can’t get growth capital, they’ll almost certainly have to sell.

  • Bain Capital Ventures Partner Christina Melas-Kyriazi said the divergence in valuations between the early and late stage may lead to more acquisitions. That isn’t necessarily a bad thing, she argued: Fintechs need to be multiproduct to survive, so smaller companies that help fill out an acquirer’s offerings have a good shot at getting bought.
  • PitchBook said in its Q1 Fintech Report that it expects VC exits to shift mostly to M&A for the rest of the year. According to the report, average deal size was down 7.3% from the previous quarter at a total of $29.3 million.
  • said in its latest fintech report that M&A volume was at an all-time high in the first quarter, with 230 deals. But the combined value of all exits, including acquisitions, IPOs and SPAC deals, fell to $27 billion, the lowest point since the second quarter of 2020, when the economy was deep in the throes of the pandemic.
  • Boutique investment firm Houlihan Lokey also reported a spike in fintech M&A. The largest acquisition in its latest monthly report was Bolt’s April acquisition of Wyre for $1.5 billion. But now Bolt’s laying people off.

Financial infrastructure is all the rage. Investors are once again picking up on picks and shovels.

  • “The next phase is not going to be a consumer-facing digital bank, or consumer-facing crypto wallet,” Pegasus Tech Ventures partner Martin Tantow told Protocol. “Now, it’s getting more interesting for us to invest in embedded finance and banking-as-a-service.”
  • Fintech analyst Jason Mikula said there are more customers than ever for those startups. “You’re not only selling to other fintechs — you’re also selling to Chase and Goldman and Citi and the other, more established banks,” he said. “Your concentration risk is better diversified.”
  • Two of the best-attended sessions at the conference were about embedded finance. The buzzword also made it into panels about investing, lending and strategic partnerships.

Fintech seems to face a rocky future, at least in the short term. Some sectors might be more recession-resistant, especially tools that help other financial firms cut costs or deliver new products. But the most enduring aspect of the industry on display at Finovate might be the impulse for human connection. Attendees put on their best smiles and schmoozed at the Hilton Union Square from the moment the breakfast buffet trays rolled out to last call at the evening happy hours. They networked like their company’s future depended on it.

— Veronica Irwin (email | twitter)


Stellar is a decentralized, fast, scalable, and uniquely sustainable blockchain network for financial products and services. It is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world’s financial infrastructure. Financial institutions and fintechs worldwide are building real-world blockchain solutions on Stellar, today.

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On the money

On Protocol: Luna token holders approved a plan to relaunch the Terra blockchain just weeks after the collapse, with a new luna currency superseding the old coins now called “luna classic.” The UST stablecoin won’t be part of the new Terra blockchain.

Maryland residents can now keep their driver’s license in their Apple Wallet. The Maryland Department of Transportation’s Motor Vehicle Administration launched the Maryland Mobile ID, which allows residents to add a digital version of their driver’s license or state ID for convenience.

Also on Protocol: Bolt laid off a significant number of employees on Wednesday, saying that it needed to go through “several structural changes” to secure its financial position. It’s one of many tech firms laying off employees in the last few weeks.

Ripple will consider an IPO after the SEC lawsuit. After hinting to Protocol in January that an IPO could follow a resolution of its SEC lawsuit, Ripple CEO Brad Garlinghouse said that once the lawsuit ends, it will explore the possibility of an IPO. With the lawsuit potentially dragging on into next year, that could be a while.

The Global Blockchain Business Council merged with Global Digital Finance. The Swiss-based organization and the U.K.-based trade group announced their merger Wednesday, an effort to create a more harmonized global regulatory framework for the digital asset industry.


FTX CEO Sam Bankman-Fried took on a panel of industry regulators in a CFTC-hosted discussion on Wednesday to discuss the company’s proposal on derivatives trading, which seeks to update margin requirements for the real-time, 24/7 world of crypto.

Sean Downey, clearing chief compliance officer and head of Policy at CME Group, criticized the proposal’s reliance on a trading algorithm, referencing the recent crypto crash, and … quoting Taylor Swift, sort of? “We’ve seen that movie before, and in fact, we saw it very recently,” he said.

Hilary Allen, a law professor at American University, echoed the same sentiments, saying that the algorithm would have to also adapt to unforeseen circumstances, which is “not what algorithms do … that’s what regulators are for.”

Bankman-Fried tweeted his thoughts in a long thread, and didn’t hold back his disdain for some of the critics. “Users know way more than any of these people about these markets, ironic to hear the opposite condescendingly said,” he wrote.

Moves and hires

Binance.US named Josh Wilsusen as chief policy officer. Wilsusen previously held executive roles at Morgan Stanley and Ally Bank, and was a senior staff member for the House Financial Services Committee.

Peggy Mangot joined JPMorgan Chase as head of Fintech Partnerships for Commercial Banking. Mangot was previously an operating partner at PayPal Ventures, whose investments include Web3 and blockchain companies. She held leadership roles at Wells Fargo and Google prior to that.

Payoneer appointed John Caplan as co-CEO and director. The move is meant to facilitate a transition for Caplan to become sole CEO, with current CEO Scott Galit continuing in a strategic role. Caplan was most recently president of North America and Europe at

Studiohouse’s partners announced they’d joined Brex’s design team. With Brex’s acquisition of Studiohouse back in March, Cesar Torres and Cullen Wilson became part of the business-card issuer’s design team.


Wyre, a company within the Stellar ecosystem, allows fintechs to bridge between the fiat and blockchain worlds, via their API suite. Wyre allows developers and businesses to move money between the USDC digital dollar and local fiat currencies, leveraging Stellar’s low fees, speed, and reliability, providing end-users a positive experience.

Learn more

Thanks for reading — see you tomorrow!

Update: This newsletter was updated to include the full name of Martin Tantow's firm.

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