Crypto’s call for regulatory clarity
Good morning, and welcome to Protocol Fintech. This Tuesday: the big Lummis-Gillibrand crypto bill, Apple’s pay-later move and another Bored Ape hack.
Off the chain
Apple Pay Later is just the beginning. Since the early days of the iTunes Music Store, Apple has depended on outside financial firms for its transactions. Project Breakout promises to change that: the long-term initiative, revealed by Bloomberg’s Mark Gurman earlier this year, would take much more of Apple’s payments infrastructure in-house. The most intriguing aspect for me isn’t breaking up payments into four installments: It’s substantially reducing the cost of smaller transactions, which might give Apple an excuse to cut the App Store rake that developers love to complain about.
— Owen Thomas (email | twitter)
The big crypto bill is here
“Most digital assets are much more similar to commodities than securities” won’t be music to Gary Gensler’s ears, but the crypto industry will likely welcome a bipartisan Senate bill unveiled Tuesday that puts a friendlier regulator largely in charge.
The Responsible Financial Innovation Act, introduced by Republican Sen. Cynthia Lummis and Democratic Sen. Kirsten Gillibrand, lays out how cryptocurrencies should be defined and regulated.
If it becomes law, it would be a victory for the crypto industry. The crypto world has long complained about insufficient or vague regulations and the SEC’s aggressive enforcement-first posture.
- The bill supports positions endorsed by the crypto industry, including the key argument that many cryptocurrencies should not be subject to securities regulations.
- As was revealed in a leaked version of the bill, Lummis and Gillibrand would hand over key oversight responsibility to the CFTC, not the SEC, which has been known for aggressive enforcement actions against crypto companies under Gensler. Bitcoin and ether, which account for more than half of the current market value of cryptocurrencies, would fall under the CFTC.
- Lummis is one of crypto’s staunchest advocates, and disclosed that she held more than $100,000 in bitcoin last year. She said in a statement that it is “critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.”
- Gillibrand said the bill offers a framework that “spurs innovation, develops clear standards, defines appropriate jurisdictional boundaries and protects consumers.”
Crypto, regulate thyself. The bill would also kick off the study of a “self-regulatory organization” that would work much like FINRA does for stockbrokers.
- A private financial regulatory group like FINRA and the National Futures Association “would represent a major step forward in the professionalization of the digital asset industry,” Jonah Crane, a partner at Klaros Group, told Protocol. Self-regulatory organizations “form the first line of defense for regulating large, complex markets.”
- Marc Fagel, the SEC’s former regional director for San Francisco and now a lecturer at Stanford Law, worried whether crypto’s mature enough to supervise itself. “With FINRA, you have long-standing broker-dealers whose legitimacy and financing are well established,” he said. “How many players in the crypto space have the same bona fides such that the regulators are willing to delegate oversight authority?”
The bill also resolves some regulatory gaps. It touches on everything from taxes to the environment.
- Under provisions of the bill, people could make purchases with appreciated virtual currency “without having to account for and report income” up to a certain threshold. It also seeks to resolve a key issue that emerged in the passing of the Infrastructure Investment and Jobs Act of 2021 by stating that miners, node operators and other crypto-transaction participants will not be considered “brokers” for income tax purposes, which would impose reporting requirements on them.
- The proposal also calls for the creation of a federal regulatory sandbox where crypto companies will be able to introduce and test innovative products in a controlled environment.
- The bill also calls on the Federal Energy Regulatory Commission to “analyze and report” on energy consumption in the digital assets market.
The bill has a long road ahead through the Senate, the House and the president’s desk. (This might be a good time for younger crypto-market participants to watch some “Schoolhouse Rock” on YouTube.) But it promises “a thoughtful approach” to crypto regulation, Crane said — a step toward the comprehensive architecture that market participants and regulators alike have been asking lawmakers to provide.
— Benjamin Pimentel (email | twitter)
A version of this story first appeared on Protocol.com. Read it here.A MESSAGE FROM VERSAPAY

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On the money
On Protocol: The SEC is reportedly opening an investigation into Binance’s 2017 initial coin offering of BNB. The agency is said to be examining whether Binance broke any securities rules in selling the tokens without registering them as securities.
The SEC is preparing to unveil sweeping changes to the stock markets. Under one proposal, payment for order flow would largely be replaced by a system where trading firms bid in auctions to handle trades.
Binance is also a money laundering hub, according to a Reuters report. A Reuters investigation found that the crypto exchange reportedly served as a channel for at least $2.35 billion in illicit funds, with hackers using the exchange to move stolen crypto.
IRA Financial Trust filed a lawsuit against Gemini. The retirement account management company alleges that the crypto exchange did not have proper safeguards against fraud, resulting in a theft of $36 million in crypto assets from retirement accounts in February.
The BAYC Discord server was hacked … again. Over the weekend, the Bored Ape Yacht Club’s Discord server was hacked after a community manager’s account was compromised and used to post phishing links. The attacker made off with 200 ether, about $360,000.
Apple’s pay-later move
Apple is joining the BNPL craze.
The tech giant announced Monday a new Apple Pay feature that would let users make purchases with its digital wallet and pay for them in four installments over six weeks. Apple Pay users won’t have to pay any fees.
The company said Apple Pay Later, which was introduced at the company’s Worldwide Developers Conference, will work “using standard Apple Pay implementation” and will also allow users to monitor and manage upcoming payments through the digital wallet.
— Benjamin Pimentel
Deal flow
Haun Ventures led a $32 million investment in Euler XYZ. The DeFi lending protocol will use the proceeds to diversify the treasury holdings of a forthcoming DAO.
Ohio-based real estate insurance fintech Foxen raised a $44 million in a series A round led by Summit Partners. Level Equity also participated in the round.
Sanlo, a nondilutive capital provider for gaming and app creators, raised $10 million in a series A round led by Konvoy Ventures. Portage Ventures, XYZ Venture Capital and Initial Capital also participated in the round.
German “buy now, pay later” company Mondu raised $43 million in a series A round led by Valar Ventures. Mondu will be using the funding to expand more into European markets, according to TechCrunch. Cherry Ventures and FinTech Collective also participated in the round.
Merge raised $9.5 million in seed funding in a round led by Octopus Ventures. The London-based startup develops payments infrastructure for Web3 and was founded by ex-PayPal and Barclays executive Kebbie Sebastian.
Indian UPI payment provider Slice raised $50 million in a series C financing round. Tiger Global led the round, with participation from GMO Venture Partners, Insight Partners and Moore Strategic Partners. The company is now valued at more than $1.5 billion.A MESSAGE FROM VERSAPAY

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Thanks for reading — see you tomorrow!
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