TFU | Jan. 7-13

Leading Off

Bitwise filed with the SEC to create a bitcoin ETF; the EBA called on the EU to review its current regulatory stance on crypto assets and consider promulgating new rules; Google was granted an EU payments license; N26 raised $300M, giving it a $2.7B valuation; two prominent UK fintechs are setting up new EU offices ahead of Brexit; China established new anti-anonymity regulations for blockchain firms; and MUFG launched a $185M VC fund focused on fintech.

 

In the News

Bitwise files for new bitcoin ETF with SEC. Crypto startup Bitwise Asset Management filed an initial registration form with the U.S. Securities and Exchange Commission (SEC) to create a bitcoin exchange-traded fund (ETF) that tracks the value of bitcoin plus any “meaningful hard forks.” If the ETF is approved, its shares will be listed on NYSE Arca, and regulated third-party custodians will store bitcoins in Bitwise’s Bitcoin ETF Trust.

EBA urges EU rules on crypto assets. A new report from the European Banking Authority (EBA) argues that crypto assets currently exist outside the scope of EU banking and payments regulations, and calls on the European Commission to explore new regulations. The European Securities and Markets Authority also published advice advocating an EU-wide approach to crypto assets to protect investors.

Google gets payments license in Ireland.  Google received authorization from the Irish central bank to operate as a payments institution under PSD2, which could allow the tech giant to “significantly expand its financial services offerings across the European Union.” The authorization will not allow Google to offer bank services like deposit accounts or loans, but it now will be able to acquire and issue payments anywhere in the EU.

N26 raises $300M, gets $2.7B valuation.  The German mobile bank raised $300 million in Series D funding at a $2.7 billion post-money valuation. The round was led by Insight Venture Partners, with support from Singapore’s sovereign wealth fund and existing investors. N26’s user base has tripled since early 2018, and the company now has 2.3 million customers across 24 European countries. It plans to expand to the U.S. soon.

China imposes anti-anonymity requirements on blockchain firms.  The Chinese Cyberspace Administration introduced new regulations requiring blockchain firms in China to “allow authorities access to stored data, and to introduce registry procedures that would require ID card or mobile numbers from its users.” Firms will also need to “oversee content and censor information that is prohibited under current Chinese law.” Violators could face fines or criminal investigation.

British fintechs establish EU offices ahead of Brexit.  London-based TransferWise and Starling Bank announced plans to set up offices on the continent as a hedge against Brexit: TransferWise plans to open a Belgian office and apply for an EU operating license to “continue to provide a great service globally . . . whatever happens with the Brexit deal”; and Starling is setting up an Irish subsidiary that will allow it to passport into other EU markets, beginning with France and Germany.

Poll says age is the strongest bias against startup founders.  A survey of 529 startup founders in the U.S. revealed that many see ageism when it comes to securing funding. Respondents noted that “ageism in tech starts, on average, at the age of 46 —and more than a quarter said the bias affects entrepreneurs as young as 36.” 37% of respondents said age is the strongest investor bias against founders.

Incumbent payments companies continue to dominate. Despite the rise of digital payment methods, Visa and Mastercard’s networks still largely form the basis of these new technologies. PayPal’s 2016 decision to let customers link their accounts to credit and debit cards reinforced incumbents’ centrality in the market. The U.S. differs from countries like China, where mobile payments have circumvented credit card networks.

MUFG sets up $185M fintech fund. MUFG has launched a $185 million venture capital fund, MUFG Innovation Partners, that will invest in fintech startups. The firm has put together a team of VCs and experts, who have a history of investing in, and working with, Japanese and global startups, which will not only “pump money into promising firms”, but also will provide access to MUFG’s expertise and global network.

U.S. shutdown impacts fintech market. Georgetown law professor Chris Brummer stated that U.S. federal government shutdown is beginning to impair fintech supervision, as furloughs at the SEC and CFTC prevent regulators from reviewing applications, working with firms, making policy, and taking planned actions.

Open Banking one year on.  The FT reviews Open Banking rules in the U.K. on the anniversary of their introduction. It notes a lack of public awareness, with only 1 in 4 respondents to one survey having heard of the rules, alongside concerns with security. However, there are 100 licensed firms enrolled in Open Banking so far with 100 waiting to join and experts expect continued investment in this area.

 

 

 

 

 

 

 

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