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Meta's stablecoin ambitions have officially come to a close, as the Diem Foundation — the consortium it founded in 2019 to build a new, digital payments network — sold to Silvergate Capital for $182 million.

Why it matters: The sale might represent a retreat by Meta, the company formerly known as Facebook, from blockchain tech and payments more broadly, but it also signals growing interest in stablecoins from more traditional financial institutions.

What's happening: Meta has unloaded Diem, the organization formerly known as Libra, in a stock and cash deal that will help it recoup at least some of the investment it made in attempting to build a new, blockchain-based payment regime.

Under the terms of the agreement, Silvergate, a commercial bank with a digital asset exchange, issued 1,221,217 shares of Class A common stock to Diem and paid $50 million in cash. Based on its closing price, the aggregate value of the deal was $182 million.

Flashback: The Libra project was announced to much fanfare in June 2019 with support from 27 tech and finance partners, including big names like Visa, Mastercard, Stripe, PayPal, eBay, Lyft, Uber, and Spotify.

But, almost immediately, the project received pushback from lawmakers and regulators in the U.S. and abroad, driving several of its largest partners to drop out of the Libra Association just months after launch.

The big picture: Stablecoins remain a flashpoint among regulators. Meanwhile, private issuers are awaiting more clarity from policymakers on how these new payment technologies will be regulated.

In November, a panel led by Treasury Secretary Janet Yellen issued a report recommending Congress pass legislation to regulate stablecoin issuers like banks or make certain only banks could be issuers.

Yes, but: In this case, the issue was less about a tech company issuing an unregulated stablecoin in general, and more about Facebook entering the space in particular.

Given the number of scandals Facebook has faced over the last several years, it always seemed like a long shot that Diem would pass muster with policymakers.

For example: In October, five senators wrote a letter urging Meta to discontinue plans to launch a digital currency and payments network.

Their beef? Recent allegations that Facebook knew its algorithms could harm adolescents and teens. And, of course, the company's general indifference to the harms its products may cause.

Of note: Silvergate (NYSE: SI) is not exactly a new player in this space — the bank aggressively dove into crypto around 2018 when most avoided it over money-laundering fears. 

In part due to its early entry into the industry, the company's value has risen 723% since its 2019 IPO, to $3.3 billion.

What's next: Diem was already working with Silvergate to issue dollar-denominated stablecoins as part of a partnership meant to appease U.S. regulators, but the acquisition could hasten that release.

In its announcement, Silvergate highlighted how its bank could integrate Diem technology with its existing real-time payments platform to launch a stablecoin later this year.

1 big thing: Diem's new home

An image of a coin with Facebook CEO Mark Zuckerberg on the front

Wayflyer, an Ireland-based startup providing revenue-based financing for e-commerce businesses, raised $150 million in Series B funding at a $1.6 billion valuation.

Why it's the BFD: "Revenue-based financing" and "capital-as-a-service" are hot buzzwords for private companies looking to fund operations without giving away equity or entering into a long-term debt facility.

Startups like Lighter Capital, Yardline, and Pipe have flooded the market over the last few years to offer short-term financing solutions based on a company’s operating metrics. 

These offerings are particularly appealing in sectors like e-commerce, where there’s a significant lag between upfront payments necessary for raw materials and the backend reporting of sales.

How it works: Wayflyer provides financing to e-commerce merchants to make inventory purchases or invest in their businesses. Merchants then repay it using a percentage of revenue until the balance is paid off.

Unlike a bank or other lender, Wayflyer takes into account a number of different inputs to determine a borrower's creditworthiness — things like Shopify and Woo Commerce data, TrustPilot reviews, Google Analytics and info about how its shipping services are performing.

By looking beyond a business’ credit file, Wayflyer (and other companies that operate in the space) say they can make better, faster decisions than banks.

The bottom line: Revenue-based financing might not be for everyone, but with today’s cheap cost of capital, and algorithmic decision-making, it could provide an attractive alternative to more traditional business loans.

2. The BFD: $150M for e-commerce financing

Illustration of a shopping cart icon full of money. 

Bolt’s Ryan Breslow is transitioning from CEO of his $11 billion company Monday to the executive chair position. COO Maju Kuruvilla, as first reported by TechCrunch's Connie Loizos, will take over as the chief executive.

Why it matters: A one-click checkout company with decacorn status, Bolt was already well known in the industry. But Breslow gave the company a whole new kind of fame last week when he went on Twitter last week to accuse payments darling Stripe and accelerator Y Combinator of anti-competitive behavior.

That's actually understating things: He called the duo “the Mob Bosses of Silicon Valley.”

