Posted In:

Crypto, DeFi, Budget Deficit


#347
The Toothpaste Is Out of the Tube

Published:

Aug 01, 2020


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Posted In:

Crypto, DeFi, Budget Deficit

Published:

Aug 01, 2020


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The US printed more money in June than in the first two centuries after its founding. Last month, the US budget deficit was larger than the total debt incurred from 1776 to 1979. Though talks between US congressional leaders and the White House on a next round of COVID-related spending stalled, government intervention is reaching higher levels than many would be comfortable with.

Consequently, Bitcoin crossed back over $10k this week with fortitude, and total value locked in DeFi protocols crossed $3.5b. Many expect more “number go up” as an unstoppable US federal money printing machine faces off against a more open, deflationary, non-sovereign controlled financial system (aka Bitcoin).

Aside from printing gobs of cash, the US government made another bizarre move, announcing that Kodak (the defunct camera maker) would receive a $765m loan to launch Kodak Pharmaceuticals. The new company will supposedly produce generic active pharma ingredients to reduce US dependency on foreign drug makers. The lack of core competencies in drug manufacturing puzzled some, but didn’t stop shares from rallying 500% - forcing the NYSE to halt their trading several times.

Finally, Congress had a showdown with the four biggest names in Big Tech (over Zoom), with Rep. David Cicilline closing the hearing by saying that Apple, Amazon, Facebook and Google have monopoly power and "some need to be broken up”. The mood was hardly jovial.

So, as the abnormality of 2020 continues to redefine “traditional” expectations, it seems hardly surprising that vast amounts of value have been flooding into Bitcoin and DeFi protocols over these past few months. The toothpaste is out of the tube and the printed dollars are now out there. Will Zuck have the last laugh with Libra?

Portfolio News


Investors gear up for acquisitions in Brazilian IT sector - Rebel CEO & President of the Brazilian Association of Digital Credit - Rafael Pereira - shares perspectives on the currently increasing appeal of the Brazilian IT sector to investors. Read more

What will small business lending look like post-Covid? - On August 11th, portfolio company Ocrolus will be hosting a virtual roundtable on how Covid-19 has acted as an accelerant into a new age of funding immediacy in which speed and customer experience are paramount. Read more

Trading is live on Dharma - Users can now search and trade 2000+ tokens in Uniswap through portfolio company Dharma with zero gas fees. Dharma is the first mobile wallet with native support for Uniswap V2. Read more

Sigma Ratings sponsors ACFCS's upcoming FinCrime virtual week - As a lead ACFCS conference sponsor, Sigma will host investigative workshops and meetings about its Terminal product which helps risk and compliance experts at banks, professional services firms and governments fight financial crime and manage other reputational issues. Read more

Sezzle, Plaid team on consumer payments - Sezzle works in the buy now, pay later (BNPL) model, meaning it lets customers pay for items in installments over a period of weeks. With the new partnership, Sezzle customers will now be able to connect their financial accounts to Plaid, thus letting them pay more efficiently, the release stated. Processing costs for Sezzle will also be lowered with the partnership, through facilitating user payments via ACH rather than using card networks. Read more

The Toothpaste Is Out of the Tube


Antitrust showdown in congress: big tech, meet big government - The continued reflexive embrace of antitrust regulation is an original sin of the administrative state with vast, potentially destructive social costs. With antitrust intervention, politicians and bureaucrats do not merely push companies around; they also directly or indirectly dictate business models and can even inappropriately influence the trajectory of entire economic sectors in non-market directions. Read more

Goldman Sachs says gold will surge another 20% and hit $2,300 in the next year, driven by rock-bottom interest rates - Continuous streams of stimulus and measures taken by policymakers to fight the economic downturn caused by pandemic will lead to a significant rise in debt in the future, Goldman said. This in turn will lead to policymakers allowing inflation to to rise, boosting precious metal prices, the bank said. Read more

Kodak's stock rose so fast it tripped 20 circuit breakers in a single day - The enormous rally in Kodak shares has no end in sight, after the Trump administration announced the company will be transformed into a pharmaceutical producer under the Defense Production Act. Read more

US mint facing coin shortage - Widespread lockdowns and health guidelines favouring the use of credit and debit payments over physical cash has hit the supply of coins and led the Federal Reserve to convene a US Coin Task Force to cope with the shortage. Read more

Two centuries of debt in one month - The United States printed more money in June than in the first two centuries after its founding. Last month the U.S. budget deficit — $864b — was larger than the total debt incurred from 1776 through the end of 1979. Read more

Industry News


Shopify: GMV OMG - Goods trafficked on company’s website reached $30b in the second quarter - Shopify announced this week that the gross merchandise volume (GMV) of goods trafficked on its website reached $30bn in the second quarter. That figure has doubled in a year and now exceeds eBay. Read more

