TFU | Aug. 6-12

Leading Off

The CSBS and other state financial regulatory groups are pushing back against the OCC’s decision to accept bank charter applications from fintech firms; IBM and Maersk are partnering on a blockchain-based global trade and supply chain management platform; the NYDFS will begin enforcing new cybersecurity regulations next month; the U.K. FCA has established a new Global Financial Innovation Network; and China’s Bitmain is on track to become the first blockchain-focused company with $10B in annual revenue.

 

In the News

States spar with federal government over fintech oversight.  States are pushing back against the federal government’s expanding oversight of financial innovation, particularly the OCC’s decision to accept national bank charter applications from fintech firms. John Ryan, head of the Conference of State Bank Supervisors, has argued that the OCC’s decision “preempt[s] state licensing and consumer laws” and will harm innovation and choice, calling it “a regulatory train wreck in the making.”

 

Capital One navigates data partnerships.  The American Banker profiles Capital One’s efforts to expand its data sharing partnerships with San Francisco-based data aggregator Plaid and third-party API provider Finicity. While U.S. financial agencies have issued guidance on data sharing, there is no regulation forcing open banking frameworks like there is in the UK.

 

Venmo’s social feed rankles privacy advocates. The PayPal-owned payments app’s default settings display users’ payment messages on a public newsfeed, prompting criticism from privacy advocates and consumer watchdogs about the extent of information shared. In February, the FTC accused it of misleading consumers about the security of the app and making it difficult to change privacy settings.

IBM and Maersk set up blockchain-based global trade platform.  IBM and logistics outfit Maersk have signed up 94 organizations to TradeLens, a blockchain-based, cross-border supply chain program to track the paper trail of tens of millions of shipping containers. The ecosystem includes 20 port and terminal operators and has processed 154 million shipping events.

 

NYDFS to begin enforcing new cybersecurity regulations next month.  New York State Department of Financial Services (NYDFS) superintendent Maria Vullo announced that financial firms overseen by the agency have less than a month to comply with a new round of cybersecurity rules, including encryption, heightened data breach protection, and governance matters.

 

Facebook responds to bank data story.  In response to a WSJ report that the social network had asked large U.S. banks to share their customers’ financial data, Facebook clarified that “we partner with banks and credit card companies to offer services like customer chat or account management . . . not for advertising or anything else.”

FCA announces global financial innovation network.  The U.K. Financial Conduct Authority (FCA) partnered with 11 other financial regulators and related organisations to establish the Global Financial Innovation Network (GFIN). The GFIN is currently seeking input on its mission statement, but is expected to support the development of the FCA’s proposed “global [regulatory] sandbox.”

T0 raises $270M at $1.5B valuation.  Online retailer Overstock.com sold an 18% stake in its blockchain exchange platform to Hong Kong-based private equity firm GSR Capital for $270 million, valuing t0 at $1.5 billion. In May, t0 partnered with BOX Digital Markets to “build a regulated exchange [to list and trade] security tokens for companies that issue, or convert existing stock to, security tokens.”

Omniex adds Levitt and Blair to Board.  The crypto investment and trading platform added former SEC chairman Arthur Levitt and ex-FDIC chair Sheila Blair to its board of directors. Omniex is building a “front-to-back office investment and trading platform for institutional investors looking to access the crypto-asset markets.” Levitt already advises other crypto firms, including BitPay and Blockchain.

Bitmain is on track for $10B in profit.  The Beijing-based seller of crypto mining equipment is “on track to become the first blockchain-focused company to achieve $10 billion in annual revenue,” according to TechCrunch. The estimate assumes stable prices in the crypto market but highlights Bitmain’s significant growth: the firm’s revenues were $2.5 billion in 2017 and $300 million in 2016.

Could blockchain transform prediction markets?  The Economist profiles the Augur protocol, a set of technical rules based on the Ethereum blockchain, that allows punters to set up prediction markets while sidestepping regulatory rules. Products like Augur may prove to be a “worthwhile exploration” of decentralised services, says author Kevin Werbach.

 

 

 

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