April 25, 2022
Illustration: D-Keine/Getty Images
Good morning, and welcome to Protocol Fintech. This Monday: the power of trading subscriptions, Stripe’s stablecoin move, and Gary Gensler speaks at a London conference.
As we send this edition, I’ll be in Northern Virginia, where I grew up and where Protocol has an office. We’re going to run briefer newsletters this week, as the team is gathering to meet in person for the first time since, well, pretty much ever. We’ll still note any business-critical news, of course, and we’re pleased to deliver a series of stories on a topic of keen interest to those in fintech: subscriptions. It’s not just about processing card-on-file transactions — we’re looking at the potential for the subscription model to fuel fintech’s growth.— Owen Thomas (email | twitter)
Upstart brokers in crypto and stocks like Coinbase and Robinhood face a dilemma: Their revenue grows when the market rises, but drops in a down or uncertain market. One way to address this is to build out features for which consumers will pay a subscription. While subscriptions aren’t new — monthly fees for online services date back decades — for consumer brokerages, these products are still largely unproven.
There’s a Prime example for how this works. Companies want to increase their subscriber numbers to increase stickiness in the way that, say, Amazon Prime keeps customers coming back with perks, said Brian Graham, partner at Klaros Group. But a bigger reason is to diversify their revenue.
Coinbase and Robinhood’s products are mainly targeted to active traders. For consumers, investment subscription offerings typically promise fuller-featured services that make trading easier, leave them more knowledgeable or keep them more secure.
No one seems to have identified a broad-based subscription offering, though — the money equivalent of Netflix or Disney+.
Companies shouldn’t rely on subscriptions just to boost immediate revenue, said Melody Brue, principal analyst at Moor Insights & Strategy. “As a business model, the subscription isn't necessarily going to be the revenue driver,” she said. “Loyalty, increased engagement, community and more customer and behavioral data that comes from those things will drive the long-term value of that customer.”
— Tomio Geron (email | twitter)A version of this story first appeared on Protocol.com. Read it here.
The emergence of DeFi is shaking up the way consumers think about how they store value. For reference, Visa saw $2.5 billion of crypto-backed transactions in the first quarter of 2022. We’re seeing consumers really starting to use this in a way that even a year ago was kind of hypothetical.
On Protocol: Stripe partnered with Twitter to start letting creators get paid in crypto. The payouts will take place on the Polygon network, and creators will initially be paid in USDC, with plans to add support for other types of crypto in the future.
Silk Road’s Ross Ulbricht won’t have to pay any restitution. The creator of the dark web drug market struck a deal with the feds to wipe out his $183 million bill with a $3 billion stash of bitcoins officials seized from the hacker who stole them from Silk Road. Getting Ulbricht to waive any ownership rights to the bitcoin helped the government claim them.
Binance reportedly recovered $5.8 million tied to the Axie Infinity hack. CEO Changpeng Zhao said some of the stolen coins were moved by hackers into over 86 Binance accounts, from which the company recovered the funds.
In addition, the U.S. Treasury sanctioned three more Ethereum addresses tied to the hack. The Office of Foreign Assets Control added three addresses to its Specially Designated Nationals list, all of which were previously flagged as connected to the Axie Infinity hack.
The Ukrainian central bank banned the purchase of crypto with its national fiat currency. The additional measures on “quasi-cash transactions,” which include the purchase of virtual assets, were implemented to “prevent unproductive capital outflows,” the bank said. Individuals can still purchase crypto with foreign currency at a cap of 100,000 hryvnia or $3,400 a month.
The Celsius Network is warning customers that the CEL token could pose “regulatory risks.” The crypto lending company updated its “Risk Disclosure” page, adding “regulatory risks” to its list of risks the CEL rewards token could face.
City Week 2022 starts on Monday. The three-day conference in London features SEC Chair Gary Gensler as a speaker on Day Two, along with European Securities and Markets Authority Chair Verena Ross and Fidelity International CEO Dame Anne Richards.
Visa and UBS’ earnings calls are set for Tuesday. V’s average estimated EPS is at $1.65, down 9% from last quarter. UBS’ average estimated EPS is at $0.51, up 34% from last quarter.
The Crypto and Digital Assets Summit starts on Tuesday. The two-day hybrid conference will be held in London, and features speakers like Binance CEO Changpeng Zhao, Ethereum co-founder Charles Hoskinson and Ripple head of Public Policy Susan Friedman.
PayPal and Fiserv’s earnings calls are scheduled for Wednesday. PYPL’s average estimated EPS is at $0.58, down 38% from last quarter. FISV’s average estimated EPS is at $1.35, down 13% from last quarter.
There are two U.S. House committee hearings slated for Thursday. A hearing on oversight of FinCEN will take place at 10 a.m. ET, and a review of recent trends in mobile banking and payments will take place at 2 p.m. ET.
Mastercard and Robinhood’s earnings calls are set for Thursday. MA’s average estimated EPS is at $2.17, down 8% from last quarter. HOOD’s average estimated EPS is at -$0.31, up 37% from last quarter.
Tech regulation beyond Big Tech: Join Protocol’s Ben Brody and a panel of experts on May 5 at 10 a.m. PT/1 p.m. ET to dive into the biggest regulatory priorities of the not-quite-biggest tech companies.
Businesses — whether Web2 or Web3-oriented businesses that don’t want to hold crypto but do want to be able to interact with crypto holders — want to be able to offer that as a payment mechanism to their communities. The other is hands-on, where merchants are comfortable accepting crypto.
Thanks for reading — see you tomorrow!