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Illustration: Aïda Amer/Axios

Show me a fast-growing fintech, whether in crypto or anywhere else, and I'll show you a company struggling to scale its compliance operation.

Driving the news: Robinhood, fresh off last week's $70 million FINRA fine, is planning to pay another eight-figure fine to the New York State Department of Financial Services, for violating cybersecurity and anti-money-laundering regulations.

What we're reading: ProPublica has a deep dive into the way in which hundreds of customers of Chime, the most valuable American neobank, have been locked out of their accounts.

  • The culprit: Chime's algorithms don't seem able to be able to reliably tell the difference between benefits fraud and genuine payments.

What's next: Crypto giant Circle is planning to go public via SPAC, at a valuation of $4.5 billion. The risk factors in its deal sheet include ongoing investigations by both the SEC and OFAC, the Office of Foreign Assets Control.

  • Also cited: "The uncertain regulatory status" of Circle's flagship USDC stablecoin, as well as the fact that Circle relies on third parties for complying with know-your-customer regulations.

The bottom line: Fintechs learn from their mistakes. If you're dealing with a startup, you have to expect mistakes — and if it's growing fast, you shouldn't expect that you'll be able to reach a human who can help solve the problem.

Go deeper

How crypto jammed the Senate

Illustration: Shoshana Gordon/Axios

In a sign of the times, cryptocurrency regulations held up a massive infrastructure bill in the U.S. Senate.

Catch up quick: A crypto tax reporting amendment to the $1 trillion package sought to bring in some $28 billion in new tax revenue.

  • A vote was held today at around 4:30 p.m. ET, potentially determining how the crypto industry evolves in the U.S. —  in a bill completely unrelated to crypto. The amendment needed unanimous consent to make the cut, but an objection from Sen. Richard Shelby (R-Ala.) prevented it from being adopted.

The big picture: As CoinDesk’s Nikhilesh De reports, the crypto industry fears the passage of the bill might lead to businesses and developers leaving the U.S.

  • At issue is a provision that would broadly define the term "broker," leading to fears that non-broker entities would be forced to shut down for non-compliance.
  • Brokers specifically need identifying information from customers when facilitating crypto transactions, which miners, validators, developers and hardware manufacturers – the firms and individuals undergirding the crypto economy – may not have.
  • These companies may choose to leave the U.S., lock out U.S. customers or just shut down their operations if forced to comply with these regulations, putting a dent in a rapidly-growing industry within the U.S.

The latest:  Despite much angst on crypto Twitter, the Senate rejected a compromise on Monday to narrow the scope of the rule to only those entities that actually facilitate transactions for customers.

  • The industry's eyes now turn to the House of Representatives, which could modify the language before passing the bill.
Updated 1 hour ago - World

Brazil senators vote to recommend criminal charges for Bolsonaro

Brazilian senators vote on probe into President Bolsonaro's handling of pandemic. Photo: Gustavo Minas/Bloomberg via Getty Images

A Brazilian Senate committee Tuesday voted to approve a report recommending President Jair Bolsonaro be charged with a raft of criminal indictments, including crimes against humanity over his response to the COVID-19 pandemic, per AP.

Why it matters: Bolsonaro has become the face of a right-wing approach to the pandemic that includes repudiating vaccines and masks and resisting lockdowns and other mitigation measures. The Senate report holds him personally responsible for half of the country's 600,000 deaths.

Former Georgetown tennis coach pleads guilty to accepting admissions bribes

Gordon Ernst (left) former head tennis coach at Georgetown, outside a courthouse in Boston in 2019. Photo: Jessica Rinaldi/The Boston Globe via Getty Images

A former Georgetown University head tennis coach has pleaded guilty Tuesday to bribery charges related to facilitating the admission of prospective applicants.

Why it matters: Gordon Ernst solicited and accepted bribes from William Singer, ringleader of the cheating scheme uncovered by Operation Varsity Blues, and families in exchange for helping prospective applicants get into Georgetown as student athletes, according to the Justice Department.