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Data: S&P Capital IQ; Chart: Axios Visuals

Cathie Woods' Ark Fintech Innovation ETF is down roughly 15% since its inception. The fund has lost all of its gains as its major holdings — including Coinbase — tumbled in trading this week.

Why it matters: Investors would've been better off at this point betting on the S&P 500, which is up about 46.8% since the Ark Fintech ETF's creation in February 2019.

Details: The Ark Fintech ETF's stocks include a mix of fintech and e-commerce companies, with Block, Coinbase, Shopify, Twilio, Robinhood and MercadoLibre among its major holdings.

Notably, Coinbase on Tuesday posted earnings that missed estimates, and its stock has plunged since.

Bottom line: Fintech needs to show either a path to profitability or growth to keep investor confidence. Right now, the sector is struggling to do either.

1 big thing: Ark Fintech’s gains gone

Google announced on Wednesday a host of new features around its payments product, including virtual cards that will give consumers more security by hiding their credit or debit card numbers from merchants.

Why it matters: Google's announcement illustrates one reason why one-click checkout-only businesses (ahem, Bolt and Fast) struggle to grow: They're competing not only with each other but with the tech giants.

Details: While many consumers are using one-click checkout buttons, a significant portion are still entering their card information manually on the web, says Bill Ready, president of commerce at Google.

The new virtual card product would address this second cohort of users. Set to be available in its Chrome browser later this year, the cards will be offered via the autofill feature.

Of note: One-click checkout companies generally charge merchants a fee to use their product, which aims to simplify the buying experience by having consumers store their information with a company for repeated use.

That's prevented one-click — which Ready calls push-button — from becoming more ubiquitous. The new virtual card, however, does not require merchants to sign up or pay for the services.

"It creates ubiquity for the consumer, by not having a separate signup process," he says. "It also creates ubiquity for the merchant."

Ready believes the security provided by virtual cards will benefit smaller businesses — which may lack brand recognition and trust —the most.

Google is not charging for the product because the company believes it is a feature of a broader ecosystem that will keep consumers and merchants in the family, so to speak.

"When you have a common store of digital credentials, it's built in an open ecosystem way that can connect with other experiences," Ready says.

2. The BFD: Google's virtual cards

Illustration of a spotlight moving away from a Google logo

Earlier this week, Coinbase for the first time detailed what would happen to user assets if the company were to go bankrupt, a disclosure that helped drive Coinbase’s share price to new lows. 

This felt a bit like the sour icing on top of the crypto crash cake, but Coinbase CFO Alesia Haas tells Axios' Dan Primack that the disclosure was prompted by new SEC guidance, not because of any solvency concerns at Coinbase.

She acknowledges the company could have done a better job communicating the reason for the disclosure, particularly given that it showed up as a "risk factor" in the midst of a market rout. She added that there are no plans to amend the disclosure's language.

Haas didn't take the bait on Dan's question about stock buybacks or take-private considerations, even though the company clearly believes its shares are now undervalued. Were there to be a takeover effort, it's worth remembering that CEO Brian Armstrong holds voting control. 

3. Coinbase bankruptcy pushback

Illustration of a finger in a suit pointing at an 8-bit coin

Terra's Do Kwon has a failed stable coin on his track record (Coindesk)

The CEO of Terra creator Terraform Labs was among the creators of another failed algorithmic stablecoin: Basis Cash.

Arca, a crypto hedge fund with about $500 million under management, sent a note to limited partners Tuesday saying it believes the drop in Terra's stablecoin is a buying opportunity.

Brazilian neobank Nubank is offering crypto trading to its customers, starting with bitcoin and ethereum. 

4. Credit score

Illustration of a credit card headed towards a goal post to score a touchdown.

• Habi, a Bogotá-based home ownership startup, raised $200m in a Series C funding valuing it over $1b. Homebrew and SoftBank Latin America Fund led. http://axios.link/76V8

• Dock, a São Paulo-based full-stack payments platform, raised $110m in funding at a $1.5b valuation led by Lightrock and Silver Lake Waterman, with participation from Riverwood Capital, Viking Global Investors and Sunley House Capital.  www.dock.tech 

• Interswitch, an African payments company, raised $110m from LeapFrog Investments and Tana Africa Capital. http://axios.link/YoSP

• TIFIN, a wealth management fintech, raised $109m in Series D funding valuing it at $842m. Franklin Resources (NYSE: BEN) and Motive Partners invested along with Hamilton Lane. tifin.com

• Deel, a remote hiring startup, has raised $50m in funding valuing it at $12b, Axios' Dan Primack reports. New investors include Laurene Powell Jobs' Emerson Collective, with existing investors including Andreessen Horowitz, Spark Capital and Y Combinator. http://axios.link/eULq

• BVNK, a crypto exchange, raised $40m in Series A funding. Tiger Global led. http://axios.link/CnMZ 

• Token.io, a digital payments startup, raised $40m in funding led by Cota Capital and TempoCap, with participation from Element Ventures, MissionOG and PostFinance as well as past investors Octopus Ventures, Opera Tech Ventures and SBI Investments. http://axios.link/GE8a

• MARA, a pan-African crypto exchange, raised $23m via equity and token sale. Investors included Coinbase Ventures, Alameda Research (FTX) and Distributed Global. http://axios.link/034l

• Cushion, a bank and credit card fee negotiation startup, raised $12m in Series A funding led by Rose Park Advisors, with participation from Flourish Ventures, Vestigo Ventures, TSEF, Green Cow Venture Capital and CMFG. cushion.ai

• Crowdz, an invoice financing company, raised $10m. Citi and Global Cleantech Capital led and were joined by Bold Capital Partners, TFX Ventures and Augment Ventures. http://axios.link/qynu

• Sudozi, a Austin-based financial software maker, raised $4.3m in seed funding. Pear VC led and was joined by S3 Ventures and Mischief. www.sudozi.com

• Payments startup Checkout.com announced plans to acquire French remote identity verification startup Ubble. http://axios.link/wmoX

• Orion Advisor Solutions announced plans to acquire TownSquare Capital. http://axios.link/3U9Y

• 6th Man Ventures, a VC firm founded by Mike Dudas and StayTuned Digital CEO Serge Kassardjian, is closing on a new, $145m fund. http://axios.link/tJVW

• NFT startup Sorare struck a partnership with Major League Baseball to launch an NFT-based fantasy sports platform. http://axios.link/3FS3

5. Deals of the day

Good morning, fintech friends. It's Thursday.

Situational awareness: Axios is heading to Davos! Register here to learn more about our attendee-exclusive events, meet-ups and more. We'll see you there.

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May 12, 2022

1 big thing: Ark Fintech’s gains gone