June 3, 2022
Photo by Marco Bello/AFP
Good morning, and welcome to Protocol Fintech. This Friday: Gemini’s layoffs, killing off the “Square killer” talk, and the state of crypto VC.
The hospitality industry is rightly skeptical about the prospects for “NFT restaurants,” but a high-profile test is coming to San Francisco. A two-story Japanese restaurant, Shō, is coming to Salesforce Park, the aboveground patch of greenery connected to Salesforce Tower. It’s using NFTs to sell VIP memberships at Earth, Water and Fire levels. It’s not clear why this requires a blockchain, as opposed to, say, a spreadsheet, since no one besides the restaurant needs to verify membership status. But it’s a good indicator of how the NFT craze means the concept is getting applied to just about anything expensive and exclusive.— Owen Thomas (email | twitter)
Even the industry's biggest bulls are saying it: Crypto winter is here.
The brothers Tyler and Cameron Winklevoss, nearly as famous for bitcoin-boosting as they were for sparring with Mark Zuckerberg at Harvard, blamed the chilly onset of stagnant crypto markets for their decision to lay off 10% of staff at Gemini, the exchange they co-founded in 2014.
“This is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as ‘crypto winter,’” the brothers wrote to employees on Thursday. “This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone.”
Gemini wasn't even alone in conducting layoffs that day. The Coinbase Ventures-backed Rain Financial, one of the Middle East’s largest crypto exchanges, also laid off "dozens of employees," according to Bloomberg.
The question everyone’s asking now: How bad will it get? Crypto and blockchain startups raised a record $25 billion from venture investors last year, according to CB Insights, a nearly eightfold increase from 2020.
Yet VC dollars are still plentiful for crypto. A May report from J.P. Morgan noted that venture capital was still flowing to crypto startups despite the TerraUSD collapse, something that could help the industry avoid a prolonged downturn similar to 2018.
Crypto believers are feeling down, not out. The Gemini layoffs are painful, the Winklevoss brothers wrote to employees, but leaner times “will help fuel the next cycle of crypto growth and adoption."
The letter is a reminder: The debate about regulating the industry is just getting started, crypto winter or not. Regulation doesn’t have to be a bad thing for digital asset values. Some guardrails could increase consumer confidence and help weed out scams. Gemini even ran ads in 2019 around the idea that "revolution needs rules." Then again, the same day as its layoffs, the firm was hit by a lawsuit from the CFTC, alleging Gemini officials misled regulators about a bitcoin futures product during talks in 2017.
Tyler Winklevoss' response? "Nuts! We obviously disagree with this lol. Will respond more fully when I have a minute. Busy building at the moment."— Ryan Deffenbaugh (email | twitter)
For the last 50 years, SAP has worked closely with our customers to solve some of the world’s most intricate problems. We have also seen, and have been a part of, rapid accelerations in technology in response. Across industries, certain paths have emerged to help businesses manage the unexpected challenges over the last few years.
On Protocol: New York State Attorney General Letitia James warned investors about cryptocurrencies, saying virtual currencies could "yield more anxiety than fortune."
Binance partnered with The Weeknd for his global tour. The crypto exchange giant said that the partnership will “integrate Web 3.0 technology for an enhanced fan experience,” and is also the tour’s official sponsor.
Also on Protocol: The Consumer Financial Protection Bureau is getting tired of letting fintechs play in its regulatory sandbox. The agency said that its sandbox initiative has proved to be ineffective, but is still processing applications. A new Office of Competition and Innovation may shake things up through an emphasis on broader rule-making.
Policygenius cut 25% of its staff. The insurance-tech startup had raised $125 million less than three months ago.
A crypto mining moratorium is back on the table in New York. The state legislature introduced legislation last year that would put a two-year moratorium on mining that uses proof of work. A revised pause on new construction passed the state Senate late Thursday. The bill now goes to Gov. Kathy Hochul’s desk.
North Dakota, meanwhile, is getting more mines. Bitzero is investing $400 million to $500 million in the state, which it chose for its North American headquarters and operations hub.
Square announced this morning that Apple’s two-way “Tap to Pay” feature, which turns iPhones that can already transmit payment-card numbers into terminals that can receive them, will become available to some Square sellers this summer. Apple announced a similar partnership with Shopify and Stripe in February.
Currently, iPhone users can pay in stores or on the go by tapping their iPhones to dedicated NFC-reading hardware made by companies like Square. The forthcoming Tap to Pay feature will allow sellers to collect payments directly through an app on their phone.
The inclusion of Square in Tap to Pay could address overblown perceptions that the new feature is a "Square killer." As Protocol noted when it was first released, Apple's unlocking of NFC hardware didn't provide the range of payment services required to make it useful. It did, however, help Stripe and Shopify — which have ambitions to grow their in-person retail payments — leapfrog the investment Square has made in card-reading hardware.
Read the full story on Protocol.com.— Veronica Irwin (email | twitter)
The downturn in digital assets hasn’t stopped VCs eager to fund the sector. Though funding dropped in May, it’s well ahead of last year’s pace, according to data tracked by Dove Metrics. One note of caution: The data tracks funding announcements, not the actual closing dates, so there’s some delay.
When companies invest in maintaining their “green ledger” with the same commitment they have to their financial ledgers, they will be able to connect their environmental, social, and financial data holistically so they can steer their business towards sustainability. At the end of the day, what gets measured, gets managed.
Thanks for reading — see you Monday!