Ripped Shopify shopping bags
Image: iStock /Getty Images Plus; Protocol

Shopify is investing in the future. But is it spending on the right things?

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Thursday: Shopify’s spending dilemma, Jack Dorsey on CBDCs, and Sam Bankman-Fried on “crypto autumn.”

Off the chain

May I see your ID? That seems to be a theme in crypto lately as the industry races to put technology and policies in place before Washington does it for them. Circle and Coinbase have been busy, backing two tech initiatives called TRUST and Verite along with other key crypto players. The first seeks to comply with the FinCEN Travel Rule, while the second is a more generalized attempt to vouch for a person’s identity without necessarily disclosing it. The question is whether it will be enough to satisfy regulators — and appease crypto’s true believers, who think anything short of Satoshi Nakamoto-level anonymity is heresy.

— Owen Thomas (email | twitter)

Playing the long game

What wasn’t to like about Shopify’s fourth-quarter earnings? The company set a revenue record, $1.38 billion; its merchandise volume was up 31% from 2020’s pandemic-strengthened holiday period; and its monthly recurring revenue, a key measure of its subscription software business, hit a record $102 million, surpassing $100 million for the first time.

So of course its shares plunged 16% Wednesday — a sign of how Wall Street is reassessing the growth prospects of companies like Shopify as the economy resets to a post-pandemic normal.

The pandemic boost to ecommerce is fading. Shopify is facing mounting pressure to prove it can grow post-pandemic. It reported a slower growth outlook, which it attributed to the absence of “COVID-triggered accelerations,” where consumers gravitated toward online shopping in the midst of lockdowns and government stimulus payments.

  • Moiz Ali, founder of Native Deodorant and a Shopify seller who also bought shares in the company, tweeted that he was down about $200,000 after the earnings call. In a thread, he outlined the ways Shopify could help sellers like him grow, and thus increase its own profitability.
  • Shopify said it will continue to build out its Fulfillment Network, which helps businesses pick, pack and ship their orders. Ali argued the company is focusing on the wrong aspect.
  • Ali pointed to better analytics and subscription-commerce software as “the most obvious opportunity” for Shopify to help its merchants and make more money.
  • Meanwhile, the software in Shopify’s logistics arm leaves a lot to be desired.
  • Shopify’s “mission may be to ‘arm the rebels,’ but it is giving us muskets in a war that is increasingly being fought with machine guns,” Ali wrote.

Shopify’s growing expenses were another source of alarm. Rocco Strauss, senior analyst at Arete Research, said investors were caught by surprise.

  • Shopify expects operating margins to shrink this year because of advertising costs and its international expansion. That’s on top of the growth in capital expenditures for the fulfillment network.
  • “We had pointed to rising capex, given the need of purpose-built warehouse infrastructure, but the $1.4 billion infrastructure investment until 2024 also caught investors off guard,” Strauss said in an email to Protocol.

Shopify’s planning for the long term, but it needs Wall Street and Main Street on board. In some ways, it’s a high-class problem: Shopify had to spend money to deal with record spending by shoppers. It has a lot on its plate, from competing with Amazon in its fulfillment network to dealing with restive merchants that expect better software. The question is whether it’s spending the right amount on the right things.

— Lindsey Choo (email | twitter)


As the race to financial innovation accelerates, Banking-as-a-Service is carving out an essential role within it. Not a bank but not a standard fintech, Banking-as-a-Service falls between the two, utilizing strengths of each to create something new. Read Demystifying Banking-as-a-Service to gain insight on how BaaS connects the digital economy.

Learn more

On the money

On Protocol: Circle, Coinbase and Block are teaming up to create a blockchain-friendly ID that can comply with federal know-your-customer rules without passing personal information.

The New Mexico House passed a bill that caps interest rates on small loans at 36%. The legislation, presented by Rep. Susan Herrera, aims to “help New Mexicans who are taken advantage of by out-of-state corporations.”

Twitter creators can now receive tips with Ethereum. The social media giant expanded its tipping option to let creators add an Ethereum address. Barter, Paga and Paytm were also added as payment methods.

The winner of Melania Trump’s NFT auction is … Melania Trump. The former first lady’s NFT auction, for a work titled “Head of State,” was won by a crypto wallet that belongs to the creators of the auction. The funds were traced through a series of blockchain transactions.

Over 4,000 criminal whales hold $25 billion worth of crypto. Criminal whales represent about 3.7% of all crypto whales. The largest source of funds was darknet transactions.

Coinbase is allowing users in Mexico to convert crypto into fiat more conveniently. Users can cash out at over 37,000 retail and convenience stores across Mexico free of charge until March 31. The crypto giant is planning to expand this service in other regions where consumers face similar conversion problems.


Jack Dorsey took questions in a Twitter Spaces Q&A with Sequoia’s Roelof Botha on Wednesday. The Block CEO is not a fan of central bank digital currencies, saying that they’re the same as fiat systems, if not worse. “They’re a lot more controlled by the centralized parties, and they don't come with the transparency that I think we deserve is our right, especially as we consider something we live and die by ultimately,” he said.

FTX CEO SamBankman-Fried doesn’t think we’re in a crypto winter — more like crypto autumn. “I don't think it's really a winter. We're still seeing a lot of activity in this space, and a lot of excitement," he told Business Insider.

Colorado is becoming the first state to accept bitcoin for taxes. “We expect by this summer, pretty soon, to accept crypto for all of our state tax-related purposes, and then we plan to roll that out across all of state government for things [that] could be as simple as a driver’s license or hunting license,” Gov. Jared Polis said in an interview.

El Salvadoran President Nayib Bukele is doubling down on his bitcoin stance, aiming to raise $1 billion to fund economic policies and issue bonds backed by bitcoin. “Bitcoin is going to change the world. It’s the evolution of humankind, and we’re going there,Bukele said at an event.

Moves and hires

Meta hired Robert Clyburn as a public policy recruiter.Clyburn was previously a senior recruiter at Morgan Stanley in its legal and compliance team, as well as a vice president executive recruiter at JPMorgan Chase.

Seth Hertlein joined Ledger as its vice president and global head of Policy. Formerly head of Policy for the Stellar Development Foundation, Hertlein will focus on designing Ledger’s global public policy strategy. Ledger also named Mung Ki Woo as VP of B2C services, and Ariel Wengroff was promoted to VP of Communications.

Revolut appointed Ibrahim Dusi as its chief risk officer for the Americas. Dusi was formerly chief risk and revenue officer at Happy Money, and will oversee risk management for Revolut in North and South America.


As the race to financial innovation accelerates, Banking-as-a-Service is carving out an essential role within it. Not a bank but not a standard fintech, Banking-as-a-Service falls between the two, utilizing strengths of each to create something new. Read Demystifying Banking-as-a-Service to gain insight on how BaaS connects the digital economy.

Learn more

Thanks for reading — see you tomorrow!

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