Weekly Update

TFU | Dec. 17 – Jan. 6

Square re-filed its ILC charter application; New York established a digital currency task force; Ant is considering acquiring WorldFirst; Google gained an EU e-money license; Robinhood is apparently preparing to expand to the U.K.; and the WSJ profiles the SEC’s Hester Peirce.

Leading Off

Square re-filed its application for an industrial loan company charter in Utah; New York State established a task force to support digital currency and blockchain regulation in the state; Ant Financial is reportedly considering acquiring British currency exchange firm WorldFirst; Google gained an EU e-money license; free-free stock trading app Robinhood is apparently preparing to expand to the U.K.; and the WSJ profiles the SEC’s Hester Peirce, whose libertarian views have made her a crypto industry favorite.  Happy New Year!


In the News

Square refiles for ILC charter.  The San Francisco-based money transfer and lending service re-applied for an industrial loan company (ILC) license in Utah, which would allow its Square Financial Services unit to offer a suite of bank services to customers, including deposit accounts and prepaid cards. The firm had previously applied for an ILC charter in September 2017, but later withdrew it.

New York establishes digital currency task force.  The authorizing bill [full text] authorizes the new task force to provide proposals on how to better define, utilize and regulate cryptocurrencies and blockchain technologies. The task force panel will include technologists, consumers, investors, corporate representatives, and academics, and must submit reports by December 2020.

CFPB to launch a regulatory sandbox in 2019. The Consumer Financial Protection Bureau (CFPB) plans to launch the first U.S. federal regulatory sandbox in 2019. Between the sandbox and the CFPB’s recently revised no-action letter policy, the Bureau is seeking to support financial services innovation by exempting certain companies from certain consumer finance laws.

Bitcoin ATMs may be used for money laundering.  The so-called BTMs, a fast-growing and unregulated segment of the cryptocurrency marketplace, are largely untraceable and are increasingly used to support money laundering efforts. Although BTMs have to comply with AML laws, bitcoins bought for cash at the machines can be deposited into any digital wallet in the world.

CSIS paper argues against a U.S. Department of Cybersecurity. In a paper for the Center for Strategic and International Studies (CSIS) [link], Suzanne Spaulding of the Department of Homeland Security (DHS) argues that centralizing cybersecurity authority under a single agency would undermine existing agencies’ responsibilities and that DHS is better equipped to manage U.S. cybersecurity standards.

Ant moves toward deal to acquire WorldFirst.  The Chinese fintech giant is in “advanced talks” to purchase the London-based currency exchange startup in a deal reported to be worth over GPB 500 million. Ant has been in talks with WorldFirst “for several months,” according to the recent report.

Google gains e-money license from Lithuania.  The license allows Google Payment, a subsidiary of Alphabet Inc., to “process payments, issue e-money, and handle electronic money wallets . . . throughout the EU.” Google follows a growing number of technology and fintech firms, including Facebook, Amazon, and TransferWise, in obtaining an e-money license.

Huawei Pay enters first foreign market.  The Chinese technology company is rolling out its smartphone payment feature to Russia, its first market outside China. Huawei Pay, like rivals Apple Pay and Samsung Pay, allows customers to make contactless payments using smartphones after entering their card details. The service has been set up in partnership with Chinese card company UnionPay.

Robinhood rumored to be expanding to U.K.  According to TechCrunch, the San Francisco-based zero-fee stock trading and crypto exchange firm is scouting office space in London and recruiting new staff in preparation for a U.K. expansion. The report notes that recruitment efforts span HR, operations, marketing, customer support, compliance, and product.

WSJ profiles “CryptoMom” Hester Peirce.  According to the WSJ, crypto startups and traders have begun to view the libertarian-leaning Republican member of the Securities and Exchange Commission (SEC) as their champion, thanks to her contrarian positions on crypto. Peirce is known to oppose certain SEC policies and has previously questioned some of the agency’s crypto enforcement actions.

Does China have an insurmountable lead in fintech?  Writing in the MIT Technology Review, Martin Chorzempa discusses China’s fintech giants, Ant and Tencent, and why their products have changed how “half a billion Chinese . . . access a dizzying array of services.” Chorzempa also highlights why the West has fallen behind in fintech innovation, and why he believes it is unlikely to catch up to China.



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