TFU | Jul. 29 – Aug. 4

Leading Off

Rakuten is applying for an ILC charter in Utah; Venezuelan president Nicolas Maduro was accused of using cryptocurrency to evade international financial sanctions; the U.K. FCA published guidance on crypto assets; Capital One disclosed that a data breach exposed the personal information of 100 million customers; and the London Stock Exchange is acquiring Refinitiv for $27B; and LabCFTC Director Gorfine is leaving the agency.


In the News

Rakuten is applying for a ILC charter.  The “Amazon of Japan” is seeking an industrial loan company (ILC) charter, filing the relevant applications with the Federal Deposit Insurance Corp. and the State of Utah. Rakuten plans to name the new entity Rakuten Bank America, and its business activities will include credit card issuing and acquiring, personal loans, business loans, and deposits.

Capital One data breach impacts 100 million customers.  The Virginia-based bank revealed that a data breach exposed personal information stored in 100 million accounts and credit card applications. The hack was carried out by a former engineer at Amazon Web Services, which hosts much of Capital One’s cloud data. The breach is expected to cost Capital One between $100 million and $150 million.

Venezuela accused of using crypto to dodge sanctions.  According to an investigation by Spanish newspaper ABC [full text], President Nicolas Maduro and the ruling Socialist Party have been using digital currency to evade international financial sanctions. Per ABC, Venezuela has been converting “tax revenue from domestic airports into [cryptocurrencies] . . . that were then transferred to exchanges in Hong Kong, Hungary, Russia and China [before being] converted and sent back to Venezuela.” 

FinCEN sues crypto exchange founder for BSA violations.  The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) filed a civil suit for $100 million against BTC-e founder Alexander Vinnik, accusing him of violating the Bank Secrecy Act [full text]. Vinnik is also facing criminal charges for “knowingly help[ing] criminals launder cryptocurrency linked to drugs . . . and other crimes.”

Revolut launches stock trading feature.  The London-based challenger bank is adding commission-free stock trading to its platform, joining other popular online brokerages like Robinhood. Revolut currently is offering the new feature only to its premium users, but the firm plans to roll out the functionality to other customers in the coming weeks.

FCA publishes final guidance on crypto assets.  Following consultation earlier this year, the U.K. Financial Conduct Authority (FCA) has published its final guidance on the regulation of crypto assets [link]. The guidance confirmed that crypto assets that behave like shares or debt instruments will fall under FCA regulation, as well as certain activities for crypto assets that meet the definition of e-money.   

BofA and First Data end BAMS joint venture.  The payments joint venture between Bank of America (BofA) and First Data, known as Bank of America Merchant Services (BAMS), will end as of June 2020. Some speculate that the conclusion of the JV could allow BofA to offer electronic payment services directly to retailers. The separation comes as Fiserv completes its acquisition of First Data. 

LSE to acquire Refinitiv for $27B.  The London Stock Exchange (LSE) agreed to buy the financial data firm for $27 billion, positioning the LSE as a global financial markets information provider on the level of Bloomberg. By purchasing Refinitiv, which was spun off from Thomson Reuters in 2018, LSE is continuing to add new sources of revenue to its business. to pay digital dividends.  The online retailer will pay out shareholder dividends as a digital security listed on its tZero platform. According to CEO Patrick Byrne, the digital A-1 shares confer legal rights similar to the common stock trading on NASDAQ. However, the digital shares are not registered under the Securities Act of 1933 and can be traded only via a Dinosaur brokerage account. 

LabCFTC Director Gorfine is leaving the agency.  Daniel Gorfine, first chief innovation officer of the Commodity Futures Trading Commission (CFTC) and the director of its LabCFTC initiative, is leaving the agency in two weeks. Gorfine was familiar with and supportive of innovations in crypto assets and other fintech developments affecting U.S. commodities markets.





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