Posted In:

Custody, Crypto


#422
Le Dîner de Cons

Published:

Jan 29, 2022


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Posted In:

Custody, Crypto

Published:

Jan 29, 2022


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Picture this: it’s 2013 and you’re at one of those hopeless ‘idea dinner’ parties that VC’s love to throw discussing the group's most exciting investment trends over the next decade. AI. Robotics. Biotech, CRISPR. Industrial 3D Printing. The typical innovation soup du jour themes are passed around the table. You work up the courage to speak your mind and suggest…custody. Custody?! The group quips the idea is almost as bad as your last dinner suggestion of investing in something called bitcoin.

Fast forward to today and sure enough new age custodians are bringing in billions of dollars of fresh capital, as investors are warming up to the powerful position these startups have in leveraging custody as the bedrock for a full horizontal suite of financial solutions for digital assets. In the past two months we’ve seen close to $3b worth of capital pour into startups that have built a core crypto custody offering wrapped within a broader crypto-as-a-service business.

This week’s $550m Series E by Fireblocks at an $8b valuation marks yet another shot against the bow. As the line between crypto, fintech, and financial services continues to blur, having crypto capabilities have become table stakes. The problem for financial institutions and fintech alike is where to begin?

Enter Fireblocks, Paxos, NYDIG and the wave of other custodian providers that are helping to onboard these players by handling the execution and safe storage of digital assets. In typical incumbent fashion, the world’s largest custodians have started to finally take notice. Last week, BNY Mellon’s CFO told analysts that its new digital asset unit ‘could create meaningful revenue’ for the bank as soon as next year. Of course the offering is powered by Fireblocks, but you get the idea.

The lesson from all of this is twofold. In an era of replatforming financial services onto a new financial tech stack, what is old is very much new again. Nothing is new under the sun. But more importantly, be sure to listen to the “François Pignon” at the table of your next crashingly dull innovation dinner.

Portfolio News


Flushing Bank to offer bitcoin services through NYDIG - Flushing Bank, a New York State-chartered commercial bank, will offer Bitcoin services to its customers in Q1 2022, the company said this week. The firm is the latest traditional financial institution to jump on the Bitcoin bandwagon in a partnership with institutional bitcoin broker NYDIG, who will facilitate the integration of bitcoin purchasing, selling, and holding solutions to the Flushing Bank’s online banking provider, Q2 Holdings. Read more

Podcast Conversation: Modernizing $25b of assets with retirement wealthtech, with Vestwell CEO Aaron Schumm - In this conversation with Lex Sokolin of The Fintech Blueprint Aaron Schumm, the Founder and CEO of portfolio company Vestwell, discusses an entirely new kind of digital retirement platform transforming the way plans are offered and administered — for the benefit of advisors, employers, and employees alike. Read more

Le Dîner de Cons


Investors bet billions on crypto custody providers - The safekeepers of crypto assets are attracting billions of dollars from investors betting that the influx of Wall Street players into digital markets will lead to a surge in demand for custody services. Read more

Crypto exchange FTX US valued at $8b as first fundraise draws SoftBank, Temasek - Cryptocurrency exchange FTX US, which raised $400m in its first funding round, was launched in 2020 by former Wall Street high frequency trading executives, and it competes with leading crypto exchanges Coinbase and Binance. Read more

Crypto infrastructure company Fireblocks nearly quadruples valuation to $8b in six months - The new valuation comes in conjunction with Fireblocks’ Series E funding round, in which it raised $550m from an investor group co-led by hedge fund D1 Capital Partners and Spark Capital. Its product enables financial institutions, including Bank of New York Mellon, BlockFi and eToro, to provide direct custody of digital assets. Read more

Industry News


Chime lines up Goldman Sachs for blockbuster IPO - The financial technology startup will likely be valued at a substantial premium to its valuation of $25b from an August funding round led by Sequoia Capital, the sources said, adding Chime could aim for a valuation of nearly $40b. Read more

Affirm launches SuperApp, browser extension to streamline consumer finances - SuperApp delivers Affirm's shopping, payments and financial services all in one place. The Google Chrome browser extension allows consumers to use Affirm's payment solutions at virtually any retailer's website, the company said. Read more

Apple to rival Square by turning iPhones into payment terminals - The company has been working on the new feature since around 2020, when it paid about $100m for a Canadian startup called Mobeewave that developed technology for smartphones to accept payments with the tap of a credit card. The system will likely use the iPhone’s near field communications, or NFC, chip that is currently used for Apple Pay. Read more

SAP to buy U.S. fintech start-up Taulia; eyes metaverse opportunities - SAP will use the acquisition to expand its presence in supply-chain financing and working capital management. SAP, which makes software for managing business processes and gets much of its revenue in recurring form, said it was also looking at opportunities in the 'metaverse' - virtual online worlds where people can work, play and socialize. Read more

Why a bank for the super rich Is taking aim at the younger merely rich - Just the good old ultra rich won’t do anymore. UBS Group's deal to buy U.S. robo adviser Wealthfront for $1.4b signals how old-guard institutions that have traditionally catered to the world’s moneyed elite are recognizing the importance of attracting younger clients, whose vision of banking differs drastically from their elders. Read more

Walmart-backed fintech startup is acquiring two firms and a new name - The firm, where Walmart is the majority owner under a joint venture with Ribbit Capital, will buy Even Responsible Finance, which is used by employers to offer workers their paychecks early and counts Walmart as a large customer. It will also buy ONE Finance, a financial-services mobile app known as a neobank that allows users to manage money and apply for a debit card or other services that come with lower fees than traditional banks typically charge. Read more

Fidelity, once stodgy and adrift, bets on the Reddit crowd - Today, Ms. Johnson’s 75-year-old company has placed more bets than nearly any other big Wall Street firm on the future of cryptocurrencies and doubled down on other areas powered by individual investors—and the plan appears to be working. Read more

