#371
Chillen Not Yellen

Published:

Jan 23, 2021


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Published:

Jan 23, 2021


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A new administration means many things for the world of finance, starting with the largest stock market rally in history between election day and inauguration. It also means new appointments, and with that, new and sometimes very different views for people in positions of power.

If (when) former Fed chair Janet Yellen is confirmed as Treasury Secretary, she’s made it no secret that big changes are ahead - from stimulus measures to potentially new crypto regulation. The new SEC chair, Gary Gensler, is a former Goldman banker and head of the CFTC, but there is no indication that this gives him extra sympathy for his previous industry. If anything, it might be the opposite. Rohit Chopra (current FTC commissioner), has been nominated as director of the CFPB, and is certainly no pushover.

The regulatory regime in the US has fluctuated over the years, tightening significantly in the immediate aftermath of the 2008 financial crisis, and then increasingly becoming looser once the economy got back on track, markets recovered (and then soared) and memories began to fade. However, with all the musical chairs going on we are once again at a crossroads. While there is some indication more progressive policy lies ahead, it is not clear the exact direction regulators will take - and what this means for finance, fintech (and crypto), and even Big Tech.

Even with the uncertainty surrounding the regulatory environment going forward, stocks don’t seem to have noticed - perhaps a sign of the incredibly loose fiscal policy around the world more than anything else. With that being said, it is probably safe to assume that markets are hoping for more of Janet “Chillen”, and less of Janet “Yellen” in her new role.

Portfolio News


Fitch invests in AI start-up Sigma Ratings to improve bank misconduct detection - Rating agencies have come under greater scrutiny following their role in the 2008 financial crisis. They were criticized for exaggerating the ratings of risky mortgage-backed securities, giving false confidence to investors that they were safe for investing. Since then they have tried to take steps to improve their methodologies and transparency. By adopting Sigma’s software, Fitch will be able to expand how it evaluates lenders’ riskiness beyond the traditional credit profile. Read more

Plaid launches FinRise incubator for entrepreneurs of color - Plaid said it will help entrepreneurs access capital and services through its network of VC firms, service providers and accelerators. The program will also offer networking opportunities, discounted services and ad credits. Additionally, FinRise will offer a three-day virtual boot camp that will feature workshops on a wide variety of technical, product and business topics. Read more

Plaid shareholders field offers at $15b after merger collapse - Normally CEOs that opt to sell their companies aren’t happy when the government blocks the deal over antitrust concerns. But that doesn’t appear to be the case with Plaid, which has seen a surge in investor interest since federal regulators blocked its merger last week with Visa. Read more

Plaid's Head of UK on how pulling the plug on Visa’s $5.3b takeover deal will help Plaid in Europe - Just 363 days separate two of the biggest announcements in Plaid’s timeline. In 2020 alone, Plaid’s customer base grew by 60% to more than 4,000 companies using its APIs, including big names like Microsoft and PayPal. “Covid-19 definitely increased the acceleration of adoption of fintech and all the companies underneath it and powering it”. Read more

SPACs: A conversation with Heads of Global Markets, Banking from Market Leader Citi - We dig under the hood of what a SPAC is, what they target, and what to do as a CEO if you are approached by one. Listen on Spotify here. Read more

Chillen Not Yellen


Biden logs best stock-market rally from Election to Inauguration Day in history - In the 11 weeks between the Nov. 3 election and Wednesday’s close, the S&P 500 surged a dazzling 14.3%, according to FactSet data. Read more

Janet Yellen suggests 'curtailing' cryptocurrencies such as Bitcoin - Janet Yellen on Tuesday suggested lawmakers "curtail" the use of Bitcoin amid terrorism concerns. It was the latest sign that lawmakers & regulators could get tough on Bitcoin & Ethereum. Read more

Yellen vows to set up Treasury team to focus on climate, in victory for advocates - The commitments mark a victory for lawmakers and advocates who want the Biden administration to enlist Treasury's sweeping influence to address the dangers that climate change poses to the economy. Read more

Biden names Gensler as SEC head in push towards more scrutiny - Gensler is a well-known quantity on Wall Street after heading the CFTC during Barack Obama’s presidency at the height of the financial crisis. He had been a key contender to lead an economic or financial agency after heading Mr. Biden’s transition team on the Federal Reserve, banking and securities regulation. Although Gensler championed the deregulation of the financial services industry decades ago, he is now considered a proponent of more constraints on the sector. Read more

Five reasons the SEC should approve Bitcoin ETFs - The evidence shows that investors would prefer to invest in cryptocurrencies through an exchange-traded fund. Bloomberg argues that if President Joe Biden’s nomination of Gary Gensler to lead the Securities and Exchange Commission is confirmed, Gensler should act swiftly to get the agency’s staff moving toward approving a Bitcoin exchange-traded fund. Read more

