TFU | June 18-24

Leading Off

The NYDFS granted a BitLicense to Square, allowing it to conduct cryptocurrency activities in the state; market analysts are predicting that Zelle will surpass Venmo in terms of users by the end of the year; a U.S. House subcommittee held a hearing on the use of digital currencies for illicit purposes; BitFlyer is suspending new business in Japan after negative findings from the FSA about its AML and security controls; and PayPal made two large acquisitions to improve its business payments and fraud protection services.


In the News…

NYDFS grants BitLicense to Square.  The New York Department of Financial Services (NYDFS) approved the payments company’s application to conduct digital currency activities in the state, allowing Square users in New York to “buy and sell bitcoin through [Square’s] Cash App.” New York is considered to have a relatively strict stance toward crypto; Square is only the ninth firm to obtain a BitLicense.

U.S. Treasury previews fintech report. According to the preview, the report will explore the use of fintech sandboxes and proposals for federal and state charters. As well as core banking services, the report’s scope includes credit services, lending, digital financial planning and wealth management, and also considers size and complexity rules, supervision for innovation and digital data management.

Zelle forecast to overtake Venmo by end of 2018.  The big bank-backed money transmission service, created partly as a response to challenges from smaller rivals like PayPal’s Venmo, is expected to grow its user base more than 73% in 2018, putting it at 27.4 million users by the end of the year — ahead of Venmo’s 22.9 million. The growth highlights Zelle’s increasing adoption by U.S. banks.

House Committee examines illicit use of virtual currencies.  The Subcommittee on Terrorism and Illicit Finance investigated problems faced by law enforcement personnel regarding illicit activities funded with cryptocurrency. Subcommittee Chairman Steve Pearce (R-NM) said the hearing was “an excellent opportunity to learn more about . . . virtual currencies and what we can do to combat [their] abuse.”

Federal bodies exploring online privacy plans.  White House officials reportedly have been holding discussions on possible approaches for online privacy regulation in response to the EU General Data Protection Regulation (GDPR) and California’s proposed privacy legislation. Separately, the U.S. Federal Trade Commission (FTC) will hold hearings into online privacy, data and competition.

BitFlyer to halt new business in Japan following regulatory pressure.  Japan’s largest bitcoin exchange said it will not take new business for the time being, after the Financial Services Agency “said it found problems in bitFlyer’s security system, including its measures to prevent money laundering and unauthorized access.” BitFlyer has apologized to its customers and is working to address the findings.

Another South Korean exchange was hacked.  For the second week in a row, a major South Korean crypto exchange was hacked, leading to another global crypto price drop. Bithumb, the seventh-largest crypto exchange in the world by traded value, was hacked for roughly $32 million in Ripple and other tokens. Bithumb temporarily halted transactions and said it will compensate victims.

Whatsapp grows payments service in India.  The Facebook-owned messaging app began beta testing payments in India in February and now has over one million users. The service uses the National Payments Corporation of India’s unified payments interface (UPI), allowing users to transact directly from their bank accounts using a virtual ID.

Paypal makes two acquisitions.  The digital payments firm agreed to acquire Canadian payments firm Hyperwallet for $400 million, helping “augment [PayPal’s] offerings to businesses for managing and processing their online and mobile payments.”  It also agreed to buy Palo Alto-based Simility, an AI fraud prevention platform, for $120 million, to grow ts fraud protection services.

SigFig raises $50M.  The San Francisco-based automated wealth management platform raised $50 million in new funding, led by General Atlantic and return investors Bain Capital Ventures, Nyca Partners, UBS, and Union Square Ventures, among others.

Akon announces cryptocurrency, plans real-life Wakanda.  The singer is launching his own cryptocurrency, “Akoin,” to be used in his “Akon Crypto City,” a 2,000-acre piece of land gifted to him by the Senegalese president, which Akon hopes to develop into a “real-life Wakanda” (referring to the fictional city from the Black Panther comics and film). So, yeah, that’s a thing that’s happening.

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