Uncle Sean's Update - 4/8/22

​ Happy Friday!!!
 
April is Community Banking Month!  Don’t forget to sign up here to receive the Uncle Sean Update straight to your inbox every week.  Here is the Uncle Sean Update for 4/8/22:
 

• The Fed released the March FOMC Minutes this week showing general consensus is to reduce the size of the Fed Balance Sheet by up to $95B per month ($60B in Treasury Securities and $35B in Agency MBS) as conditions warrant and most likely a 50 bps interest rate increase - all beginning at the May FOMC meeting (provided all data forecasts come to fruition).
• Adding on for more strong employment data to support Fed tightening, initial unemployment claims fell to 166,000 (estimate was 200,000) for the week ended April 2 – the lowest in 54 years going back to November 1968.

 

• FIS Worldpay announced that they are the first global merchant acquirer to allow merchants to receive settlement in USDC (USD Coin as issued by Circle) for both crypto-native as well as traditional businesses to drive digital currency adoption.

 

• American Express expands their partnership with i2C (card issuing, lending, and payments platform) to North America stating that “the American Express network is ‘open for business’ with fintechs by creating a plug-and-play onboarding platform to bring innovative products to market at speed.”

 

• The Clearing House (TCH) makes it official this week by announcing the increase of the transaction value limit to $1 million on the RTP® network effective April 18.  This is an increase from the current transaction limit of $100,000 and follows the previously announced increase to the Same-Day ACH transaction limit to $1 million which took place on March 18.

 

• GoDo (fintech earned wage access “EWA” platform) partners with Highnote (card issuer processor and program manager) to launch the GoDo Card - a Mastercard prepaid GPR debit card issued by Sutton Bank.   

 

• More and more financial institutions are continuing the trend of dropping NSF and / or revising overdraft programs for other fee related services.
• Fifth Third Bank announced they will eliminate NSF fees for consumer accounts and highlights Fifth Third Momentum Banking giving customers various options to get access to their money faster and address liquidity issues.
• Stanford Federal Credit Union also announced the elimination of NSF fees for its members and is in the process of revising their entire overdraft protection program.

 

• Some high profile regulators giving crypto related speeches caught my attention this week.  The punchline is that U.S. regulators are embracing newer digital technologies and ramping up investor / consumer protections – NOT attempting to block or ban crypto as other countries have done….  Meaning digital assets / cryptocurrencies are largely here to stay.
• The messages are clear and consistent – protection of consumers and retail investors, thwart illegal use, mitigate market risks, and guard against systemic financial risks, while encouraging innovation (whew – I’m glad that’s not my job to accomplish all of that – LOL).  And the regulators certainly appear to be working together to deliver that consistent messaging.
• U.S. Treasury Secretary Janet Yellen’s speech this week reiterated that crypto regulations should support responsible innovation while managing risks.
• SEC Chairman Gary Gensler’s speech on Monday focused on regulating crypto markets the same as other exchanges an protection of crypto investors with an emphasis on:
• Retail investor protections
• Teaming up with the Commodities Futures Trading Commission
• Register and regulate crypto platforms, including working to separate out the custody of assets to minimize risk
• Acting Comptroller of the Currency Michael Hsu echoed extremely similar comments today discussing regulation, architecture, and interoperability of stablecoins.

 

• Meanwhile (also important for my fintech friends), the FDIC issued FIL-16-2022 Notification of Engaging in Crypto-Related Activities reminding bankers that all FDIC-supervised institutions “that are considering engaging in crypto-related activities to notify the FDIC of their intent and to provide all necessary information that would allow the FDIC to engage with the institution regarding related risks. Any FDIC-supervised institution that is already engaged in crypto-related activities should promptly notify the FDIC.”

