Crypto wallets wrestle with a central question
Image: Plaid

Crypto wallets wrestle with a central question

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Thursday: Plaid’s central(izing) question, JPMorgan shows startups love, and Green Dot changes out CEOs.

Off the chain

Maybe the fact that Aptos Labs was staffed by Meta alumni wasn’t such a good sign after all? The debut of the aptos token was decidedly rocky, with the price of APT dropping by more than a third after an airdrop to early community members as well as moderators muting its Discord channel when it was swamped with scammers and unhappy token holders. But the worst sign was on Aptos Labs’ own blockchain explorer, which shows it barely handling 27 transactions per second — orders of magnitude below the 160,000 transactions per second it promised. Aptos Labs CEO Mo Shaikh waved off these concerns. He might want to rethink that approach. The crypto world is arguing over whether tokens are securities, but a token debut is just like an IPO in one key aspect: It’s the first time much of the world starts paying attention to you, and a messy beginning doesn’t bode well for the future.

— Owen Thomas (email | twitter)

Opening up wallets

Crypto is touted by enthusiasts for its ability to be trustless and conduct transactions without intermediaries. A new product from Plaid challenges that idea. Some enthusiasts may see this as more encroachment of traditional finance in crypto. But others could see this as an inevitable maturing of the industry.

Security is an ongoing challenge for crypto, and crypto wallets in particular are a vector of attack. A number of hacking and social engineering attacks have occurred that find various ways to connect to the wallets of unsuspecting users and drain their tokens.

Plaid is getting deeper into crypto, this time through crypto wallets. A new tool it’s introducing Thursday helps developers connect crypto wallets to apps.

  • Fintech app users have gotten used to seeing Plaid’s logo pop up when they try to connect their bank accounts. Now Plaid is trying to play a similar role for crypto applications. Consumers who want to use a NFT marketplace, blockchain game, or DeFi app and click on a button to “connect wallet” will see a screen from Plaid pop up offering to connect their wallet of choice.
  • Plaid’s new product is a way to address security fears, but it also feeds into an ongoing debate over just how decentralized crypto can be while addressing consumers’ needs for secure, easy-to-use apps.
  • Plaid’s Wallet Onboard has integrated with more than 300 wallets, including MetaMask, Coinbase Wallet, Trust Wallet, and Ledger. And it’s trying to address the security concerns around wallets by having any developer who wants to use its product go through its existing traditional compliance and risk checks, said Alain Meier, head of identity and fraud.

Plaid’s crypto offering is striking in inserting itself as a centralized authority into a decentralized world. Many who are new to crypto or want the familiar feeling of safety of a traditional finance application may welcome and trust Plaid’s involvement.

  • Plaid isn’t getting involved in crypto transactions between the apps and wallets it connects, and can’t see those transactions, Meier said. But it is counting on some brand recognition in crypto, since it already helps exchanges such as Binance.US and Gemini with things like bank connections or sharing crypto data.
  • Plaid is looking to move further into crypto, especially with its identity-verification products for traditional finance. These include a new behavioral analytics tool that can predict whether you are entering your own Social Security number or a fraudulent one based on the way it is entered into a form.
  • The company is also working on a way of verifying identity without sending data to an app, a feature which may appeal to more privacy-conscious crypto users. For example, if a product is age-restricted to 18- or 21-year-olds, Plaid could just pass on that verification without sharing a user’s birth date.

Since Plaid sits at the middle of a range of this data, this type of identity tool is a logical next step. As it gets further into crypto, though, it may find a challenge persuading the more hardcore blockchain developers and savvy customers that trusted is better than trustless.

— Tomio Geron (email | twitter)

A version of this story first appeared on Protocol.com. Read it here.

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There’s no let-up in the surge of cyberattacks against businesses. But shutting down the hackers will require many enterprises to evolve their strategy. Presented by At-Bay.

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On the money

A federal appeals court said the Consumer FInancial Protection Bureau’s funding mechanism is unconstitutional. The decision throws out the CFPB’s payday lending regulation and could require the regulator go through the annual Congressional appropriations process.

JPMorgan Chase is courting startups. The largest U.S. bank is launching a website, Capital Connect, that aims to connect startup founders with venture capital investors to simplify the fundraising process, as well as expanding a team that serves startups.

Binance now has the second-largest voting share in Uniswap DAO. Binance’s 5.9% share of tokens trails only a16z’s 6.7%, causing some concern for Uniswap founder Hayden Adams.

Wise raised its transfer fees. The U.K.-based money transfer company pinned the fee increase — its first since 2020 — on volatility in foreign exchange rates.

Coinbase and Primer struck an ecommerce deal. Primer is integrating Coinbase Commerce into its checkout system for crypto payments.

Overheard

Katie Haun of the eponymous crypto VC firm has weighed in again on the Tornado Cash sanctions case. This time, she brought in some extra legal firepower: Steve Engel, a former Justice Department lawyer who clerked with her at the Supreme Court. How Haun described recruiting him: “Steve doesn’t hang out on crypto Twitter so I called him up, explained the situation, and we brainstormed a bit.”

“There’s nothing shocking about individuals supporting candidates who share their policy views,” New York Rep. Ritchie Torres told Forbes when asked about his suddenly fervent declarations that “crypto is the future” and support for an a16z-backed crypto startup following a fundraiser by top partners at the firm.

Moves and hires

Sridhar Ramaswamy has launched nxyz, a Web3 search startup. Ramaswamy led Google’s ad business from 2013 to 2018.

Olivia Albrecht is CEO of climate-focused neobank Aspiration. CEO and founder Andrei Cherny has stepped down but will remain on the company’s board. The bank’s efforts to go public through a SPAC deal have faced delays.

Vatsa Narasimha is CEO of ComplyAdvantage. Narasimha has been promoted from COO. Charles Delingpole, founder and former CEO, is now executive chairman.

Vivek Sharma is Stripe’s head of revenue and financial management. Sharma was formerly Meta’s vice president of Horizon.

Daniel Seifert is Coinbase’s regional managing director in Europe. Seifert, a former senior executive at German financial technology company Solarisbank AG, will lead Coinbase’s European expansion.

George Gresham is CEO of Green Dot Bank. Former CEO Dan Henry was fired, according to the bank. Green Dot is a partner to Apple and Walmart but had warned investors of customer turnover earlier this year and is in a dispute with another partner, Uber.

Major League Baseball Is looking for someone to lead digital gaming, NFT, and metaverse licensing projects. The baseball league has NFT partnerships already with Sorare and Candy Digital.

A message from At-Bay

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