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Kalshi Sues CFTC; Bitcoin ETF Roadkill; FTX: Case Clothed (Future of Finance | Week in Review)

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.
Future of finance

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation. 

Sam Bankman-Fried’s Bad Last Hope: Please Pity My Terrible Fashion Sense

What happened: Sam Bankman-Fried was found guilty on all seven counts. During closing arguments, the prosecution focused on six times in which Bankman-Fried could have chosen to not use customer funds but instead doubled down. The defense seems to have ended merely by saying SBF is being persecuted for looking like a slob.

Why it matters: We just watched the end of the biggest financial trial of the decade. And given the severity of the charges he faced, it feels criminal to have let SBF’s defense team wrap up on the conclusion that he’s still some misunderstood genius with no taste in clothes.

What’s next: How much jail time do you do if you misappropriate a few billion? (By Yuegi Yang, Bloomberg)

Betting On Politics In the United States Remains Very Illegal

What happened: Kalshi, a start-up backed by financial heavyweights, is suing the Commodity Futures Trading Commission after being denied a license to allow U.S. residents to bet on the outcome of political elections.

Why it matters: Sports betting is now a legal, ubiquitous presence in American life. Gambling on politics or creating contracts on lots of different events is a part of life in Britain and elsewhere. Kalshi has a reasonable argument: that election gambling is similar to derivative-based hedging of all kinds, given that businesses and traders are particularly exposed to political risk.

What’s next: U.S. regulators often end up doing the right thing, just after exhausting all other options. Expect Kalshi to succeed, but have its fair share of competition by the time it does. (By Paul Kiernan, The Wall Street Journal)

Your Beloved Personal Finance App Is Being Replaced By Something Worse

What happened: Intuit, which owns both Mint and Credit Karma, just asked all Mint users to switch to Credit Karma since it’s going to shut down the former in order to focus on the latter.

Why it matters: The writing has been on the wall for a while. Development slowed on Mint after its parent company bought Credit Karma, which has some but not all of the personal finance app’s features. Plus, Credit Karma has 130 million users to Mint’s three. But the takeaway is simple: if you love something and depend on it, know who owns it and what signal their other moves might be sending about its future. 

What’s next: As this piece notes, apps that previously competed with Mint saw more sign-ups this week than on any other week before. (By Christine Hall, TechCrunch)

All the Weird Ways to Own Bitcoin Without Owning Bitcoin May Soon Die

What happened: Microstrategy, the strange computer components company with the Bitcoin-maxi founder, Michael Saylor, has finally acknowledged the obvious: if the SEC approves Bitcoin exchange-traded funds, it’s going to be a lot less attractive to own Microstrategy stock.

Why it matters: For years, owning Microstrategy has been a strange way of owning Bitcoin without actually having to buy any Bitcoin. Because its Chairman Saylor, became known as one of the coin’s biggest proponents and bought each and every dip (and even some non-dips), the company’s stock became a proxy for Bitcoin ownership for equity investors. Thankfully, for everyone but Microstrategy, Saylor, and Microstrategy share owners, regulatory approval may mean a much straighter path for Bitcoin ownership.

What’s next: ETF approval still actually needs to happen. But watch as every proxy premium slowly vanishes in the coming months. (By Olga Kharif, Bloomberg)

The Most Optimistic Take on U.K. Fintech You’ll Read

What happened: Someone tried to figure out if fintech in the U.K. is actually stripping traditional banks of customers, and whether that pace can be sustained to the point that the industry becomes the country’s most important start-up byproduct.

Why it matters: “In its early days, fintech’s scope was limited somewhat to a range of niche, backend functions. Today, the sector has a much broader definition, encompassing everything from open finance and neobanks to digital lending platforms. Consumers have come in droves. Challenger banks like Monzo seem to have everyone brandishing their distinct coral cards. In 2019, open banking users in the U.K. passed the 1 million mark; in 2023, that number now sits at 7 million.”

What’s next: Struggling to answer a hard-to-answer question: are traditional banks actually contracting because of fintech, or because of something more systemic? (By Sanchit Dhote, Fortune)

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.