Uncle Sean's Update - 5/13/22

Happy Friday!!!
 
Oooh – It’s Friday the 13th!!!!  Watch out for black cats, broken mirrors, and don’t walk underneath any ladders – we’ve had enough bad luck this week called the Dow, Nasdaq, Crypto, and S&P!  Here is the Uncle Sean Update for 5/13/22:
 

• Things in the crypto world got really interesting this week….
  • We saw an unprecedented meltdown of Terra’s UST/Luna this week.  There is a lot more to this and I won’t even pretend to cover all of it (CNET also has a good summary), but here are the basics:
    • The TerraUSD Stablecoin UST (an algorithmic stablecoin NOT to be confused with Tether USDT) as a “stablecoin”, should be pegged to the U.S. Dollar on a 1:1 basis, but fell to a low of $0.12 Friday morning - akin to a bank run (yeah – I said it), liquidity became the primary concern in a hurry.  The related LUNA cryptocurrency also fell from $80 to $0 (yes, zero) during the week.  This sent shockwaves through the rest of the crypto markets (systemic risk, anyone???), but other leading stablecoins such as Tether USDT, recovered quickly.
  • Coinbase had a rough week citing 1Q2022 results showing declining users, declining trading volume, huge decrease in trading revenues, and a big quarterly loss of $430M.  But that’s not the story.  Embedded in their regulatory filing is a reminder that if a bankruptcy were to occur, customers could lose all of their holdings (see paragraph 1 on page 83 of the Coinbase 10Q).  Ugh – I know it’s a new SEC disclosure requirement (ref SAB 121), but tough timing for that kind of messaging on the heels of a rough Q1 earnings report while the stock is down 70% YTD; and experiencing major outages as crypto prices plunge (along with the rest of the markets to be completely fair). 
    • But YES, this is what happens when the company is not FDIC or SIPC insured, your entire investment including principal is at risk and individuals may likely become unsecured creditors in a bankruptcy case.  No real immediate concerns of BK for Coinbase specifically, but it shines more light onto the fact that this industry needs regulatory involvement for ordinary investor protections – sooner rather than later.
  • No coincidence, Treasury Secretary Janet Yellen told congress to act quickly to pass legislation to regulate stablecoins referencing Terra UST and Tether USDT as a warning.  Yellen stated, “They present the same kind of risks that we have known for centuries in connection with bank runs.”

 

• Solo Funds gets cease-and-desist order from Connecticut Department of Banking stating that all of the loans made to Connecticut residents from June 2018 – August 2021 contained a “tip” bumping the effective APR for the micro-loans from 43% - 4,280%.

 

• Qoins (PFM app to pay down consumer debt) partners with Bond infrastructure platform to launch the Qoins Debit Card (a Visa Prepaid GPR issued by Evolve Bank & Trust) in less than four weeks.

 

• Visa curates pool of BNPL Partners for issuers.

 

• ConnectOne Bank announced a partnership with Nymbus to launch “niche-based vertical” digital banking solution (i.e. direct digital bank) by year-end 2022.

 

• And another Credit Union buying a bank…  DFCU Financial (Charter 61844; $6.4B Total Assets) is acquiring First Citrus Bank (FDIC 34899; $689M Total Assets), BHC is First Citrus Bancorporation, Inc. (FR 3547841).
  • For those keeping score, this is the 7th CU acquisition of a bank YTD for 2022 compared to 13 in 2021, 7 in 2020, and 16 in 2019 (source: FedFis).

 

• FIS announces embedded finance offering developed in partnership with Treasury Prime making it easier for small and mid-sized financial institutions on FIS core to become sponsor banks by via FIS API.

 

• Visa’s global head of fintech and crypto, Terry Angelos is leaving to become the new CEO of DriveWealth the brokerage infrastructure firm powering investing apps such as Unifimoney, Cash App, Douugh, and others.

 

• NYDIG announces partnership with Jack Henry to allow Jack Henry Banno FI’s to provide bitcoin services (buy-hold-sell) for consumer and business accounts.

 

• Hanover Bancorp had their IPO this week at $21 per share raising approximately $27M under the Nasdaq symbol HNVR. 

 

• Instacart announced they have confidentially filed a S-1 draft registration statement with the SEC for a potential IPO.

 

• Notable FinTech funding for the week:
  • Deserve (credit card platform ) secures a new $250M credit facility after experiencing 650% growth in transaction volume and 800% growth in receivables in 2021.
  • Chainalysis (blockchain analysis and tracking firm) raised $170M in Series F funding round at a $8.6B valuation.
  • Talos (crypto trading platform) raised $105M in Series B round at a 1.25B valuation.
  • Cushion (credit card and bank fee negotiation company) raised $12M in Series A funding readying for their bill pay solution for 100,000 current customers plus an additional six-figure waitlist. 
  • Ness (health-based credit card rewards app) raised $15.5M in Seed funding. 
  • Altro (credit builder based on existing subscription payments) raised $18M in Series A funding round.
  • TIFIN (AI wealth mgmt) raised $109M in Series D at a $842M valuation.

 
 
Random Uncle Sean Stuff:

• You HAVE to see this – In Dolni Morava, Czech Republic, the world’s longest pedestrian suspension bridge is now open.  WOW – not even going to lie, those pics made me dizzy and gave me butterflies!!!!  I can hear Aunt Patty now saying, “oh hell no!!!”  LOL!!!  😲
• I am at that age now when I have to select my year of birth online, it’s like a big spin on the Price is Right wheel waiting, waiting, and waiting for my number to come up…
• Gonna have to start taking Dramamine to deal with these stock market swings.  WHEW, what a crazy week.
• Deep thought from Uncle Sean…  Always remember that you are unique….  Just like everyone else!  😊

 
 
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.