March 17, 2022
Photo by James Arthur Gekiere/BELGA MAG/AFP via Getty Images
Good morning, and welcome to Protocol Fintech. This Thursday: understanding SWIFT, the Bored Ape token, and “buy now, pay later” at the pump.
I noticed that Aptos, the Meta alumni crypto project, recently described itself as taking money from Katie Haun. Haun, who left a16z last year to start her own firm, is also an active angel investor, so it wouldn’t be a total surprise if she did the deal on her own, but I checked with her reps, and it is in fact an investment from her firm’s newly raised fund.
But what do we call that firm? If you ask the SEC, it’s KRH Partners, but Haun & Co. would prefer you not use that “placeholder.” Which puts people like me, who like to call things by their name, in a curious spot. While awaiting the unveiling of the Haun venture’s permanent name, I suggest the following placeholders:
In other news, Leah Zitter, who’s written extensively about fintech and crypto, is contributing a piece today on SWIFT. If you’ve ever needed a quick primer on the payments messaging system to send to someone, this is it.— Owen Thomas (email | twitter)
The war in Ukraine and consequent moves to sanction Russia have put a spotlight on SWIFT as an integral part of the global payments system, but what part? Analogies abound, each more confusing than the last: It’s the “Gmail of global banking,” it’s Twitter for banks, it’s a thermostat system.
The most common description of SWIFT is a messaging system for payments orders, not a medium for moving money. But modern money is just data entries in bank accounts. You need messages to transmit that data. And SWIFT is a database of financial institutions. If you insist on a software analogy, it’s Microsoft Outlook, Exchange and Active Directory.
SWIFT is modern, but it reflects a banking system that dates back to Italy of the late medieval period. Italian banks gave birth to the Western financial system, which is why you run into the terms “Nostro” and “Vostro.”
Disconnecting Russian banks from SWIFT effectively axes them from this worldwide web of accounts. The accounts are still there, but the hard part is finding them.
Could Russia adopt alternatives? China and Russia have both been developing their own bank-messaging networks. And the energy business might be key.
Sanctions will likely tighten over time. The EU issued a fourth round of financial measures Tuesday. Keeping track of who’s safe to do business with will be crucial. In normal times, it’s hard for financial institutions to keep up. SWIFT’s KYC Registry is a crucial tool, which is why kicking banks off SWIFT can have cascading effects. Finding banks willing to hold “Nostro”/“Vostro” accounts will get harder. The SWIFT ban doesn’t just prevent banks from easily messaging each other; it creates the kind of risk and uncertainty in doing business that bankers hate. And that’s the point.
— Leah Zitter (twitter)
As one of the top super apps in the world, Revolut is always looking to launch new products and improve their existing offerings. Revolut used Fireblocks to handle the heavy lifting on the tech side so they could focus on shipping new products for their 15.5 million users.
On Protocol: Blockchain analytics are becoming the talk of Washington, including a Senate hearing with the co-founder of Chainalysis Thursday.
FTX partnered with AZA Finance to expand its presence in Africa. The crypto exchange’s partnership with the Kenya-based financial services firm seeks to increase adoption of Web3 products and digital currencies in the African continent.
Also on Protocol: Ukrainian President Volodymyr Zelenskyy signed a law to make crypto legal in Ukraine. While the law doesn’t make crypto legal tender, it provides a regulatory structure for digital assets.
New Hampshire passed a crypto-friendly bill. The bill, authored by Rep. Keith Ammon and co-sponsored by Rep. Joe Alexander, aims to attract investments and jobs in the digital asset industry to the state.
Bored Ape Yacht Club NFT holders can now claim ApeCoins. Yuga Labs plans to make the token created by ApeCoin DAO “the primary token for all new products and services.”
Crypto companies are finding a friendly audience for gripes about the SEC. Rep. Tom Emmer said he’s received numerous complaints from crypto companies about the SEC and accused the agency of being “burdensome” with its information requests.
As gas prices continue to increase across the nation amid the Russian invasion of Ukraine, "buy now, pay later" companies like Klarna and Zip have partnered with gas stations to provide consumers with options to stretch out their payments.
Both Klarna and Zip are payment options at Texaco and Chevron gas stations, where you can choose to split up your (now inevitably sky-high) gas payments into four payments due over six weeks.
Klarna’s pay-later option requires you to first create a digital in-store card in the Klarna app. The virtual card feature is a way pay-later companies are extending their reach from online purchases into physical retail.— Lindsey Choo (email | twitter)
Michele Korver is leaving FinCEN for a16z Crypto. Korver was most recently chief digital currency advisor at the financial crimes agency, and is joining the VC firm’s crypto arm as head of Regulatory.
Lydia Hylton joined Bain Capital Crypto as a partner. Hylton was previously an investor at Redpoint Ventures. Looks like the investment firm’s gender demographics are now 7-1.
Michael Warren joined Ripple’s board of directors. Warren was a senior adviser for the White House in the Obama administration and is managing director of Albright Stonebridge Group.
FTX named Steve Sadin as its head of Gaming Partnerships. Sadin previously headed Warner Bros. Games’ Boston studio, and will be responsible for FTX’s partnerships with major gaming brands.
Revolut CRO Alan Chang is leaving to launch a crypto venture. Chang has reportedly invested millions into the project himself, and is preparing to raise $100 million for it.
Mastercard appointed Stephanie Meltzer-Paul to lead loyalty services. Meltzer-Paul was most recently at Inspire Brands, and was head of Loyalty and Digital Services for Dunkin Brands.
Visa is hiring undergrads for its crypto development program. The program is an “18-month rotational development experience” and aims to build a “strong entry-level pipeline of talent.”
Silvergate appointed Rebecca Rettig to its board of directors. Rettig is currently general counsel of the Aave Companies and was previously a partner at Manatt, Phelps & Phillips.
Over 1,000 institutions have enabled crypto and digital assets for their customers with Fireblocks. Help your team accelerate time to market, minimize tech maintenance, and provide an easy to use crypto treasury system. Fireblocks is quickly becoming the go-to platform for the most innovative organizations.
Thanks for reading — see you tomorrow!