The SEC brought suit against Kik for its $100 million token offering that allegedly violated U.S. securities laws; JPMorgan is shuttering its mobile-only bank Finn one year after its nationwide rollout; Facebook plans an independent foundation to run its proposed cryptocurrency; the FSB considers the effect of decentralized financial technology on financial stability; and a survey finds half of EU businesses are unprepared for new security rules for payments.
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SEC sues Kik. The Securities and Exchange Commission (SEC) charged the Canadian messaging firm with illegally selling securities when it conducted its $100 million token offering in 2017. The SEC claims that Kik sold its Kin token to U.S. investors without registering the offer as required by U.S. securities law. Last week, Kik began crowdfunding money to support its challenge of the SEC’s charges.
JPMorgan shuts down mobile bank. Just a year after its nationwide launch, JPMorgan Chase is shutting down Finn, its millennial-focused mobile-only banking offering. Having worked for over a year to “understand [millennials’] unique money challenges and what influences their spending” and “fend off the challenge of digital upstarts,” the bank has decided that “Chase is better suited to provide Finn’s services itself.”
Facebook’s GlobalCoin may be run by an independent entity. According to The Information, the social media giant is creating an “independent foundation to govern its cryptocurrency,” which would feature representatives from firms on the network. Facebook reportedly intends to license network nodes for $10 million each, aiming for $1 billion in initial fees that would be used to back GlobalCoin.
FSB publishes report on financial DLT. The report from the G20’s Financial Stability Board notes that decentralized financial technologies may benefit financial stability via increased competition but also warns of risks via concentration of ownership, increased cyclicality, and lack of legal certainty and consumer protection, challenges that may require a more “activity-based approach to regulation”.
Australia to crack down on crypto tax avoidance. The Australian Taxation Office (ATO) is working on 12 tax avoidance cases involving abuse of crypto assets. Notably, at least one of the cases involves a “global financial institution” suspected of hiding taxpayer assets and income details. The crackdown is part of a global investigation by tax authorities from five countries pursuing some 50 such cases.
Payments firms unprepared for EU security rules. A survey found only half of EU businesses are ready for the introduction of the EU’s new security rules for online payments, Strong Customer Authentication, which come into force in September. The study by payments firm Stripe and researchers 451 Research predicts the lack of preparedness could cost the EU economy more than €50 billion.
FCA tightens P2P rules. The U.K. financial regulator has introduced new rules which will limit the amount retail investors can put into peer-to-peer lending platforms, as well as require companies to give better information. The changes follow high-profile problems in the sector, such as the collapse of specialist lender Lendy in May. Experts predict the new rules will lead to further closure of lenders.
Study finds hackers selling bespoke toolkits for banks. Michael McGuire, a criminology professor at the University of Surrey, engaged criminals on the dark web over a series of months, and found tools for sale that specifically targeted companies like Bank of America. In the study, researchers found that banks were the most frequent target of tailored tools, accounting for about 35% of those on offer.
WorldRemit raises $175M. The British payments firm, which focuses on the global remittance market, brought in $175 million in series D funding led by existing investors TCV, Accel and Leapfrog Investments. The company has now raised $400 million total. It is currently scaling up its U.S. business and developing a payments product aimed at small and medium-sized businesses.
Stripe leads $22.5M funding round for Step. The payments firm led a $22.5 million Series A funding round for the U.S. digital banking startup building a mobile bank account “specifically designed for teens that is interest bearing and has no hidden or overdraft fees.” Step plans to use the funding to hire staff and accelerate its launch.
U.S. bank supervision unfit for the digital age, says The Economist. Despite being a hotbed of financial innovation, fintech companies in America face a more difficult path to obtaining banking licenses than in other countries. Thus incumbents, like Goldman Sach’s Marcus and Ally (formerly General Motor’s financial arm), have considerable advantages as they do not need to apply for a bank charter.