FTX collapse could be a catalyst for crypto regulations??; FinTech Winter is a brilliant time for banks to increase acquisitions ??; & much more ??

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???Hey,?Linas here!?Welcome to a????weekly free edition????of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

If you’re not a subscriber, here’s what you missed this week:

1. Affirm offers a profitability strategy that other BNPL FinTechs should steal ???[it’s a must-read for all FinTechs!]
2. The crazy FTX story is getting even more ridiculous ??
3. Price is the story, or how retail is adopting crypto ???[lots of remarkable charts here]
4. The future is purple. Nubank Purple ???[good lessons for other neobanks]
5. Binance wants to be your Crypto Bank ??
6. The verticalization of neobanking continues ??
7. Institutions are now driving the crypto adoption boom ??
8. The worst year ever for stock trading apps ???[and it might become worse before it gets better]
9. Klarna's explosive growth is rapidly declining ??
10. FinTech Winter, or a warning sign from FIS ??

and more! Don't miss out and join the community here????

Last week (21-25 November) was another thrilling and hot week in FinTech.?We will look at the FTX collapse that could be a catalyst for crypto regulations; FinTech Winter, which is a brilliant time for banks to increase acquisitions, and other interesting news and developments.

Without further ado, let us dive into what happened in the financial technology sector last week. Let’s connect the dots.

FTX collapse could be a catalyst for crypto regulations??

Zoo out ?? FTX?is now undoubtedly the biggest thing both in crypto and FinTech right now. Apart from what has been said and discovered, there’s another important trend emerging.

Following the crazy collapse of the once second-biggest crypto exchange in the world, there are rising fears that consumers aren’t being protected adequately, which builds up the pressure on financial services watchdogs to better regulate the cryptocurrency industry.

More on this ???Industry is already responding. For instance,?Coinbase?CEO Brian Armstrong has said he thinks inadequate US digital asset regulation has forced crypto exchanges to set up operations overseas, as FTX did in the Bahamas, leaving consumers more vulnerable. Furthermore, some UK banks have already started to prevent customers from buying cryptos in response to what they say is a rise in crypto scams. And the list could go on.

What this means? ???In short,?more oversight is coming in major markets (especially in the US). Having FTX implosion (along with other crypto meltdowns this year, such as LUNA) could bring everything sooner.

?? THE TAKEAWAY

The key catalyst ???As I’ve written earlier, the EU is planning to pass vital crypto regulations in its Markets in Crypto Assets (MiCA) legislation before 2023. The new legislation would replace a patchwork of national rules with one framework covering various countries for the first time. But a vote on the new rules has reportedly been delayed until February, as per CoinDesk. What’s important here is that MiCA would not only harmonize the crypto oversight but also could be the groundwork for crypto regulations globally. When it comes to the US, it is further behind in creating concrete rules. Various government agencies have skirted around formal regulations. And there isn’t even agreement on whether the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) should be in charge of oversight. A similar situation can be seen in other major markets such as the UK, where the Financial Conduct Authority (FCA) currently only oversees companies’ approach to anti-money laundering. Having said that, it’s clear that crypto regulation in most markets has been painfully slow to materialize, which one way or another led to the fact that customers are currently suffering. But the latest and biggest crypto meltdown of 2022 may shock policymakers into action. It has to.

Refresher: FTX is much worse than anyone imagined ??????

FinTech Winter is a brilliant time for banks to increase acquisitions ??

The news ???Banks looking to expand their digital capabilities reportedly may be taking a closer look at acquisitions of FinTechs, according to Reuters. That’s becoming an attractive option as interest rates are up and valuations are down, Reuters reported.

More on this ???Looking at the macro level, we can easily support this hypothesis. The valuations of FinTechs have fallen 70% this year while those of banks have slipped only 33%, and the S&P 500 has dipped 23%, as per the report.

The decline in FinTech valuations has obviously been driven by the economic downturn, rising interest rates, and lower investor confidence after (drums ??) the collapse of cryptocurrency exchange FTX.

?? THE TAKEAWAY

Why this makes sense? ???Despite the difficult macro situation, banks have been earning more as their lending business benefits from rising interest rates. Furthermore, it’s much easier for banks to buy FinTechs than to merge with other banks because the latter involves more regulatory scrutiny. Zooming out, it’s also important to remember that many FinTechs will definitely face a stricter climate soon, with more layoffs and lower valuations possible. Hence, well-positioned banks can definitely be on the hunt for deals as they enter a period of market consolidation. So, very soon a wild ride might begin ??

Bonus: Lessons from another failed neobank ??

Crypto Winter takes another victim - a crypto exchange turned neobank ??

Goldman Sachs' Marcus shows just how difficult FinTech really is ??

Extra Reads & Quick Bites for Curious Minds??

• Deeper into banking ?? Nubank, a Latin America-based financial technology firm, has launched Mexican savings accounts as it looks to scoop up market share. The digital bank's Mexican arm, known as Nubank Mexico, opened a waiting list for the savings accounts, which will roll out in stages with first access going to current clients and members of the company's digital forum Comunidad Nu. Cuenta Nu will be 100% digital and will offer a daily yield, with no minimum balance requirements nor extra fees, as well as provide immediate liquidity, with customers being able to withdraw cash 24/7, without restrictions. Opening Cuenta Nu and transferring money to other accounts will be managed entirely through Nu Mexico’s app and will have Nu’s human customer service 24 hours a day through the in-app chat, phone, or email. Yet another reminder that The future is purple. Nubank Purple ??
• It’s over ??Australia's stock exchange operator?ended?a years-long effort to build a blockchain-based settlement system. The ambitious effort for a world first was plagued by delays, and critics questioned its durability. Australian Securities Exchange will write off $165M to $172M in development costs. Digital Assets Holdings worked with ASX on the project.?While disappointing, the settlement's future is still unsettled. Just look at?JPMorgan and its recent move into DeFi.
• Another one ???SoftBank is back and it’s about to sell 29M shares in Indian FinTech giant?Paytm?worth around $215M. Japan-based?SoftBank?is planning to sell a 4.5% stake at a discount of 7% after the lock-in period.?Yet another reminder that?SoftBank is an elephant that keeps falling over ??.

Money Moves??

• Anode Labs?raised?$4.2M?to build a decentralized energy network. The round was co-led by?Lerer Hippeau?and?Lattice Capital.
• Pan-African cross-border payment app?Chipper Cash?reportedly intends to acquire Zambian FinTech?Zoona Transactions International.?The deal, subject to authorities’ approval, would bring to Chipper Cash new online services, a new agent network, and entry to Zambia, TechCabal?reported.
• French revenue-based financing FinTech?Karmen?announced a?€50M debt facility?from Fasanara Capital.

Continue reading by subscribing to?Linas's Newsletter.?You will receive fresh news about FinTech with hot takeaways every day.

P.S.?You might enjoy my earlier pieces as well:

?? The Perfect Pitch Deck: How Coinbase Raised Seed Capital and Began Journey Towards $100B Worth Public Company

???A Wise pitch deck that led to London’s biggest and most successful direct listing ever

?? Lessons FinTechs can learn from Spotify going into audiobooks ??

***

About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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