August 3, 2021
Photo: Andy Feliciotti/Unsplash
Hello and welcome to Protocol | Fintech! This Tuesday: The Senate zeroes in on crypto, Monzo faces a money-laundering probe and Square buys Afterpay.
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The Senate held a hearing on cryptocurrencies last week called "Cryptocurrencies: What are they good for?" But the room wasn't as hostile as the title sounded.
Members of the Senate Committee on Banking, Housing and Urban Affairs, while critiquing the industry, delved into some of the nuts and bolts of the crypto world, from miners to software security. Some expressed skepticism about cryptocurrencies: Sen. Elizabeth Warren, who last week asked Treasury Secretary Janet Yellen to take the lead on regulating crypto, called digital currencies "the yellow brick road."
The debate over crypto comes as broader crypto tax enforcement has become part of the big debate over the infrastructure bill dominating Washington's attention. As of Monday, in a concession to the crypto industry, the latest version of the bill clarified that miners or node operators wouldn't be responsible for reporting transactions to the IRS.
Who's in control here? Some panelists and senators raised concerns that cryptocurrencies are not quite as decentralized as advertised.
Miners are in the spotlight. Crypto miners, typically a shadowy part of the crypto world, were a focus for their role in the industry — particularly as more of the work critical to operating blockchains shifts to the U.S. amid a crackdown in China.
Is crypto too big to fail? Some panelists and senators raised questions about the systemic risk of the crypto industry overwhelming the traditional financial markets, as more and more ties between the two markets develop.
The best news out of the hearing was an increasing sophistication from Congress on crypto — arguably a sign of crypto's increasing importance in mainstream finance. Take it as a sign that more regulation and legislation is coming.
Indeed, Virginia Democrat Rep. Don Beyer just introduced a detailed 58-page bill that would impose a slew of new changes on the crypto industry, including defining which tokens are securities as well authorizing the Federal Reserve to create a central bank digital currency.
Singapore is fast becoming a global hotbed of tech innovation. It's easy to see why. Nearly 80 of the world's top 100 tech firms have set up outposts there, including Google, Facebook, Stripe, Salesforce and homegrown unicorns like the super-app Grab.
Join Protocol's Biz Carson for a conversation with Atomic's Swathy Prithivi, Accel's Rich Wong and Asana's Oliver Jay during our upcoming event: Going Global: How Tech Companies Can Expand Internationally August 10 at 9 a.m. PT / 12 p.m. ET Learn More
Square bought Afterpay. Square's deal to purchase the buy now pay later company instantly adds a large merchant network, while much more tightly connecting Square's Seller unit to its consumer-focused Cash App.
Stock exchanges are facing questions, too. Robinhood has been scrutinized for taking payment for order flow, but some critics say exchanges take a similar approach — and create similar conflicts of interest — with exchange rebates.
That's the projected number of consumers with digital payment cards — even though a PYMNTS.com study found many consumers still aren't interested in giving up plastic.
What fintech trend are you most excited about?
I am excited about the potential role that fintechs can play in enabling meaningful action on climate change. Without reliable data on the environmental footprint of a financial transaction, banks are often flying blind today when it comes to allocating financial resources efficiently to support climate action objectives. Firms like Doconomy are aiming to fill that gap.
What was your first tech or fintech job?
I was part of the team that built out India's first online retail brokerage (Sharekhan) more than two decades ago.
How do you see AI changing fintech in the next three to five years?
AI can dramatically improve the way in which fintechs manage risk. Many fintechs face a significant credibility challenge today: Can they scale up without putting customer welfare and financial system stability at risk? AI can help them overcome this challenge in a lean, agile way.
Business leaders say they choose Singapore for its modern tech infrastructure, strong government support, robust pipeline of talent and pro-business regulations (the World Bank ranks it No. 2 in the world for ease of doing business). Plus, its location in the heart of Southeast Asia serves as a launchpad into the bustling Asian-Pacific market.
Thanks for reading — see you Friday.