MoneyNeverSleeps: Fintech SPACs and Digital Assets | Clubhouse | Jay Z, Jack Dorsey and Bitcoin

In this Money Talks segment, Pete and Eoin riff on Pete’s first experience with Clubhouse, Jay Z and Jack Dorsey’s Bitcoin Trust for Africa and India, fintech valuations and SPACs, Citi’s fat finger, efficient crypto markets and grief for Revolut over raising fees.

MoneyNeverSleeps is sponsored by PAT Fintech, the training partner that demystifies fintech and digital finance for financial services professionals.

MAIN STORIES WE COVERED:

Why can’t Europe build a Clubhouse? (Sifted, 17-Feb-21)
Thoughts from the author, Nicholas Colin, pointed to a fragmented European market (we agreed), a lack of experience with scaling social media platforms (we agreed here too), and perhaps a less favourable European mindset towards social media (we’re too snobby in Europe? Really? Not the Irish, at least!).

Jay Z and Jack Dorsey’s Bitcoin fund for Africa and India (TechCrunch, 12-Feb-21)
Jay Z and Jack Dorsey are getting together to start up a Bitcoin Trust and putting 500 Bitcoin into it between the two of them, which is currently worth $23.6 million. The fund will be set up as a blind trust, and Jay and Jack won’t be giving any direction, but they are looking to hire three board members. So, Pete Townsend applied for the job, and we’ll let you know in upcoming episodes how that all goes down.

Fintech valuation multiples with SPACs (Fintech Blueprint Newsletter, Lex Sokolin, 15-Feb-21)
What fintech company is going to turn down an approach from the likes of a Chamath Palihapitaya with a SPAC (special purpose acquisition company) and the funding to bring it public, as opposed to traditional routes. The valuations on the upcoming fintechs going the SPAC route are very high, but comparing the fintechs’ market valuations to those of a bank is non-sensical, and here’s why:

Eoin’s thought’s: “Where’s the real upside with a traditional bank? When you look at some of the fintechs, they’ve got far more upside as they grow and build out functionality because they’re software companies. It’s the ability to adapt and pivot that the banks don’t have.”

Pete nodding his head: “When you get out of that old-school banking model, based on paper and old pipes and plumbing and fax machines, into a digital environment with real-time data and APIs, you’re creating so many more monetization opportunities for what you’re doing and for the data you’re generating. There’s just far more upside in fintech than with traditional banks.”

Citi loses legal battle over $0.5 billion funds transfer gaffe (Finextra, 17-Feb-21)
Pete’s thoughts: “This Citi ‘clerical error’ is just one example, but I’ve been thinking about how inefficient the public markets are, not in terms of trading and price discovery, but after the trade.

It’s the post-trade world where so many problems still exist, like what happened with Robinhood’s clearing process during the GameStop pandemonium. We don’t have these same problems in the crypto markets where the trade is the settlement and everything is pre-funded.”

RELATED STORIES:
Just another institutionally crazy week in crypto:  Arca’s “That’s Our Two Satoshis” newsletter (Jeff Dorman, 16-Feb-21)

‘Free’ current account provider tries to make money: Fast-growing Revolut to increase its fees in blow to its 1.2 million users (Irish Independent, 16-Feb-21)

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