"…there’s just no substitute for coming together in person.” - Google Chief People Officer Fiona Cicconi
Google is calling its employees back to the offices, saying that its latest products are being “conceived, developed and built by teams working side by side.” It’s a trend that is its way back across corporate America across sectors, led by finance and technology.
Meanwhile, the talk of the town last week was the U.S. SEC’s regulatory crackdown on the cryptocurrency market, including two leading trading platforms. Investors are on pins and needles ahead of the Fed’s June meeting, especially after Canada’s central bank surprised the market with another interest rate hike. And while the eurozone has fallen into a recession, the U.S. economy has seemingly managed to stave one off so far.
U.S. SEC Chairman Gary Gensler is taking direct aim at the cryptocurrency industry. In the past week, major cryptocurrency exchanges Coinbase and Binance have been sued by the securities watchdog for allegedly operating as illegal securities exchanges through their support of unregistered securities in the form of digital assets. Billions of dollars have been withdrawn from the exchanges since the complaints were lodged.
Coinbase CEO Brian Armstrong is staying on offense, vowing that he won’t delist the digital assets that the SEC has identified as illegal securities, including one of the top-10 cryptos named Cardano (ADA). He is calling for regulatory clarity around the crypto market. Binance says it is will continue to defend itself against the SEC’s bullying and intimidating tactics.
The bitcoin price has fallen below the $27,000 level amid what is likely to be a drawn-out legal battle between the U.S. cryptocurrency market and Gensler. Incidentally, Gensler also spoke at a fintech conference last week, where he stated, “The vast majority of crypto tokens meet the investment contract test. Not liking the message isn’t the same thing as not receiving it.”
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While Coinbase goes on the offense, online brokerage Robinhood is playing defense. The company, which supports crypto trading in several leading assets, is taking steps to appease the SEC to avoid getting swept up in the costly litigation web.
Robinhood announced plans to delist the cryptocurrencies that the SEC has identified as unregistered securities. These include Cardano (ADA), Polygon (MATIC), and Solana (SOL). Robinhood will continue to provide support for other digital assets on its trading platform, including bitcoin and meme-coin Dogecoin.
The chat-bot craze has spilled over into the fixed-income market, where fintech play LTX has introduced its version of ChatGPT. LTX, a subsidiary of Broadridge Financial, is behind BondGPT, which harnesses OpenAI GPT-4 tech to answer bond-related queries and support the process of finding bond investments on the platform.
BondGPT will access liquidity data from its LTX Liquidity Cloud app to help investors select bonds and build their investment portfolios with greater efficiency.
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Consumers are growing more confident about the possibilities for embedded finance and digital banking, a new survey done by card-issuing company Marqeta reveals. The poll shows that digital payments and shopping solutions have become competitive with legacy systems.
Based on the survey results, consumers are increasingly relying on more than one financial service providers including both traditional financial institutions and digital products that are a product of embedded finance for shopping transactions. According to the Marqeta report:
Embedded finance represents the presence of financial services into products that are non-financial in nature, a market that’s estimated to reach $40 billion in the coming years.
Argentina-based fintech Uala making an expansion push into Mexico with its high-yield savings account. The product will include a fixed annual interest rate with a 9% yield attached. Uala is also planning to support remittances via Western Union.
More than half of Mexico’s consumer save their money in an informal way, officials say, while nearly half of the country’s population collect zero yields on their savings. For Uala, getting the approval of Mexico to operate in the country is a big deal that it says distinguishes it from the fintech competition.
Takeaway: Mexico’s fintech landscape is becoming increasingly competitive as consumers begin to experience greater control over their personal finances, a potential window of opportunity for fintechs. More broadly, high-yield savings accounts are all the rage since Apple and Goldman Sachs issued their product yielding 4.15% for Apple Card holders, despite some hiccups along the way.
Users of banking app Chime ran into some confusion with the fintech’s early direct deposit feature. A string of users complained of not receiving their funds early as intended with Chime’s early direct deposit program, which typically lets customers receive their funds as soon as two days early.
But when the funds didn’t arrive as expected, users began documenting their delays on twitter. Chime’s customer service team was quick to respond, explaning that the timing for deposits to hit depends on several factors, including when the employer or payroll provider sends the money. Still, it wasn’t enough to satisfy some customers.
Australia’s buy now pay later (BNPL) market is about to get some guardrails. After months of discussion on how to regulate this industry, Aussie officials have landed on grouping BNPL companies under credit laws. This means that companies must abide by certain lending obligations and obtain credit licenses in the country.
As BNPL has grown in popularity in Australia, so too have the risks, especially without any specific rules in place. Leading players in Australia’s BNPL market will be affected, including the likes of Zip Co and Afterpay. For its part, Zip is a step ahead as it already holds a credit license in the country.
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Affirm - In the U.S., BNPL stock Affirm (AFRM) has been on a tear. After rallying as much as 33% in June to nearly $20 per share, investors have taken some profits. The stock is most recently hovering at about $17.75 per share. Affirm stock has benefited after the company inked an agreement with e-commerce behemoth Amazon in which businesses that use Amazon Pay will have the option to support Affirm’s Adaptive Checkout, an installment program that lets customers pay over time.
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Central bankers will convene this week to discuss the fate of short-term interest rates. The markets have been see-sawing on mixed expectations for which path policymakers will ultimately pursue. While Fed Chairman Jerome Powell has hinted at a pause, the economy has shown signs of recovery that could cause him to revert to his rate-raising arsenal.
In the markets, the S&P 500 has reentered bull-market territory led by technology stocks, which also bodes well for the sentiment around fintech stocks.