TFU | Oct. 14-20

Leading Off

Global regulators, including FATF and the FSB, weighed in on the risks posed by stablecoins; the U.S. government is reportedly considering creating its own cryptocurrency; EU regulators are looking into potential antitrust violations by Apple Pay; the FT brought new evidence of fraudulent accounting practices at Wirecard; Venmo will launch its first credit card; Revolut is looking to raise $1.5B in debt and equity; and digital bank Chime experienced a service disruption affecting millions.

 

In the News

Global regulators weigh in on stablecoin risks.  Following its latest meeting, the Financial Action Task Force (FATF) released a document stating that stablecoins pose a risk to the global financial system due to their potential use for money laundering and terrorist financing [full text]. FATF’s announcement follows a Bank for International Settlements (BIS) report [text] arguing that stablecoins are a growing threat to financial stability and competition. Meanwhile, the Financial Stability Board (FSB) announced that it will consider the regulatory issues posed by stablecoins.

Could Libra concerns lead to Fed-backed cryptocurrency?  According to Politico, U.S. “lawmakers and Federal Reserve officials are so concerned about [Libra] that they’re contemplating . . . having the central bank create a competitor.” While discussions remain “informal” for now, the idea of a U.S. government-run cryptocurrency reportedly is gaining momentum as other countries pursue their own. 

BOE survey: ⅔ of UK FIs now use ML tools.  According to a Bank of England (BOE) survey of nearly 300 financial institutions (FIs), nearly ⅔ of respondents said they are already using machine learning (ML) tools in their businesses. The results showed that “the median firm uses live ML applications in two business areas and this is expected to more than double within the next three years.”

EU launches Apple Pay antitrust probe.  The European Commission says it is looking into antitrust concerns involving the company’s digital payment tool on the iPhone. Apple rivals reportedly asked the EU to investigate over concerns that Apple blocks access to its app and technology for cashless payments to competitors. The Commission has sent questionnaires on the topic to market participants.

FT calls into question Wirecard accounting practices.  The Financial Times released new evidence that the German digital payments firm, “one of Germany’s leading business success stories,” has engaged in questionable financial and accounting practices, “appear[ing] to indicate a concerted effort to fraudulently inflate sales and profits.” Wirecard’s share price fell 15% following the FT’s report.

Revolut bidding for $1.5B in new debt and equity.  The British challenger bank is working with JPMorgan to oversee a $1 billion convertible loan and a $500 million equity raise. Revolut is aiming for a $5-$10 billion valuation post-funding, while the loan would help it prepare for share conversion “in the event that the company received a US banking license.”

Venmo to launch credit card.  The PayPal-owned payments transfer service plans to launch a credit card, using Synchrony as its issuer. Venmo already offers a Mastercard-branded debit card, allowing users to withdraw cash or pay for services out of their Venmo accounts in the real world, but the new card will allow Venmo to tap a new source of revenue from card interchange fees.

Fidelity rolls out digital asset services.  The asset manager, which has $2.8 trillion under management, is one of the first traditional institutions to offer digital asset custody services and is expanding its offering to a “full rollout.” CEO Abigail Johnson noted that firms currently offering similar services, like Coinbase, “don’t have the existing relationships with independent advisers” that Fidelity has. 

Paytm seeking to raise $2B.  The Indian mobile payments giant is aiming to raise an additional $2 billion at a $15 billion valuation. Existing Paytm investors Ant Financial and Softbank are expected to join the new round, which would be expected to close in the next two months. Paytm is seeking new funding to help fend off “competition from Google Pay, Walmart’s PhonePe and . . . WhatsApp.”

Chime outage affects millions of customers.  The digital-only U.S. bank suffered a disruption that left customers unable to make card transactions, withdraw cash, or access online services. The problem has been linked to an operational failure at payments processor, Galileo. The outage is the third for the bank since July and comes as Chime seeks to raise new funding from investors at a $5 billion valuation.

 

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