November 1, 2022
Photo illustration: Protocol; Nathan Laine/Bloomberg via Getty Images
Good morning, and welcome to Protocol Fintech. This Tuesday: Elon Musk makes “crypto Twitter” a little more literal, Chase goes after the rent, and Coinbase chiefs get “juicy feedback.”
Off the chain
I’ve gone decades without a checkbook. Around the turn of the millennium, I politely declined my bank’s offer of a paper checkbook, intent on using online bill pay and other means to avoid what I saw as a fast-declining means of moving money. I might have been optimistic in my early adoption, because the old-fashioned rent check has a way of clinging to life. As of 2016, more than half of renters used a check or money order to pay their rent.
Now JPMorgan Chase wants to tackle the problem, with a service for renters and property managers to create digital invoices for rent that can be paid electronically. Chase has a big consumer banking base, and it probably stands to save a lot of money if it can chip away at those remaining cases where people need paper checks. And it’s also a big multifamily lender: With a better look at those rent streams, it can probably improve its underwriting. I just feel sorry for anyone still in the checkbook printing business.
— Owen Thomas (email | twitter)Like totally crypto Twitter
Twitter’s future looks fuzzy under Elon Musk. But could things be coming into focus for crypto Twitter?
Musk now owns a social network used by a large and dynamic online community of crypto supporters, in which he himself has been one of the loudest and quirkiest voices. The ongoing health of Twitter and its direction under Musk could have a significant impact on a service where crypto promoters tout tokens, developers coordinate software updates, and investors seek information.
Musk has shown he can move crypto. The self-appointed “chief twit,” who has more than 112 million followers on Twitter, is known for triggering wild movements in the price of dogecoin by just mentioning the token.
- At his direction, Tesla purchased $1.5 billion worth of bitcoin and announced that it would take the crypto token as payment before selling a huge chunk of that investment and saying bitcoin payments had been halted due to environmental worries.
- Despite Musk’s idiosyncratic posturing, crypto fans on Twitter seem excited by the notion of someone they view as one of their own running the place. Dogecoin, for example, has been rallying again, its price boosted not by any tweets by Musk but simply by the idea that one of its leading cheerleaders is in charge.
Crypto even played a role in financing Musk’s Twitter takeover. Crypto powerhouse Binance invested alongside Musk, giving it a say in reshaping a major social network.
- CEO Changpeng Zhao said in a statement that Binance’s hope is to “play a role in bringing social media and Web3 together in order to broaden the use and adoption of crypto and blockchain technology.”
- Patrick Hillmann, the company’s chief strategy officer, called the investment “a great R&D opportunity” to use Twitter as a “sandbox” for applying “Web3 solutions” to the problems that plague a Web 2.0 social network. That includes fighting the crypto spam bots Musk has complained about.
- Some ideas already being considered include a microtransaction system that would impose prohibitive costs on bots, Hillmann said. Another proposal is to use NFTs to help establish users’ identities.
Musk’s first priority has to be fixing Twitter. Only then can Twitter think about launching its Web3 experiments, Hillmann said.
- Rob Siegel, a management lecturer at the Stanford Graduate School of Business, said Twitter under Musk could mean that “Web3 technology finally gets a commercially interesting application at scale that is more than financial speculation.”
- But it’s also easy to see scenarios where Twitter “devolve[s] into more chaos,” Siegel said. “Musk’s promises of a barely moderated free-for-all” could easily attract “racist and anti-Semitic” tweets, said Marc Fagel, a former SEC regional director for San Francisco, as well as “unfounded crypto evangelism and pitches for NFT and crypto scams.”
- Musk tried to reassure advertisers that the service would not become a “hellscape.” But he did not help his case when he shared a baseless conspiracy theory about the attack on Paul Pelosi, husband of Speaker of the House Nancy Pelosi. Musk later deleted the tweet, which “probably means he thought it was a mistake,” said Binance’s Hillmann.
Though crypto fans obviously want to know how the Musk regime will benefit them, their needs are likely on the back burner. “Dealing with crypto Twitter might be a low priority,” Siegel said. Indeed, Musk has barely tweeted about crypto since he started accumulating his stake in Twitter. “I did it to try to help humanity whom I love,” Musk wrote in a note to advertisers. Crypto Twitter might particularly love Musk. But Musk has a lot of people to love.
— Benjamin Pimentel (email | twitter)
Correction: A previous version of this article misspelled the name of Binance's Chief Strategy Officer. It is Patrick Hillmann, not Hillman.
A version of this story first appeared on Protocol.com. Read it here.A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION
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On the money
BlockFi has picked Stripe for its global payments. Stripe has been pushing harder into crypto lately with products designed for the sector.
India is starting a CBDC pilot. The initial test for the digital rupee will be for settlement of transactions in government securities.
Haun Ventures is petitioning the CFTC to set rules for DAOs. The petition comes after Haun partners Chris Lehane and Tomicah Tillemann expressed concern about the agency’s “regulation by enforcement” in the Ooki DAO case.
Tether is facing a renewed Justice Department probe. A team of government prosecutors in Manhattan is taking over the investigation, Bloomberg reports.
Revolut’s CEO has renounced his Russian citizenship. Nikolay Storonsky is a staunch opponent of Russia’s invasion of Ukraine, and is solely a British citizen now, a spokesperson said. Storonsky’s father, a Gazprom executive, was recently sanctioned by Ukraine.
Overheard
Crypto ETFs? Not so fast, said Ethereum co-founder Vitalik Buterin. “I don't think we should be enthusiastically pursuing large institutional capital at full speed,” he tweeted. “The ecosystem needs time to mature before we get even more attention.”
Gary Genslertried being nice on Twitter: “Happy 14th birthday to Satoshi Nakamoto’s whitepaper! It has led to innovation and crypto asset investing. Let’s make sure as crypto enters its 15th year that investors get proper protection.” The SEC chair nevertheless got blasted by crypto Twitter in his replies.
Coinbase CEO Brian Armstrong and COO Emilie Choi give each other “juicy feedback,” Choi revealed in a new Fortune profile of her boss.Deal flow
Three former Tinkoff executives have raised $16 million to start a digital bank initially targeting the Philippines. They may find themselves going up against their former employer: The Russian online bank had also set plans to expand in Asia.
Onward raised $9.7 million in a series A round. The fintech startup aims to simplify divorced parents’ management of shared expenses. TTV Capital led the round and Citi Ventures, Correlation Ventures, Gingerbread Capital, and Lerer Hippeau participated.
Decentralized Engineering Corporation raised $9 million in a seed round. DEC’s Trip, a protocol on the Solana blockchain, is meant to run decentralized ride services like Teleport, an Uber alternative which will debut at the Solana Breakpoint conference this month.
Custodia raised an additional $7 million. The digital asset bank has raised a total of $51 million from backers including Binance.US and Coinbase Ventures.
Argo Blockchain won’t go through with a $27 million investment deal. The crypto miner told investors it sold off some of its mining hardware to raise money instead.
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