Much of the venture capital community — many of whom have ties to Stripe and YC — jumped into the fray, labeling Breslow's accusations as conspiracy theories and pointing out factual errors in this thread. 

But many supported the sentiment of Breslow's post: It gathered some 9,000 "likes" on Twitter. 

The details: Breslow told Axios' Dan Primack the transition has been in the works for weeks, and acquisitions will be a key part of his job. Bolt is reportedly in talks at the moment to raise at an even higher valuation — potentially giving it plenty of cash to make deals.

Bottom line: Regardless of where you fall on the Twitter debate, if you didn't know Bolt before, you certainly do now.

3. Bolt shake-up

Illustration of a luggage conveyor belt with a lightning bolt among the suitcases

Bitcoin network transaction volume surpasses AmEx, research shows (Blockworks)

Bitcoin eclipsed $3 trillion in payment transactions last year, surpassing American Express and Discover, according to data from cryptocurrency investment firm NYDIG.

The second most populous country in the world is getting into crypto. The Reserve Bank of India will launch its own digital currency on April 1 and will tax income on the transfer of virtual assets at 30% — lifting worries of a trading ban. Bitcoin rose 2% on the news.

Watching out for the Bitfinex hackers (CoinDesk)

The hackers who stole from Bitfinex in 2016 have moved about $3.56 billion in crypto from that heist, per blockchain analytics firm Elliptic. The perpetrators are unlikely to cash out the funds, especially at prominent exchanges.

4. Credit score

Illustration of positive and negative trend lines coming out of center point.

• Keo World, a buy now, pay later financing platform for SMBs, raised a debt facility of up to $500m from Hayfin Capital Management. www.keoworld.com

• Chargebee, a San Francisco-based subscription management company, raised $250m valuing it at around $3.75b. Tiger Global and Sequoia Capital led and were joined by Insight Partners, Sapphire, and Steadview Capital. www.chargebee.com

• Betterfly, a Chilean insurtech startup, raised $125m in Series C funding at a $1b valuation. Glade Brook led and was joined by Greycroft, Lightrock, and insiders QED Investors and DST Global. http://axios.link/RJuB 

• Phantom, a San Francisco-based maker of a wallet apps for the Solana ecosystem, raised $109m. Paradigm led valuing it at $1.2b. phantom.app

• OpenGamma, a London-based financial software-as-a-service firm, raised $21m in new funding led by Allianz X, the digital investments arm of the Allianz Group. http://axios.link/ugWt

• Lex, a New York-based commercial real estate securities marketplace, raised $15m in Series A funding. Peak6 led, and was joined by Khosla Ventures, MetaProp, Two Lanterns, MUFG Innovation Partners and Gaingels. http://axios.link/mhjX 

• Nestcoin, an Africa-based company investing in and building web3 applications, raised $6.45m in pre-seed funding. Investors included Alameda Research, Distributed Global, Alter Global, Serena Ventures, A&T Capital, MSA Capital, and 4DX Ventures. http://axios.link/LYNc

• NachoNacho, a San Francisco-based SaaS product marketplace, raised $3m in seed funding. AltaIR Capital led and was joined by Moving Capital, PMC, and s16vc. www.nachonacho.com

• Amount, a Chicago-based banking technology provider, acquired SMB loan and account origination platform Linear Financial Technologies. http://axios.link/b9kl

• Amber Group, a crypto finance startup, bought Japan-licensed crypto exchange operator DeCurret through its local subsidiary, WhaleFin Holdings Japan. http://axios.link/g3po

• ConsenSys acquired MyCrypto, a Redondo Beach, Calif.-based wallet for managing ethereum accounts. Investors such as Polychain Capital backed MyCrypto. http://axios.link/myRX

• DNA Payments, a London-based vertically integrated payments provider, has acquired Peterborough’s Kwalitas. http://axios.link/5iiq

5. Deals of the day

• Crypto.com, a Singapore-based cryptocurrency platform, named Giuseppe Giuliani as managing director of the Crypto.com Exchange. He was previously Kraken's global head of institutional relationships and services.

• Maya Frai joined Greylock’s consumer investing team. She will be focusing on areas including crypto and web3.

6. It's personnel

🙏 Thanks for reading Axios Pro Fintech! If you're not a subscriber and you've made it this far, you should sign up today. 

7. Memes and mumbles

Good morning, Fintech Deals readers, and happy Lunar New Year. 🐯

Situational awareness: "Web3 is the future, or a scam, or both," writes Recode's Peter Kafka. Good, we're glad someone finally cleared that up. 

February 01, 2022

1 big thing: Diem's new home