Good morning, and welcome to Protocol Fintech. This Thursday: throwing fintech shade in Washington, Jesse Powell is out as Kraken CEO, and Ryan Breslow stages a comeback.
When is an NFT not an NFT? When it’s fungible. That’s the apparent conclusion of EU regulators as they try to close loopholes in the region’s crucial MiCA rules for crypto assets. A leaked draft of the latest language obtained by CoinDesk encourages a “substance over form” approach, which means that fractionalized NFTs might be treated as securities. Which makes sense: Fractionalizing NFTs seems like a pretty obvious way to financialize an asset. It also points out to me how far ahead the EU has gotten in considering the nuances of crypto markets, while the U.S. still stumbles toward maybe taking up a vote on broad crypto legislation next year.
— Owen Thomas (email | twitter)
How do you take your bank CEOs?
Big bank leaders arrived on Capitol Hill Wednesday for day one of their semi-regular grilling by Congressional leaders. (Olive oil, salt, pepper, and some light balance sheet scrutiny, that kind of thing.) Though the hearing focused on traditional finance, the daylong affair included rounds of questions from lawmakers on two big fintech topics: peer-to-peer payment systems and a digital dollar.
There was some early shade thrown at big-name fintechs. “Despite the headlines, disputes within the Zelle network make up less than 10 basis points of all transactions,” said PNC Bank CEO Bill Demchak. “That is not true of unregulated P2P digital payment services.”
Big Banks are financial “leaders,” multiple representatives said, but they won’t take the lead on adopting a CBDC. Banks took a passive approach when asked about a digital U.S. dollar, signaling they will not proactively push implementation along. The crypto industry, meanwhile, has been rallying around asset-backed stablecoins.
The hearing showed lawmakers still see plenty of flaws in traditional finance — areas where they may be more primed to accept disruption from potential incumbents despite increasing skepticism of tech in general. It also demonstrated where regulators are concerned that new tech companies may be perpetuating the same harms. Fintech leaders would be smart to tread carefully with P2P payments and pushing for a CBDC, and to appear keen to do so in a way that doesn’t perpetuate harm to consumers. Otherwise they may find it’s their turn for a Capitol roasting.
— Veronica Irwin (email | twitter) and Ryan Deffenbaugh (email | twitter)
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On the money
On Protocol: Kraken CEO Jesse Powell is stepping down and will be replaced by chief operating officer David Ripley.
Coinbase tested making in-house bets on crypto. A team within the crypto exchange focused on trading completed a $100 million test trade earlier this year, the Wall Street Journal reported. Coinbase executives testified to members of Congress last year that the company didn’t buy or sell digital currencies for its own account. A Coinbase spokesperson told the Journal that it decided against proprietary trading. “Our statements to Congress accurately reflect our actual business activities,” the spokesperson said. “Coinbase does not, and has never, had a proprietary trading business.”
Tether has been ordered to produce documents showing USDT’s backing. A judge in New York ordered the company to produce financial records relating to the backing of USDT as part of a lawsuit alleging Tether conspired to issue the stablecoin as part of a campaign to inflate the price of bitcoin.
The Fed raised interest rates by 75 basis points for the third time in a row. Let’s check in on fintech stocks: Coinbase closed Wednesday down by just half a point; PayPal was roughly the same; Block closed down 3.3%; and SoFi closed the day down 3.4%. The S&P 500 Index closed down 1.7%.
Overheard
Is Brian Moynihan the most conflict-averse banking chief ever? “I’m not sure I agree with Visa’s public statement at all, but it’s their statement. I’m not sure that I don’t agree with it. I just really don’t reflect on other people’s statements, frankly,” the Bank of America CEO said at Wednesday’s House hearing in response to a question about Visa’s move to categorize gun shop transactions.
Moves and hires
Former Square executive Jackie Reses is now chair of Kansas City-based Lead Bank. Reses headed up an investor group that bought the bank earlier this year. She revealed her role to the Kansas City Business Journal, which also reported she planned to move to the area.
Binance has launched a global advisory board of business leaders and former government officials. The group is chaired by Max Baucus, a former U.S. Senate Finance Committee chairman and ambassador to China.
Ryan Breslow has reemerged as CEO of health-focused startup Love. Breslow stepped down as Bolt’s CEO in January.
Ira Auerbach is leading Nasdaq’s new digital assets unit. Auerbach previously led prime broker services at Gemini.
Abhi Pabba, the manager of credit risk for Apple Card, has left Apple. Pabba is joining the credit card startup X1 as chief risk officer.
Spencer Tucker is Yuga Labs’ first chief gaming officer. Tucker previously worked for developers Scopely and Gree International Entertainment.
Chris Hazelton is director of marketing for crypto prime brokerage Floating Point Group. Hazelton joins from Fireblocks, where he most recently led product marketing for crypto and cybersecurity services.
A MESSAGE FROM VERSAPAY
The AR Disconnect happens when AR teams and customers struggle to communicate, causing slowed cash flow and damaged relationships. If that sounds familiar, get our new report covering what’s really hurting customer experience, and what you can do about it.
Learn more
Thanks for reading — see you tomorrow!
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