Kraken launches Institutional Arm to capitalize on surging Bitcoin ETF demand 💸🫡; Webull to go public in $7.3B SPAC deal 😲; Affirm sets sights on UK expansion and beyond 🚀🇬🇧
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back 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:
Block delivers strong 2023 results and sets sights on consumer banking growth 🏦📈 [analyzing the most important numbers, uncovering what they mean to see why Cash App’s new (re)focus is the best possible strategy + some juicy bonus reads]
Klarna replaces 700 human agents with ChatGPT as it prepares for a $20 billion IPO in 2024 😳 [the time has come & how leveraging AI the BNPL giant has done one of the greatest comebacks in FinTech + more deep dives & reads on AI + Finance]
Stripe's valuation rebounds to $65 billion as payments giant buys back employee shares 😮💨 [what it’s all about & why it’s rather disappointing + lots of bonus reads into Stripe and beyond]
FinTech M&A is heating up: Fiserv & Amadeus battle for Shift4 in a $9B deal 😳💸 [where’s the money & value at + some juicy bonus reads inside]
HSBC's new FX app Zing shows slow growth 📉😬 [it’s very slow… & what this tells us + some bonus reads inside]
Apple to share BNPL data with Experian, impacting credit reports 💳🍎 [what this means + some deeper dives into BNPL and Apple building for the AI-first finance]
As for today, here are the 3 fascinating FinTech stories that were disrupting the world of finance as we know it. This was another intense week in the financial technology space, so make sure to check all the above stories.
Kraken launches Institutional Arm to capitalize on surging Bitcoin ETF demand 💸🫡
The news 🗞️ San Francisco-based cryptocurrency exchange Kraken has launched a new division called Kraken Institutional in a bid to cater to growing demand from institutional investors flocking to Bitcoin exchange-traded funds (ETFs).
Let’s take a look at this.
More on this 👉 The dedicated institutional arm consolidates Kraken's existing offerings like spot trading, over-the-counter (OTC) trading, staking, and custody solutions under one umbrella brand. Kraken is positioning the new unit to provide asset managers, hedge funds, and high-net-worth individuals tailored services to meet their specific crypto trading and investment needs.
The launch comes on the heels of the approval of several spot bitcoin ETFs in the U.S. this year, which have attracted over $6 billion in inflows in just two months. Kraken is thus looking to leverage this surge in institutional demand to expand its client base beyond retail traders.
Head2Head 🥊 The move sets up direct competition with Coinbase's COIN 0.00%↑ institutional arm Coinbase Prime, which currently serves as custodian for eight of the ten bitcoin spot ETFs accounting for over 90% of assets under management. Kraken hopes to diversify the ecosystem and reduce reliance on a single dominant player in custody solutions for bitcoin ETFs.
As part of the new offering, Kraken also plans to launch a qualified custody service later this year through its banking subsidiary Kraken Financial.
The company has also been actively working on expanding its regulatory compliance across Europe, with a recent virtual asset service provider (VASP) registration from Dutch authorities.
✈️ THE TAKEAWAY
Why it matters? 🤔 This is an obvious and much-expected move from the crypto heavyweight. With surging interest from institutional investors and more entrants expected on the heels of the successful bitcoin ETF launches, Kraken is making a strategic push to strengthen its institutional footing and emerge as a leading provider of enterprise-grade crypto services. Capturing even a fraction of the exponentially growing assets in bitcoin ETFs could supercharge Kraken's growth. That said, maybe Kraken IPO is next? 👀
ICYMI: Ether overtakes Bitcoin as top institutional crypto asset 📈 [what’s happening & what this means + more reads inside]
Coinbase's Strategic Leap: strong 2023 earnings signal bright prospects for 2024 and beyond 🤑🚀 [a holistic view at Coinbase focusing on financial performance, market position, strategic initiatives, and potential risks & opportunities to see why their future is brighter than many think]
Webull to go public in $7.3 billion SPAC deal 😲
The news 🗞️ Online brokerage Webull is set to go public in a $7.3 billion merger with a special purpose acquisition company (SPAC), after failing in previous attempts at an initial public offering (IPO) partly due to its past crypto offerings.
Let’s take a look.
More on this 👉 The New York-based company, which launched its trading platform in the U.S. in 2018, agreed to combine with SK Growth Opportunities Corp and expects to start trading on the Nasdaq in the second half of 2024. The deal would give Webull an enterprise value of around $7.3 billion. Not bad!
According to Webull's U.S. CEO Anthony Denier, efforts to IPO were hampered by the company previously offering cryptocurrency trading to users, something the SEC has not looked kindly on.
Webull thus sold its crypto asset business in late 2023 to remove this regulatory uncertainty and pave the way for the public listing.
And it seems it’s finally happening…
Why SPAC? 🤔 The SPAC route provides more certainty on valuation upfront compared to a traditional IPO, Denier said. The blank-check deal is expected to raise about $100 million for Webull, which it plans to use to expand internationally and add new products.
Webull saw huge growth during the pandemic as retail investing boomed, reaching 20 million registered users globally. It has focused on more active traders compared to rivals like Robinhood HOOD 0.00%↑, providing tools for technical analysis.
One must note that the impending public listing comes as fintechs tread carefully amid increased regulatory attention on companies with ties to China. While Webull counts Chinese tech giants Xiaomi and Alibaba among its early backers, Denier stressed it is not majority Chinese-owned.
