June 9, 2022
Photo: Melissa Lyttle/Bloomberg via Getty Images
Good morning, and welcome to Protocol Fintech. This Thursday: Gensler’s big move, Apple’s secret payments weapon and the CFTC’s crypto punch.
As Apple moves to take more of its payments business in-house, there’s one name you need to know: Cherie Fuzzell. She joined Apple in 2015 after running ParkMobile, and is senior director of Global Alliances for Apple Pay. Filings also show that she’s president of its Apple Payments subsidiary, the entity registered as a money transmitter with most states and a logical base on which Apple might build its own payments architecture.
Intriguingly, she was also formerly on the board of Intelligent Systems, the parent of payments processor CoreCard, which Apple partner Goldman Sachs picked in 2019 to handle Apple Card operations. Payments is a small world.— Owen Thomas (email | twitter)
SEC Chair Gary Gensler has been talking since he started the job about making big changes to the U.S. equities markets. Now those potential changes are coming into focus.
On Wednesday in a speech at a Piper Sandler conference, Gensler suggested the use of auctions to ensure the best prices for stock trades. That idea, along with several other big changes that the SEC is considering, could mean breaking the lock wholesalers currently have on executing the vast majority of retail orders. That also means payment for order flow, the blockbuster business model that fueled Robinhood’s no-commissions approach and that other retail brokerage giants more quietly use, could face retirement.
Gensler says the market needs greater “order-by-order” competition. That’s not great news for market makers, or the brokers they split profits with through payment for order flow.
There are big gaps in the current price-disclosure regime. Information about which trades are getting better prices isn’t always clear.
Payment for order flow is absolutely in Gensler’s sights. He name-checked Robinhood in his speech.
Gensler’s to-do list is long, the rule-making process is slow and Wall Street will make its voice heard. Robinhood Chief Legal Officer Dan Gallagher slammed the proposals ahead of Gensler’s speech Wednesday, suggesting that the SEC chief was unwelcoming to the kinds of people zero-commission trading has brought into the market. That suggests the tenor of the fights ahead.
The SEC could begin proposing these various rules this fall, according to the Wall Street Journal, and public comment would follow. In a video he posted on Twitter this week, Gensler acknowledged it takes a long time to make changes under federal laws governing rule-making. And he read some “mean tweets” aloud. There will almost certainly be more.— Tomio Geron (email | twitter)
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On Protocol: Suzanne Martindale, head of California’s Division of Consumer Financial Protection, has some major crypto worries. “We are getting complaints where people are just straight-up being defrauded,” she told Protocol in a Q&A.
Many more payments and gig-economy companies will be issuing tax forms. The Internal Revenue Service’s new rule that companies must report gross payments of over $600 a year is drawing wide criticism in the tech industry, saying that it causes confusion and potentially unfair tax burdens for small businesses and online sellers.
Also on Protocol: New York’s Department of Financial Services issued new regulatory guidance on stablecoins, where licensed crypto entities can only offer stablecoins that are fully backed by a reserve of assets and redeemable by holders within two business days.
A former Better.com exec says the company misled investors. Sarah Pierce, former executive vice president for Sales and Operations, filed a complaint Tuesday, stating that she had warned CEO Vishal Garg that his layoff plan violated California’s Warn Act.
Affirm’s stock slide could be a bad sign for other “buy now, pay later” companies. After Apple introduced itself as a direct competitor, Affirm’s shares plunged. Now analysts are worried that the competitive sector may be hit hard by rising interest rates and shrinking household income.
CFTC Chair Rostin Behnam said Wednesday that his agency won't be weak on crypto — and added that anyone who thinks otherwise is confused.
"We are one of the toughest cops on the beat," he said at an event hosted by the Washington Post. "We have a strong enforcement program, and we are very, very strong in terms of our market oversight and surveillance."
Behnam defended the agency against the notion that the SEC would be tougher in overseeing cryptocurrencies and pushed back on the view that the emphasis on CFTC regulation in the Lummis-Gillibrand bill amounts to a win for the industry.
"It's just a misunderstanding of the securities laws and the commodities laws," Behnam said, saying that the kinds of regular disclosures that securities issuers make through the SEC aren't useful for many cryptocurrencies, including bitcoin.
Read the full story on Protocol.com.— Ben Brody (email | twitter)
Former U.S. Solicitor General Donald Verrilli Jr. has joined Grayscaleas a senior legal strategist. Grayscale said the former top attorney in the Obama administration will bolster its efforts to convert its bitcoin trust into an exchange-traded fund.
Paradigm has hired Katie Biber as chief legal officer. Biber served as general counsel for Mitt Romney's presidential run and has since worked in counsel roles for Airbnb, Thumbtack, Anchorage and, most recently, Brex.
Glenn Swanson has joined Toast as vice president of Engineering, Fintech. He was most recently a senior director of Software Engineering at PayPal.
Salman Syed is leaving Marqeta after nearly six years with the payments company. He was most recently the firm's senior vice president and general manager for North America.
Rho has hired Alexa Summer as its chief legal officer. She was previously risk and regulatory lead counsel at Airbnb and an assistant U.S. attorney.
Coinbase has hired Josh Fendrick as a manager of U.S. policy. He was most recently an economic policy adviser to Sen. Gary Peters of Michigan.
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Thanks for reading — see you tomorrow!