Rohit Chopra nominated to lead Consumer-Finance Agency - If confirmed, Mr. Chopra would replace Kathy Kraninger, a Trump-appointed official who has run the bureau since 2018. The decision to tap Mr. Chopra, a Democrat currently serving as a member of the Federal Trade Commission, was announced along with Gary Gensler’s nomination to lead the Securities and Exchange Commission. Mr. Gensler could give Wall Street its most aggressive regulator in two decades. Read more

Industry News


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China plans tougher antitrust rules for non-bank payments industry - Under draft rules proposed on Wednesday, the People’s Bank of China (PBOC) can advise the state council’s antitrust committee to stop companies abusing their dominant position or even break up a non-bank institution if it “severely hinders the healthy development of the payment service market”. Read more

LatAm insurtechs aim to disrupt the back-office - Insurtech startups in Latin America have moved away from lead-generation strategies such as comparison sites, to concentrate efforts on making processes like claims handling within traditional insurance companies more efficient. Read more

TikTok’s Chinese version Douyin launches an e-wallet - Payment is a natural step for Douyin, which has a growing e-commerce business. Users can be directed to a product link while watching a video of an influencer reviewing, say, a lipstick. Instead of the ubiquitous WeChat Pay and Alipay, they may opt for Douyin Pay one day, if the incentives are great enough. Read more

Funding mega-rounds highlight investor ‘fomo’ - Surging valuations in companies such as Checkout.com, Rapyd and Stripe highlight confidence that the trends encouraged by the pandemic — declining cash usage and rising numbers of online and digital payments — are here to stay for the long term. Cynics suggest some investors also have an eye on more short-term gains from a potential wave of consolidation. Read more

Payments startup Payoneer in merger talks with SPAC - The SPAC has begun talks to raise new equity to support a transaction that’s slated to value the combined entity at more than $2.5b. FTAC, led by Chairman Betsy Cohen and Chief Executive Officer Ryan Gilbert, raised roughly $755m in an August initial public offering for the purpose of acquiring or merging with a technology or financial services technology-focused company. Read more

Britain’s IG Group to buy U.S. options firm Tastytrade for $1b - The IG-Tastytrade deal comes as interest in options has surged among individual investors. Many Americans turned to trading stocks and options during the coronavirus pandemic, as lockdowns and a shift toward remote working left millions at home with little to do. Intense volatility across financial markets, a move toward zero- or low-commission trades in the brokerage industry and popular trading apps such as Robinhood also fueled the boom. Read more

Monzo founder Tom Blomfield is departing the challenger bank and says he's "struggled" during the pandemic - Blomfield held the role of CEO until May last year when he assumed the newly created title of president and resigned from the Monzo board. However, having been given the time and space to consider his long-term future at the bank he helped create six years ago, and with a refreshed executive team now in place, he says it is time to “hand over the baton”. Read more

21 European fintechs to watch in 2021 - Sifted has asked seven European fintech founders for their picks of fintech companies to watch for in 2021. Read more

Housing market stays tight as homeowners stay put - The typical homeowner in 2020 had remained in place for 13 years, up slightly from 12.8 years in 2019 and well ahead of 2010’s reading of 8.7 years, according to a new analysis by real-estate brokerage Redfin. Read more

More cash means more problems for big banks - Chase ended 2020 with $1.4t in cash and marketable securities, which it said is some $450b in excess of what regulators require. Across Chase, Citigroup, PNC, and Wells Fargo, cash assets at year-end represented about 15% of their total assets, well up from less than 10% a year before. Read more

United Wholesale Mortgage goes public in biggest SPAC deal ever - United Wholesale Mortgage made its public trading debut Friday, the largest-ever listing through a special-purpose-acquisition company (SPAC) with a valuation close to $16b. Read more

Select Financings


Arbol - New York based insurtech platform for parametric products raised $7m in Series A funding led by Mubadala Capital. Read more

Brigit - New York based consumer finance app raised $35m in Series A funding led by Lightspeed Venture Partners. Read more

LeoCare - France based insurance startup raised €15m in Series A funding from Felix Capital, Ventech and Daphni. Read more

Indy (f.k.a. Georges) - France based accounting automation app for freelancers and small businesses raised €35m in Series B funding led by Singular. Read more

iStox - Singapore based digital securities platform raised $50m in Series A funding from Development Bank of Japan, JIC Venture Growth Investments, Juroku Bank, Mobile Internet Capital, Singapore Exchange, Tokai Tokyo Financial Holdings and Hanwha Asset Management. Read more

PPRO - London based localized payments platform raised $180m in new funding from Eurazeo, Sprints Capital and Wellington Management. Read more

Trovata - San Diego based automated cash management startup raised $20m in Series A funding led by Wells Fargo Strategic Capital. Read more

Volopay - Singapore based “financial control center” for businesses raised $2.1m in Seed funding led by Tinder co-founder Justin Mateen. Read more

Wintermute - London based algorithmic liquidity provider for digital assets raised $20m in Series B funding led by Lightspeed Venture Partners. Read more


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