 

• “That escalated quickly” (in my best Ron Burgundy voice)….  Early this year it was reported that Fast (one-click online checkout firm) was looking to potentially raise additional Series C equity capital.  Then reports came out late last week that Fast had hired Morgan Stanley for a possible sale.  Early this week Fast announced on their website that they will be shutting down operations effective April 15.  This comes after a $102M Series B in Jan 2021 and total capital raises of $124.5M with Stripe as lead in the Series A and Series B rounds.
• NPR has a good summary detailing that Fast AF, Inc. (that is not a typo) allegedly generated $600K last year in top line revenue, but had a $10M monthly cash burn (those numbers are not typo’s either) – WHOA NELLY!  Well shucks, there’s yer problem right there!
• No down round, no layoffs, just an abrupt shutdown. 
• I get it.  It’s not like another $100M or so was going to fix that cash burn and excessive spending pattern; and I’m guessing the Stripe brothers were tired of paying for that party.
• A piece of good news for some of the employees – Affirm is making job offers to many of Fast's engineers.
• There has been a significant amount of talk this year on how VC multiples and valuations change materially as interest rates rise.  Unfortunately, this may be the beginning of a rough couple of years for firms that still have needs for additional equity funding for cash flow with a longer break-even window.  Maybe the adage of “move fast and break things” only applies when interest rates are near zero…???

 

• Bolt (one-click online checkout firm, and yes – competitor to Fast) announced an agreement to acquire Wyre (fiat-to-crypto and payments infrastructure firm) to power up the industry’s first one-click crypto checkout.  CoinDesk has a good summary pinning the deal at $1.5B.

 

• I started to cover Jamie Dimon’s Annual Shareholder Letter that was released Monday, but I changed my mind – LOL!!!!  If you really want to – you can read up on it here.  Spoiler alert – the U.S. economy is strong, interest rates need to rise to fight inflation, competitive and regulatory threats abound, the war in Ukraine and Russian sanctions will slow the global economy.  I know – shocking revelations, right (sarcasm)?!?!

 

• Notable FinTech funding for the week:
• Unifimoney (digital wealth mgmt. platform for banks and CU’s) raised $10M in Seed round to “extend its coverage of alternative assets including collectables, sports memorabilia and NFT's in addition to a full suite of retirement accounts with both traditional and alternative asset IRA's.”  Future products include an investment rewards CC for FI customers.
• RenoFI (residential renovation lending platform for lenders) raised $14M in Series A funding round to “empower lenders to offer best-in-class financing solutions that better meet the needs of today's homeowners.”
• Remote (international payroll, benefits, HR, and employee onboarding / compliance platform for businesses) raised $300M in Series C funding at a $3B+ valuation.
• Fidel API (financial infrastructure API platform for card transactions) raised $65M in Series B funding round to continue global expansion.
• Binance.US (crypto exchange) raised a massive $200M Seed Round at a $4.5B valuation – WOW that’s a big seed round.
• Ellevest (wealth mgmt. platform designed specifically for women) raised $53M in Series B funding round.
• Vontive (residential mortgage and RE investment platform) raised $25M in Series B plus $110M in debt for total of $135M in capital.

 
 
Random Uncle Sean Stuff:

• The NCAA Final Four and Championship basketball games were fantastic!  Congrats to the University of Kansas Jayhawks for overcoming a 16 point deficit (the largest in NCAA title game history) to win the NCAA Men’s National Championship!  Equally as exciting – congrats to the University of South Carolina Gamecocks for a dominating performance to win the NCAA Women’s National Championship!
• And now, as we begin to carefully emerge from years of hibernation within our own socially isolated (and many times depressed) Covid cocoons, a ray of light begins to emerge…  Baseball is here!!!  Seen by many as the true beginning of spring thus exiting a multi-year winter of our discontent (see what I did there – LOL).  Regardless if it is MLB or your local Little League, baseball appeals to all of our senses and social needs.  From the wide expanse of the bright green field to the smell of leather and freshly cut grass (excluding the pungent nature of Icy Hot and pine tar), to the crack of a bat, the click-clack of cleats on concrete, and the snap of the ball as it hits the catcher’s glove.  The sun on our skin and the taste of your favorite ballpark indulgence (for me it is hot dogs, definitely hot dogs, yes – more hot dogs please) and the comradery of a team including family, friends, and water-cooler discussions.  Ahhhh yes, spring is here; and with it comes new beginnings.  WOW – that was deep!!!! 😊
• Here come the Dad Jokes:
• Beer is now cheaper than gas.  So drink, don’t drive.
• If you replace your potato chips with grapefruit as a snack you can lose up to 90% of what little joy you still have left in your life!!!
• I decided to make sure Aunt Patty woke up with a big smile on her face Saturday morning.  Now I’m not allowed to have Sharpies in the house anymore…  😊

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.