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Fintech Newsletter for 4/03/21

Fintech news for week ending 4/03/21

Below are news related to  fintech industry this week.

General News

PayPal introduces "Checkout with Crypto."

A couple of weeks back, Tesla, Electric vehicles  and a clean energy company announced that the  people residing in the U.S. could buy Tesla cars with Bitcoins. As of this writing, Tesla accepts Bitcoins as the only form of cryptocurrency. PayPal, which is also one of Elon Musk's first companies know for online payments, this week announced a new addition to its checkout service called "Checkout with Crypto."  that will help people in the U.S to transact with digital cryptocurrency during the checkout process.

Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies." -Dan Schulman, president and CEO, PayPal.

The new feature is smart enough to detect if the buyer has enough cryptocurrency in the digital wallet to make a purchase and will provide the buyer with an option at checkout to use cryptocurrency. Read about digital wallets in our blog post on payments.

Following cryptocurrencies are supported Bitcoin, Litecoin, Ethereum, or Bitcoin Cash.  Buyers can't mix two different cryptocurrencies to make a purchase. Once the customer chooses the cryptocurrency for the purchase, PayPal will convert it to a "Fiat currency" - essentially to traditional currency issued by a country's government.

PayPal's new feature will help make cryptocurrency more transactional rather than treating them as a buy-and-hold asset class.

Suez Canal blockage now clear.

In last week's newsletter, we mentioned the havoc caused by the Suez Canal blockage. The  Ever Given, one of the world's largest ships, which got stuck in the canal, got successfully re-floated earlier this week. There have been reports that all the stranded ships have now passed through the waterway. As per the Journal, The Ever Given shipowner has $3.1 billion in liability coverage. However, 200 ships stuck in the canal are likely to claim money for the losses over the next few weeks. It will be interesting to see how the insurance side of things will uncover for this incident.

Consumer Confidence Index reaches a new 52 week high.

In last week's newsletter, we mentioned that the U.S. jobless claims were heading in the right direction and were the best from the time lockdowns started. However, we also cautioned that the numbers were still higher when compared to pre-covid times. The consumer confidence index(CCI) is a survey done by the conference board to measure consumers' confidence in the economic outlook. CCI trend was   similar to Jobless claims.CCI hit a new  52 week high of 109.7 ,however this is lesser than the pre-pandemic level of 132.6 from February of last year. Contrary to the jobless numbers (where lower is better), higher CCI indicates customers are more willing to spend on the economy.

Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

Archegos fallout impacts certain banks.

Archegos a hedge fund that had taken certain risky leveraged "total return swap" positions  - borrowing money from banks to get economic profit or losses from the portfolio of stocks in exchange for a fee. In essence, the bank owns the underlying asset, and the hedge fund gets any gain or loss. However, if the underlying asset starts to loose value, the bank will make a margin call for hedge funds to place in more collateral. If the hedge fund cannot get more collateral, the bank will sell the underlying asset. Causing a downward spiral effect. Archegos, in the last couple of weeks, have experienced a similar situation, and many prominent U.S. banks had exposure to Archegos. Some of them reportedly have liquidated at the right time ,banks such as Goldman Sachs and Morgan Stanley. While other banks have encountered losses such as Credit Suisse and Nomura holdings.

All threats to the nation's financial system should be addressed -Treasury Secretary Janet Yellen.

U.S. treasure secretary Yellen has expressed interest in resurrecting the dormant hedge fund regulatory group to study risks posed by hedge funds.

Bank of America acquires Axia Technologies.

Axia Technologies,German based health care  payment and technology company focused on "patient payments" was acquired by Bank of America .The terms of the deal was not disclosed in the press release made by the bank.

Venture and IPO

  • Pipe, Miami based B2B financing platform for SaaS companies, raised $150M in new funding.
  • Sightline Payments, Las Vegas-based payments company for the gaming marking, raised $100M in growth funding.
  • Paidy, Japan Based BNPL provider, raised $120M in series D funding.
  • Gro, London based decentralized finance startup, raised $7.1M in seed funding.
  • Spiral, New York-based banking solution for the charitable sector, raised $14m in new funding.
"The future belongs to socially-conscious brands that care as much about giving back to society as they do about generating profits and growth. Spiral plans to pioneer the ethical banking industry by creating a new ecosystem solution for more than 100 million charitable givers and 1.5 million non-profit businesses","Not only does Spiral make it easy and engaging for people to support causes they care about but we also financially reward them so they can personally thrive.- Shawn Melamed, CEO and Co-Founder of Spiral
  • Next insurance, Palo alto, California,  a small business insurance provider, raised $20M in new funding.
  • High radius, Houston-based AI-powered order-to-cash, and treasury solution raised $300M in series C funding.
  • Capitolis, a New York-based SaaS platform for helping banks pool trading resources, raised $90m in series C funding.
  • Ramp, a New York-based corporate card startup, raised $65M.
  • Ethics, a New York-based tech-driven asset management platform that powers personalization for advisors, raised $29m in series B funding.

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