May 10, 2022
Image: iStock/Getty Images Plus; Protocol
Good morning, and welcome to Protocol Fintech. This Tuesday: Shopify’s new fight, why you shouldn’t call Hester Peirce “Crypto Mom,” and the UST disaster.
The crypto price charts were bloody, with bitcoin down 12% below $30,000 at one point Monday. Most disturbingly, the peg on Terra’s UST stablecoin fell apart. Luna Foundation Guard, a nonprofit that helps support UST, voted to loan out $1.5 billion in bitcoin, and UST held in its reserves to support the price, but that didn’t seem to work. Some called it “an old-fashioned bank run” on Twitter. The incident is likely to strengthen calls for someone — anyone — to exercise oversight of stablecoins.— Owen Thomas (email | twitter)
It’s a familiar script: While the pandemic brought immense hardship, remote-economy darlings like Zoom, Netflix, Peloton and Shopify helped buffer the pain, and saw outsized gains as a result. Two years later, as pandemic fears subside and people venture back outside, demand for those companies’ services has faded, and valuations are in freefall.
The post-pandemic snapback to the “new normal” has been particularly pronounced in ecommerce. Now there are questions about whether the pandemic accelerated long-term shifts in consumer behavior or just gave these companies a temporary boost. Shopify has become a crucial test case for the post-pandemic economy.
Shopify’s earnings were so bad, its “new normal” is worse than before the pandemic. Shopify posted adjusted earnings of 20 cents per share on Thursday, after analysts estimated it would pull in about 64 cents per share. The difference sunk the Canadian company’s stock below where it was the day the WHO declared the coronavirus a global pandemic.
Shopify isn’t showing signs of slowing down. It still has a healthy balance sheet, and it’s putting it to work by acquiring the San Francisco logistics startup Deliverr for $2.1 billion, mostly in cash.
Now Shopify just needs to send a gag to CEO Tobi Lütke, with priority shipping. “Is there a place where financial analysts track records are kept? People seem to pay attention to them but are they held accountable?” Lütke tweeted Sunday.
If Lütke’s going to prove he deserves that tight control over Shopify’s future, he’ll have to show that he has a strong post-pandemic vision. Fast shipping that can compete with Amazon Prime is one thing. Pushing Shop Pay for streamlined checkout is another priority. But most important may be continuing to push Shopify’s software and payments into brick-and-mortar retail. Small businesses that cycled between lockdowns and reopenings figured out they have to operate in a hybrid mode. The rebels are fighting on more than one front, and Shopify needs to be in every battle.— Veronica Irwin (email | twitter)
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On Protocol: Users will soon be able to upload their NFTs as profile pictures on Instagram. Starting this week, some will get to test the feature, with the NFTs labeled as “digital collectibles.”
Coinbase will block some Russian customers by the end of the month. The crypto exchange notified users that their accounts will be blocked on May 31, and advised them to withdraw their funds or provide documentation that they aren’t subject to EU sanctions.
Also, Coinbase’s shares sank to a record low the day before its earnings call. The crypto exchange’s share price dropped by about 20% Monday. Including that drop, its value has fallen by more than 75% since its direct listing last year.
The Indian government is considering a 28% GST tax on crypto. A tax council is reportedly trying to place cryptocurrencies’ tax treatment on par with the lottery, casinos, race courses and betting. Crypto is already subject to a 30% income tax under a law implemented in April.
SEC Commissioner Hester Peirce would just as soon you didn’t call her “Crypto Mom.” “On the one hand, I think it's kind of funny because I don't have children … On the other hand, there are a couple reasons that I push back a little. One, I'm not an advocate for any industry … But I also think it's important for people not to think about the government in parental terms,” she said in an interview with Protocol.
Mark Cuban, the “Shark Tank” investor, has been investing in crypto for a while now, and he’s predicting that something similar to the dot-com boom will happen in Web3. “The chains that copy what everyone else has will fail. We don't need NFTs or DeFi on every chain. We don't need bridges to move NFTs between chains (does this make it fungible?),” he tweeted.
LootRush — think Steam, but for blockchain games — raised $12 million. The round was led by Paradigm and a16z.
Long Game, a platform that turns personal savings into a game, was acquired by Truist Financial Corporation. The company had privately raised $20 million before the acquisition, but details of the purchase weren’t shared publicly.
Ecommerce software company Swiftline acquired Charm.io. Charm.io tracks insights from 5.9 million online retailers, according to a press release. It’s an early deal for Swiftline, which had raised $12 million as of December.
TaxBit and Deloitte joined forces to offer tax reporting solutions for companies transacting in digital assets. Deloitte’s tax expertise will augment TaxBit’s software to help companies stay compliant in a rapidly evolving space.
KeyBank acquired GradFin, which offers student loan advisory services. Terms of the deal were not disclosed, though it’s worth noting KeyBank’s M&A record: The company also bought B2B platform XUP Payments in November.Accenture purchased Akzente, a German consultancy that helps companies hone their sustainability goals. The amount of the deal was not disclosed — you know, because going green is priceless.
In order to be successful in Flatiron, a restaurant will need to draw a weekday lunch crowd with healthy offerings and a work-friendly setting for professionals; to stand out among nearly double the restaurants in SoHo, a new restaurant should lean into arts and culture with a design-forward setting.