✈️ THE TAKEAWAY
Looking ahead 👀 First and foremost, the SPAC deal marks a major milestone for Webull following outstanding growth. Its continued international expansion and additional product lines like banking and margin lending could further boost revenues down the line. Of course, as it courts the scrutiny of public markets, retaining users in an uncertain macro climate will be key. Looking at the big picture, as Webull joins the public markets, the blank-check space shows signs of warming up again after a two-year freeze. With volatility easing and demand recovering, reformed SPACs could regain their appeal for high-growth tech firms like Webull seeking more reliable routes to public listings. It’s been a while!
ICYMI: Robinhood posts surprise profit in Q4 2023, eyes return to growth 😳📈 [a closer look to see whether Robinhood is worth your time and money in 2024]
Affirm sets sights on UK expansion and beyond 🚀🇬🇧
The news 🗞️ Affirm AFRM 0.00%↑, the San Francisco-based Buy Now, Pay Later (BNPL) provider, is preparing to expand into the United Kingdom, with a launch expected soon. The company sees strong appetite in the UK for the type of longer-term, interest-bearing installment loans that Affirm specializes in, according to Chief Revenue Officer Wayne Pommen.
Let’s take a quick look at this.
More on this 👉 Beyond the UK, Affirm is eyeing additional markets in Western Europe, partly to support key existing partners like Amazon AMZN 0.00%↑ and Shopify SHOP 0.00%↑ that have a major presence there. Distribution partnerships that provide access to many merchants and consumers quickly are a key growth priority. Recent tie-ups with Google Pay, Walmart self-checkout, and Amazon Business are early examples.
ICYMI: Payments are eating Shopify while Shopify is eating FinTech 🛍️💳 [latest numbers, what they mean & how Shopify is disrupting the whole FinTech ecosystem]
The company is also moving into verticals beyond retail goods, with elective healthcare identified as a promising area given Affirm’s focus on larger-ticket, out-of-pocket purchases. Compared to more specialized BNPL players in these verticals, Affirm sees competitive advantages from its larger user base, brand, scale, and product capabilities.
✈️ THE TAKEAWAY
Looking ahead 👀 Affirm’s international expansion plans and push into new spending categories will further heat up competition in the rapidly evolving BNPL space. As regulation increases as well, Affirm’s ability to offer a differentiated BNPL model while managing risks and costs will be tested. However, the growth opportunities are immense for Affirm and other top BNPL firms cementing their positions. Watch this out!
ICYMI: Affirm stock surges on strong Q2 results: is now the time to buy? 🤔📈 [looking at the key numbers, uncovering what they mean to see what’s the potential upside for 2024]
🔎 What else I’m watching
Binanced 👀 On Friday, a federal judge signed off on Binance's $4.3B plea deal with the U.S. Department of Justice, CoinDesk reported. During a sentencing hearing, Judge Richard Jones of the U.S. District Court for the Western District of Washington approved the fine, though did not yet sign off on a monitor for the exchange, a condition of the deal. The DOJ announced the settlement last November, alleging Binance violated sanctions and anti-money-laundering laws over many years. Ex-CEO Changpeng Zhao, who was forced to step down, pleaded guilty to separate charges and is currently scheduled to be sentenced in late April. ICYMI: BREAKING: Binance. CZ to step down & Binance to pay $4.3 billion in fines 🤯 [a closer look at this craziness with the details, data + what it means for the industry & what’s next]
Worldline’s net loss 📉 Shares of French payments processor Worldline slipped after the company reported a net loss of €817M for 2023, compared to a profit of €211M a year earlier. This was due to a €1.15B impairment charge in merchant services and a deteriorating outlook. The company reported a 6% rise in full-year revenue, in line with revised guidance. However, merchant services experienced a contrasting performance, and financial services reported a 1.3% decline in revenue. Worldline has instituted a cost-cutting program, taking the ax to 1400 jobs, which will cost around €250M but deliver a €200M run-rate cash cost savings from 2025. The company's share price has been propped up by the purchase of a seven percent stake by Crédit Agricole. ICYMI: France’s Crédit Agricole bets on payments giant Worldline 💸 [why it makes perfect sense & what’s next + a closer look at Worldline]
Mastercard + MTN 💳📱 Mastercard has partnered with MTN Group Fintech to provide secure mobile payment solutions to African people and businesses. This partnership aims to support MTN's goal of becoming Africa's main fintech platform and will impact 13 African markets. The collaboration will promote digital commerce and enhance opportunities for small and medium-sized enterprises (SMEs) by facilitating seamless commercial operations, better payments acceptance, access to affordable credit, and secure digital tools. The partnership will introduce virtual and physical Mastercard companion cards to every MoMo wallet, granting users access to over 100 million acceptance locations globally. It will also provide SMEs with payment acceptance solutions and expand access to mobile money remittance services. This collaboration underscores Mastercard's commitment to promoting financial inclusion worldwide. ICYMI: Official: Mastercard makes strategic FinTech investment in Africa's MTN 🔴🟠
💸 Following the Money
Simetrik, a financial automation platform based in Colombia, has completed a Series B funding round, raising $55M.
Madrid-based Embat, a treasury management platform, raised $16M in Series A funding. Creandum led the round and was joined by investors including Samaipata, 4Founders, and Venture Friends.
BounceBit, a Bitcoin restaking protocol under development, has raised $6M in a seed funding round co-led by Blockchain Capital and Breyer Capital.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
Your newsletter is simply the best, I read it daily!
The story that caught my eye and made me chuckle was that HSBC's Zing has slow growth. While it's too early to call it Dead On Arrival, it was pretty predictable that HSBC could not deliver on its promise of becoming a fintech. Like an elephant promising to become a ballerina.
Good stuff - many thanks