TFU | Mar. 2 – 8

Leading Off

Robinhood experienced severe system outages; Ant Financial took a minority stake in Klarna; the European Systemic Risk Board warned of the systemic risk of cyber threats in a new report; Starling is applying for an Irish banking license as it aims to expand in Europe; and South Korea passed legislation on crypto regulation. 

In the News

Robinhood outages cause some users to lose big.  Robinhood experienced severe system outages during last week’s stock market rally due to operational failures. The firm’s founders stated in a blog post that the cause of the outage was “stress to our infrastructure.” The company plans to provide access to its premium subscription service, Robinhood Gold, as compensation to all customers.

Ant Financial takes stake in Klarna. Ant Financial Group, owner of Alipay, announced that it is taking a minority stake in Klarna, the Swedish payments firm valued at $5.5 billion last August. The investment, which is reported to be less than a 1% stake, aims to utilize the firms’ deepening partnership to bring more “innovative and convenient” financial services to consumers globally.   

ESRB warns of systemic risk of cyber threats.  In a new report [full text], the European Systemic Risk Board (ESRB), the body responsible for macroprudential oversight of the EU’s financial system, warned that a serious cyber incident could pose a systemic risk to the financial system. Factors highlighted in the report include increasing digitisation, reliance on data, and incidence of serious cyber attacks.

Starling Bank eyes European expansion with Irish license.  The London-based challenger bank’s CEO, Anne Boden, said that Starling is “working on a process to get an Irish banking license” and that it would look into creating an EU office in Dublin as it considers expanding into the EU banking market post-Brexit. Starling raised £60 million in fresh funding last month.

South Korea passes crypto regulation legislation.  The South Korean legislature approved the creation of “a framework for the regulation and legalization of cryptocurrencies and crypto exchanges,” which will allow the country’s financial regulators to oversee crypto-related businesses. The government’s move reverses its previous stance on crypto, which included strict regulations passed in 2017.

India reverses crypto trading ban.  The Indian Supreme Court overturned the country’s ban on cryptocurrency trading, in place since the Reserve Bank of India “barred banks and other financial institutions from facilitating ‘any service in relation to virtual currencies’” two years ago. The court overruled the central bank’s decision on “grounds of disproportionality.”

Privacy laws strengthened in Washington, proposed in New Jersey.  Lawmakers in Washington State passed amendments to strengthen provisions of the Washington Privacy Act, including a private right of action to enforce privacy rights, following criticism from privacy advocates. Meanwhile, New Jersey lawmakers proposed a privacy bill requiring consent for the sale of consumer data.

Nubank launches credit card in Mexico.  The Brazilian digital bank, valued at $10 billion, rolled out its “Nu” credit card to Mexicans over 18 years old, already amassing a waiting list of 30,000 customers. Currently, only 10% of Mexican adults have credit cards; and with an underbanked population of 36 million, Nubank sees a significant opportunity to capture a large part of the Mexican card market. 

Revolut adds ex-Goldman banker to its Board.  The London-based challenger bank added Michael Sherwood, former co-chief executive of Goldman Sachs International, to its board as a non-executive director. Sherwood is the latest banking veteran to join Revolut’s board as the firm aims to strengthen its governance in the wake of negative stories about its compliance and internal culture.

LendingClub deal faces hurdles.  An article in American Banker considers the regulatory hurdles that must be overcome before the online lender can complete its recently announced acquisition of Radius Bank. The article notes that the deal will “invite intense regulatory scrutiny” that could define rules for future deals.

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