TFU | May 14-20

Leading Off

The CFPB restructured its Project Catalyst initiative, placing it directly under the Director’s control; Coinbase is making a series of moves aimed at attracting high-speed traders and institutional investors; PayPal announced it will purchase Sweden’s iZettle for $2.2B; a WSJ study of nearly 1,500 digital currency offerings found hundreds of fraudulent ones; California is considering a new data protection bill that would extend new data rights to individuals; and Circle raised $110M in Series E funding, achieving “unicorn” status.

 

In the News…

CFPB restructures Project Catalyst.  The Consumer Financial Protection Bureau (CFPB) is placing its internal fintech innovation team under the direct supervision of the CFPB Director’s office and renaming it the Office of Innovation. The CFPB said the move, part of a larger restructuring effort, is aimed at encouraging “consumer friendly innovation.”

SEC launches dummy ICO site.  The Securities and Exchange Commission (SEC) created a fake initial coin offering (ICO) on www.howeycoins.com “to educate investors about what to look for before they invest in a scam.” Chairman Jay Clayton said, “[We] want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of [ICO] fraud.”

Coinbase aims at HFT and institutional investors.  The crypto exchange is making several moves aimed at expanding its services and clientele, including introducing “low-latency performance” (i.e., support for high frequency trading) and introducing an SEC-qualified custodian service and a trading platform for institutional clients. It is also opening a Chicago office.

PayPal to purchase iZettle for $2.2B.  The global payments firm will purchase the Swedish retail payments firm for roughly $2.2 billion, the largest acquisition in PayPal’s history. The move will place PayPal in greater competition with Square by giving it a presence in “hundreds of thousands of brick-and-mortar retailers around the world . . . that PayPal [has] historically overlooked.

WSJ study reveals hundreds of crypto cons.  The Wall Street Journal conducted a review of documents related to nearly 1,500 digital coin offerings and found “271 with red flags [including] plagiarized investor documents, promises of guaranteed returns and . . . fake executive teams.” In one egregious case, images for one site’s “executive team” were in use on nearly 500 other sites.

The electricity required to support Bitcoin is soaring.  According to a new study, the global energy footprint associated with mining and managing Bitcoin is expected to double by the end of the year, bringing it to 0.5% of the world’s electricity (about equal to the Netherlands). The prediction echoes the concerns about Bitcoin’s rapidly rising energy consumption that we covered earlier this year.

Santander tests blockchain for shareholder votes.  Working with investor communications firm Broadridge Financial Solutions, the Spanish bank used blockchain to create a “shadow” register of proxy votes cast at its annual general meeting. The trial makes Santander the first company to trial blockchain for this purpose. The bank has said blockchain could revolutionize corporate democracy.

California considers ballot measure on data privacy.  The California Consumer Privacy Act of 2018 would give “consumers the right to ask companies to disclose what data they have collected on them; the right to demand that they not sell the data or share with third parties for business purposes; and the right to sue or fine companies that violate the law.”

Ant Financial reveals surge in users.  In its latest investor report, the Chinese technology giant reported that its user base has increased to 622 million people. The firm, which recently raised $10 billion in new funding, also has $345 billion in assets under managementmaking it the world’s largest consumer wealth management platform.

Circle raises $110M, now valued at nearly $3B.  The Boston-based money transfer and crypto exchange firm raised $110 million in Series E funding, placing its valuation just almost $3 billion. Investors included Bitmain, Blockchain Capital, and Tusk Ventures. Circle also revealed plans to launch a “US dollar coin,” a regulated, blockchain-based digital token backed by real currency.

Is algorithmic credit scoring really better?  While supporters argue that credit scoring decisions made by algorithms are more accurate and more fair than human-made decisions (because they are “unswayed by the racial, gender, and socioeconomic biases” of humans), new studies suggest that computer-based scoring also may be unfairly biased – while also being less transparent about it.

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