Good morning, and welcome to Protocol Fintech. This Friday: Klarna aims to swipe more market share, the battle over Sarah Bloom Raskin, and results from the Crypto Bowl.
Off the chain
Russia’s on the brink of getting cut off from the world financial system, and Kremlin functionaries are fighting over whether to allow crypto. It’s a reassuring indicator that even authoritarian governments can be indecisive and bureaucratic. Meanwhile, the Biden administration is edging ever closer to a semblance of a strategy for regulating digital assets. No wonder we’ve seen a flurry of announcements promising self-regulation. In other news, Halsey Minor’s back and he’s got an NFT to sell you.
— Owen Thomas (email | twitter)
Swipe now, pay later
If “buy now, pay later” upstarts are going to really take on the credit card networks, ecommerce isn’t enough. They’ll have to go where Visa and Mastercard got their start — at the store counter.
Klarna is making its move now, having opened up a waitlist for U.S. customers to sign up for a physical card. (It’s a Visa card: For now, Klarna has to ride its rival’s rails.) The card will let consumers pay in four installments in store or online. By the time it launched a similar card in the U.K. last month, it had 400,000 people on the list.
There’s more in store. To really compete with banks’ credit and debit cards for customer dollars, “buy now, pay later” companies have to offer a means of paying in stores.
- Klarna is the latest company to move into plastic. Affirm had previously announced a Debit+ card.
- Block, which owns Square and Cash App, is making the recently acquired Afterpay its “buy now, pay later” offering. It also issues the Cash Card, a physical debit card. It’s reasonable to expect those all to be integrated over time.
- These cards can be used in store or online like a traditional debit card linked to the consumer’s bank account. That greatly expands the range of merchants where “buy now, pay later” plans can be used, and also gives the company data about retail spending it can use to strike direct deals.
It’s a coupon site, it’s a savings account, it’s a super app! A physical card is just part of the super app strategy, which includes shopping, banking, crypto and more.
- “Buy now, pay later” companies want to build super apps, just like PayPal, Block, Robinhood and others. Banking apps want to add shopping, trading apps want to add spending. Everyone wants to do everything.
- Klarna provides a range of shopping options. And it offers bank accounts in Germany and savings accounts in the Dutch market.
- Affirm has a high-yield savings account and plans to add crypto trading.
Meanwhile, credit card companies are trying to push back with their own offerings. AmEx, Chase and Citi now offer consumers the ability to convert credit card purchases to “buy now, pay later” after purchasing. And PayPal offers its Pay in 4 option for consumers paying anywhere through its app, as well as offering it through the merchants in its vast network. An ongoing scramble for the consumer credit market is definitely in the cards.
— Tomio Geron (email | twitter)A MESSAGE FROM NOVOPAYMENT
As the race to financial innovation accelerates, Banking-as-a-Service is carving out an essential role within it. Not a bank but not a standard fintech, Banking-as-a-Service falls between the two, utilizing strengths of each to create something new. Read Demystifying Banking-as-a-Service to gain insight on how BaaS connects the digital economy.
On the money
On Protocol: Sequoia Capital launched a $500 million investment fund focused on crypto tokens.
Circle has doubled its value in a new SPAC deal. The crypto firm said it had renegotiated its agreement with Concord Acquisition Corp. to value the company at $9 billion, accounting in part for the growing circulation of the USDC stablecoin.
Also on Protocol: The DOJ’s new crypto crime unit has found its boss. Eun Young Choi, a veteran prosecutor and a former assistant U.S. attorney, will be the first director of the National Cryptocurrency Enforcement Team.
Biden’s crypto-regulation order could come next week. Yahoo Finance’s sources say the order will ask a range of agencies to weigh in on a broad strategy for regulating digital assets.
The Bank of Russia is doubling down on a crypto ban amid plans to issue a digital ruble. The central bank is standing firm on its stance that cryptocurrencies should be completely banned, not regulated. Instead, it wants to issue a CBDC.
The Senate Banking Committee is in a standoff over fintech deals. Republicans boycotted a vote on Federal Reserve nominees Tuesday over allegations that Sarah Bloom Raskin had helped a nonbank fintech firm obtain a Federal Reserve master account shortly after leaving her position at the Treasury Department. And now the Kansas City Fed and the Colorado Division of Banking are fighting. It’s super messy.
Melania Trump is going full steam ahead with another NFT collection. The “POTUS TRUMP NFT Collection” will feature 10,000 NFTs, divided into platinum and gold tiers. Her first NFT auction drew skepticism after the winning bid was traced back to her team’s crypto wallet.
CoinJar launched a crypto-to-fiat Mastercard debit card. The card will allow U.K. customers to instantly convert almost 50 cryptocurrencies to pounds for purchases, charging a 1% conversion fee. It will be available both as a digital and physical card.
Overheard
The Senate introduced legislation requiring a report on the financial risks of El Salvador’s adoption of bitcoin as a legal tender. El Salvadoran President Nayib Bukele thinks the U.S. should mind its own business. “OK boomers … You have 0 jurisdiction on a sovereign and independent nation. We are not your colony, your back yard or your front yard. Stay out of our internal affairs,” he tweeted.
Halsey Minor, the CNET founder who’s now CEO of NFT publishing service Vivid Labs, thinks that NFTs can be more valuable if they’re tied to real-life items like luxury goods. “You buy a limited-edition bag, but you also get an NFT that proved that it was real, videos about how the bag was made and pictures of how the bag can be styled,” he said in an interview.
How does Charlie Munger really feel about bitcoin? “I’m proud of the fact I’ve avoided it … it’s like some venereal disease,” the Berkshire Hathaway vice chairman said in an interview.
A MESSAGE FROM NOVOPAYMENT
As the race to financial innovation accelerates, Banking-as-a-Service is carving out an essential role within it. Not a bank but not a standard fintech, Banking-as-a-Service falls between the two, utilizing strengths of each to create something new. Read Demystifying Banking-as-a-Service to gain insight on how BaaS connects the digital economy.
The chart
Was the Super Bowl really the Crypto Bowl? Not every company advertising in the big game saw the same lift, at least as measured by App Store rankings. Coinbase’s QR-code ad may have been more effective than the more traditional, celebrity-driven route other crypto advertisers took. Crypto.com, in particular, didn’t see much of a lift in its rankings after running a LeBron James spot.
Thanks for reading — we’re off Monday, so we’ll see you Tuesday!