Good morning, and welcome to Protocol Fintech. This Wednesday: Wall Street shrugs off Robinhood’s shiba inu move, Circle lands more funding, and Cathie Wood dumps PayPal.
Off the chain
Forbes is introducing a virtual Billionaires collection, as NFTs, of course. Skip the eye roll, though, and pay attention to its partner: FTX. Coinbase is producing the Bored Ape movie trilogy. Where’s OpenSea, the dominant NFT marketplace, in all this deal-making?
— Owen Thomas (email | twitter)
A crypto strategy for the dogs
Shiba inu coin has a fierce online community, and the shibheads got a morale boost from Robinhood’s embrace. And the price of SHIB rose as much as 35%. But adding the popular token didn’t garner Robinhood a warm hug from Wall Street.
Crypto is a growing part of Robinhood’s business, the foundation of its ambitious international expansion plans. That’s actually the problem. A quirky growth driver has delivered a wild, unpredictable ride, and investors aren’t here for it.
Robinhood is throwing caution to the wind. The company added shiba inu and three other tokens just months after CEO Vlad Tenev said Robinhood wanted to be “very careful” about adding new cryptocurrencies.
- Crypto revenue is growing rapidly, surging more than 300% year-over-year in the fourth quarter of 2021. Robinhood is clearly riding the “meme coin revolution” which has “only just begun,” Chris Kline, Bitcoin IRA COO and co-founder, told Protocol. “With shiba now listed and available on Robinhood, retail traders will continue to define the path forward for these coins.”
- But while Robinhood has “negotiated much better economics on crypto trading,” this is being offset by “the decline in broader industry crypto volumes,” Goldman Sachs analysts wrote in a note downgrading Robinhood from neutral to sell.
Wen profits? Robinhood made stock-trading hip for a new generation of first-time retail investors. Many of those same traders grew attracted to crypto’s promise.
- But investor interest seems to be waning. Goldman Sachs warned of “softening retail engagement levels (particularly among the low-end consumer).”
- Unlike “older and higher net worth” traditional investors, many Robinhood customers are younger, less affluent investors whose ability to invest will likely be affected by higher gas prices and inflation, the Goldman Sachs note said.
- Regulatory uncertainty around crypto as well as questions about the longevity of consumer interest make Robinhood’s future fuzzy. And investors need to see “a clearer path to near term profitability,” the note said.
- It doesn’t help that Christine Brown, Robinhood Crypto’s COO, announced in March she was leaving. A longtime product operations lead at Robinhood, Brown had only been named to her new role in April 2021.
What would change Wall Street’s mind about Robinhood? The company is working “to make Robinhood the best place to invest in crypto,” Chief Brokerage Officer Steve Quirk said. But you know what got people most excited about Robinhood recently? When Robinhood extended its stock-trading hours, matching its older rivals’ extended-hour trading. Robinhood shares soared more than 20% the day that feature was announced. That’s a pretty clear signal: Stock-trading made Robinhood a phenomenon. And it’s what investors want to see more of.
— Benjamin Pimentel (email | twitter)A MESSAGE FROM CHECKOUT.COM
The emergence of DeFi is shaking up the way consumers think about how they store value. For reference, Visa saw $2.5 billion of crypto-backed transactions in the first quarter of 2022. We’re seeing consumers really starting to use this in a way that even a year ago was kind of hypothetical.
On the money
Applied Blockchain adjusted its $60 million IPO. The blockchain firm is now offering more than 8.5 million shares of common stock, more than doubling its initial offering of 3.2 million. The proposed pricing range has also been reduced to $6 to $8 per share, from $16.54 to $20.54 previously.
Axie Infinity developer Sky Mavis is launching a $1 million bug bounty. After its Ronin network was attacked in a $622 million hack, Sky Mavis is offering bounties to individuals who can identify software security vulnerabilities.
Circle announced a $400 million funding round. Expected to close in the second quarter, the funding round will see investments from BlackRock, Fidelity, Marshall Wace and Fin Capital. The crypto company still expects to proceed with a SPAC merger to go public.
Ethereum is making progress in its proof-of-stake tests. In their quest to switch the blockchain’s consensus mechanism from proof-of-work to proof-of-stake, developers successfully carried out the first major test on its mainnet shadow fork.
Celsius is banning non-accredited U.S. investors from earning rewards on transfers. While coins transferred prior to April 15 will continue earning rewards, new transfers made by non-accredited U.S. investors after April 15 will not.Overheard
Virgil Griffith, a former Ethereum developer, was just sentenced to 63 months in prison and must pay a $100,000 fine for teaching North Koreans how to use crypto to evade sanctions. “The fact of the matter is Virgil Griffith … hoped to come home to Singapore or elsewhere as a crypto hero,” U.S. District Judge Kevin Castel, who presided over the case, said.
The Consumer Financial Protection Bureau is charging TransUnion for repeatedly violating a 2017 law enforcement order. “TransUnion is an out-of-control repeat offender that believes it is above the law. I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully,” CFPB Director Rohit Chopra said in a press release.
Cathie Wood, CEO of Ark Invest, thinks Venmo is just a “follower” of Cash App, and dumped all of the firm’s PayPal holdings as a result. “We tend to put our bets with who we believe will be the winners … As we consolidated our portfolios during a risk-off period, we chose Block over PayPal,” she said in an interview with CNBC.
A MESSAGE FROM CHECKOUT.COM
Businesses — whether Web2 or Web3-oriented businesses that don’t want to hold crypto but do want to be able to interact with crypto holders — want to be able to offer that as a payment mechanism to their communities. The other is hands-on, where merchants are comfortable accepting crypto.
Thanks for reading — see you tomorrow!