Which fintech sectors are attracting the most startup funding? - The WSJ canvases the market and finds that consumer-payments categories, which include startups like Square, continue to capture financial-technology funding. Another hot trend is known as fractionalization. All sorts of startups are allowing investors of all kinds to invest in asset classes that once would have been inaccessible. Read more

Fintech companies, facing competition from mainstream banks, step up their offerings - Fintech startups have established themselves as viable competitors in the financial-services business, but now they face a new challenge: Some mainstream banks have started to offer fintech-inspired services such as early paycheck access and no-fee overdrafts. Read more

Mark Zuckerberg’s stablecoin ambitions unravel with Diem sale talks - The Diem Association, a cryptocurrency initiative once known as Libra, is weighing a sale of its assets as a way to return capital to its investor members. Diem is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture. Read more

Citadel Securities: How the Wall Street outsider became ‘the Amazon of financial markets’ - The initial ideas that would evolve into Citadel Securities took life in the early 2000s on a separate floor of the hedge fund’s old Chicago headquarters. Since then it has grown into one of the largest trading houses in the world, involved in roughly one in four of all US stock trades and nearly 40% of all those involving individual retail investors. Read more

JPMorgan agrees to acquire 49% stake in Greek fintech company Viva Wallet - Founded in 2000, Viva Wallet offers a cloud-based payments platform for SMBs in 23 countries across Europe. It provides card acceptance services through its point-of-sale application, as well as business card services to small businesses. Terms were not disclosed, but the deal was reported to be valued at more than $2b. Read more

Insurers want to avoid covering war. Ukraine hacks put that to the test - Some insurance companies cited “act of war” exclusions to try to avoid covering the damage of a Russian cyberattack against Ukraine in 2017 that rippled outward internationally, causing billions of dollars in damage. Now, as U.S. officials warn of similar hacks, a New Jersey judge said such clauses covered “traditional” war—physical, not cyber, activity. Read more

China fintech startup PingPong weighing $1b Hong Kong IPO - The fintech firm is riding on a boom in cross-border commerce by Chinese sellers operating on foreign platforms. Founded in 2015, PingPong collects payments for Chinese exporters selling through services such as Amazon.com Inc., Shopify, and Shopee. Read more

Helios in talks with Africa mobile operators on fintech billions - Helios Investment Partners is in talks with Africa’s largest wireless carriers, including MTN Group and Airtel Africa about ways the private-equity firm can help them cash in on their mobile-money and digital-payments platforms. Read more

Argentine fintech 'unicorn' Uala launches in Colombia amid Latam push - Argentine digital banking startup Uala announced its launch in Colombia on Thursday, a new frontier for the firm as it expands in Latin America and looks to tap in to the region's millions of unbanked savers. Read more

Buy now, pay later firm Klarna launches physical card in the UK - The Klarna Card will initially only include Klarna’s “Pay in 30” feature, which lets shoppers pay down their debt within 30 days. Read more

Select Financings


Ascend - Palo Alto based BNPL commercial insurer tool raised $30m in Series A funding led by Index Ventures. Read more

Aver - Decentralized peer-to-peer betting exchange built on the Solana blockchain raised $7.5m in Seed funding led by Jump Crypto. Read more

BCB Group - London based startup providing business accounts and payment services to crypto clients raised $60m in Series A funding led by Foundation Capital. Read more

Blockdaemon - New York based blockchain infrastructure company for node management and staking raised $207m in Series C funding led by Sapphire Ventures and Tiger Global. Read more

CoinTracker - San Francisco based crypto portfolio tracker and tax calculator raised $100m in Series A funding led by Accel. Read more

Compound - San Francisco based tech-powered wealth management platform raised $25m in Series B funding led by Greenoaks and Lachy Groom. Read more

Creditas - Brazil based lending start-up raised $260m in Series F funding led by Fidelity Management & Research. Read more

Domain Money - New York based stock and crypto investment app raised $33m in new funding from investors including Bessemer Venture Partners and Salesforce founder Marc Benioff. Read more

Esusu - New York based credit building startup raised $130m in Series B funding led by SoftBank. Read more

Fireblocks - New York based institutional crypto custody provider raised $550m in Series E funding led by D1 Capital Partners and Spark Capital. Read more

FTX US - Chicago based American affiliate of cryptocurrency exchange FTX raised $400m in Series A from investors including SoftBank, Temasek, Paradigm and Multicoin Capital. Read more

Inventa - Brazil based inventory marketplace that also provides credit raised $20m in Series A funding led by a16z and Monashees. Read more

Laka - London based collective insurer for bike and e-bike owners raised $12m in Series A funding led by Autotech Ventures. Read more

NALA - Tanzania based cross-border payments startup raised $10m in Seed funding from investors including Amplo, Accel, Bessemer Venture Partners and DFS Labs. Read more

Polly - San Francisco based technology provider for the mortgage industry raised $37m in Series B funding led by Menlo Ventures. Read more

SavvyMoney - California based consumer credit score startup raised $45m in growth funding from Spectrum Equity. Read more

Stonks.com - San Francisco based fundraising platform raised $15m in Seed funding led by a16z. Read more

Tribevest - Columbus based collaborative investing startup raised $3m in Seed funding from I2BF Global Ventures, Mucker Capital, Gaingels, Vibe Capital and Ryan Leslie. Read more

Tuum - Estoniana based core banking platform raised €15m in Series A funding led by Portage Ventures. Read more

Vest - Mexico City based stock trading app raised $6m in Seed funding led by Founders Fund. Read more

Vesta - San Francisco based mortgage infrastructure startup raised $30m in Series A funding led by a16z. Read more


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