DBS trials SingPass face verification for digital banking sign-ups - The bank is working with the Singapore government to use face verification technology to sign up customers on its digital banking platform. Read more

Varo Money granted national bank charter - San Francisco based consumer fintech firm that closed a $241m funding round last month is to be granted national bank charter allowing the company to offer FDIC-insured services. Read more

Affirm prepares IPO that could value fintech firm at up to $10b - Investor interest in the fintech industry, which digitizes functions such as payments and lending, has exploded as consumers increasingly shop and manage their finances online—a trend that has only been hastened by the coronavirus pandemic. Read more

Instant payments in Colombia: Transfiya transfers multiply - Spearheaded by portfolio company Minka, Transfiya, a new system system for instant P2P payments in Colombia, is quickly gaining strength. Read more

Monzo's losses rise to £114m as pandemic threatens operations - Losses at Monzo rose to £113.8m from £47.1m in its latest annual report as it said coronavirus disruption had threatened its ability to operate and that "the ability of the Group to continue as a going concern is subject to material uncertainties" following the pandemic. Monzo's revenues rose to £67.2m from £19.7m in the 12-month period to February. Read more

Fintech unicorn TransferWise announces a new $319m secondary share sale round - London based money transfer firm is now valued at $5b following a secondary share sale led by Lone Pine Capital and D1 Capital Partners, highlighting increased investor appetite for online payments amid the coronavirus pandemic. Read more

Enova to acquire OnDeck in a cash and stock transaction valued at approximately $90m - This transaction brings together two complementary, market-leading businesses combining world-class capabilities in consumer and small business online lending. Enova and OnDeck are both innovators that have helped revolutionize online lending, using data and advanced analytics to simplify and expand access to financial services for underserved borrowers, while providing an unparalleled customer experience. Read more

Visa to incorporate cryptocurrencies into its payments network - In a blog post announcement, Visa said it has been working with Coinbase and Fold to “provide a bridge between digital currencies and [its] existing global network of 61m merchants.” As a result of this collaboration, more than 25 digital currency wallets across the globe have linked up with Visa to enable consumers to spend their digital currency using a Visa debit or prepaid card. Read more

Banking app Dave hit by data breach - The data including names, emails, birth dates, addresses and phone numbers were obtained via the third party analytics platform provider Waydev and posted in a public forum. Read more

India eyes global online payments push as transactions boom - Since it launched in 2016, India’s Unified Payments Interface has helped propel the growth of online payments in the country of 1.4b people. The system allows people to make cheap, instant transfers across bank accounts and to pay for everything from groceries to online services. Read more

Will superfunds come to the rescue of UK pensions? - The FT explores a new breed of corporate consolidator which is preparing to swoop on UK pensions. Last month, UK regulators gave the green light for the creation of “pension superfunds” commercially run entities capable of pooling final salary schemes from different employers and running them as one large fund. Read more

Founder hits jackpot thanks to China’s love of stock trading - A good Bloomberg article on the origin and growth of Futu during COVID. Futu was founded by Tencent’s 18th employee who left to start the business after growing frustrated with the software he used to trade Hong Kong stocks. Read more

Tink aims to be the brains of open banking - Daniel Kjellén, Tink’s CEO, tells the FT that the company he co-founded in 2012 is aiming to be the “rails and brains” of open banking. Read more

Select Financings


Cambrian Asset Management - Mill Valley, California based quantitative digital asset investment firm raises $4.2m in Seed funding led by Howard Morgan (co-founder of Renaissance Technologies and First Round Capital), Tano Capital, Dennis Phelps (General Partner at IVP), and Kevin Ryan (co-founder, MongoDB & Business Insider). Read more

Candis - Berlin based automated bookkeeping software company raised €12m in Series B funding led by Viola Ventures and Rabo Frontier Ventures. Read more

ComplyAdvantage - London based AI platform and database for financial crime raised $50m in Series C financing led by Ontario Teachers’ Pension Plan Board. Read more

EMQ - Hong Kong based cross-border remittances company raised $20m in Series B funding led by WI Harper Group. Read more

Guideline - San Mateo, California based small businesses 401(k) provider raised $80m in Series D funding led by Generation and Greyhound Capital. Read more

Magnetis - São Paulo, Brazil based digital investment manager platform raised $11m in Series B funding led by Redpoint eventures. Read more

Remitly - Seattle based digital remittance company raised $85m in new funding at a $1.5b valuation led by insider PayU, the fintech investment arm of Naspers. Read more

StashAway - Singapore based digital wealth management company raised $16m in Series C funding led by Square Peg. Read more

Thought Machine - London based core banking platform raised $42m in Series B funding led by Eurazeo Growth. Read more

True Link Financial - San Francisco based provider of digital financial services targeting retirees raised $35m in Series B funding led by Khosla Ventures and Centana Growth Partners. Read more


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