A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.
Why Life Has Been ‘Miserable’ in Crypto Since FTX’s Implosion
What happened: It wasn’t the catalyst for everything that came after, but since last fall’s FTX implosion, crypto trading has dried up, once-promising sub-categories like NFTs have turned into a joke, and the ultimate industry mood indicator, the price of Bitcoin, has not come close to recouping 50% of its previous highs.
Why it matters: Maybe the most important metric, percentage growth in crypto jobs, is most closely tied to the dissolution of Sam Bankman-Fried’s empire. Whereas once the industry was growing for years, often by 30-40% a month, since last November it has contracted severely. That’s largely a byproduct of venture capital money quickly disappearing. The ecosystem may have every right to have lost the trust of investors and employees, but it’s still startling to see how quickly it all blew up.
What’s next: Every investor likes to talk about how the best companies are built in down markets. Now we get to wait, see, and find out if the survivors truly change the world in the ways they’ve promised. (By Anna Irrera, Bloomberg)
Fintech Money Is Available, Provided You’re Super Small
What happened: Publicly-traded fintechs are down a whopping 72%. Late-stage funding is all but nonexistent. Yet fintech seed deals are proliferating.
Why it matters: It’s not that investor money isn’t available. It’s that investors know better than to fund companies that got drunk off of cheap credit over the past decade. Hence the record funding, at least according to PitchBook, available to seed and early stage companies, that have none of the same problems.
What’s next: Everything lags. Which means that while there may be no fintech IPOs in the near future, the current recipients of this shopping spree may represent a large chunk of the IPOs four years from now. (By Christine Hall, TechCrunch)
Coinbase Goes Global Because It Has To
What happened: In something like the second or third crypto winter, exchanges like Coinbase are struggling. So the U.S.-based company facing U.S.-based regulatory risk is now making a bet that its prospects will improve if it becomes a global brand.
Why it matters: Binance is losing customers, losing trading volume, and under a perpetual dark cloud because of its icy relationship with U.S. law enforcement and civil authorities. Coinbase has a chance to establish itself as the most trusted exchange, even as it faces its greatest legal hurdles from its country of origin. Even if trading volume never exceeds its 2021 highs, there will eventually be a winner in crypto world, and that winner will have to have a global presence.
What’s next: Everyone waiting, again, to see what happens to the industry leader run by someone who’s either a genius, an international fugitive, or some mixture of the two. (By RT Watson, The Block)
Is the U.K. About to Alienate Fintechs Forever?
What happened: Revolut has been Exhibit A on why building a fintech in the U.K. is so hard, waiting more than two years for a license. Now its wait may be extended, as it allegedly allowed $1 million-plus to be distributed from accounts the government said were crooked.
Why it matters: It’s not hyperbole to say that a lot of the U.K. fintech ecosystem will live or die based on what happens with Revolut. Already, employees have jumped ship, start-ups have moved headquarters, while the U.K.’s formerly most valuable private tech company has waited for clarity.
What’s next: Revolut has had no trouble attracting and keeping customers even as it sits in regulatory purgatory. The real question is where the company will end up operating in the next year or two. (By Laura Noonan, The Financial Times)
Visa Joins in On the AI Gold Rush
What happened: Visa’s venture arm announced it was earmarking $100 million to make in generative AI investments.
Why it matters: It’s a long way from the payments companies attempt to buy Plaid for $5 billion, an acquisition blocked by regulators. But Visa’s entry into start-up land is significant if only because it’s another VC ready to offer seed funding to any start-up that looks promising.
What’s next: Once again, it’s a fantastic time to start a fintech company. Not such a great time to be in one that hasn’t achieved profitability. (By Wallace Witkowski, MarketWatch)