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BFD Expert Voices - Private Credit

BFD Expert Voices

Even facing a Securities and Exchange Commission lawsuit, U.S. crypto exchange Coinbase is now the industry's regulatory frontman. 

Why it matters: Coinbase is taking over a role that once belonged to FTX, whose collapse contributed to a crackdown that threatens to push much of the industry abroad. CEO Brian Armstrong spoke to Lucinda on the company's new role from the nation's capital yesterday.

What's happening: "We're at a really important moment in the U.S. right now where there's been some bad actors in crypto. We now have a moment to finally get some regular rules on the book," Armstrong says on the timing of his visit.

On Wednesday, Armstrong met with the New Democrat Coalition in D.C., and yesterday Coinbase bought a full-page ad in the Washington Post calling for greater regulatory clarity.

"I think the shifting dynamics and the regulatory crackdown ... it does position us really well to be the global leader in it," he adds.

Be smart: Coinbase asserts it didn't break SEC rules. Its current fight with the commission could upend the crypto industry.

The SEC suit alleges that several cryptocurrencies trading on its platform are securities, which would put each of the organizations behind them under more onerous reporting standards, resulting in higher costs.

Flashback: FTX turned itself into a political machine by spending aggressively on lobbying and campaign contributions — with then-CEO Sam Bankman-Fried saying he might spend as much as $1 billion in the 2024 election cycle. (He later walked that back.)

Now, with the collapse of FTX and the sidelining of Binance stateside, the U.S. crypto community is again condensing around Coinbase.

"Last summer, Sam Bankman-Fried was knocking down the doors of House and the Senate," says Blockchain Association CEO Kristin Smith. "There was a void when he got arrested that needed to be filled, and I think Brian being here is really important."

Coinbase had been putting the groundwork in before the FTX collapse. In 2021, it hired Kara Calvert as head of U.S. policy and Faryar Shirzad as chief policy officer.

What's next: The company plans to increase spending on pro-crypto lobbying and political contributions in the next few political cycles, a spokesperson told Lucinda.

Coinbase was the most active crypto player in terms of lobbying contributions last year, donating $3.4 million.

Between the lines: Coinbase is, in many ways, the natural new old face. The publicly traded company is the country's largest crypto exchange.

One fun thing: Though most of his time is still spent on product, Armstrong acknowledges focusing more on D.C. But visiting the U.S. capital every eight weeks or so has not given him a taste for working in the public sector.

"I don't think so," Armstrong says when asked about entering politics. "I like delegating things to different leaders in the organization. But ultimately, if some tie needs to get broken or if I need to make a call, I can just make it. Whereas in their world, they may just debate it for two years."

1. Interview: Coinbase’s Brian Armstrong

Brian Armstrong, co-founder and CEO of Coinbase Global. Photo: Victor J. Blue/Bloomberg via Getty Images

Crypto startup Ethena, which is developing a stablecoin secured by ethereum derivatives, raised $6 million in seed funding led by Dragonfly, the company told Ryan exclusively.

Why it matters: Developed in response to Terra's failure, the new stablecoin has a novel approach to maintaining its dollar peg.

Plus: Monday's Pro Rata, on a global tax deal

2. A new kind of stablecoin

Illustration of several different coins combined to form one glitching coin

The 2022 acquisition of The Gathering Spot by minority-focused neobank Greenwood has spiraled into a courtroom dispute with allegations of a missed multimillion-dollar payment and questionable accounting practices, Axios' Thomas Wheatley wrote.

Why it matters: The founders of The Gathering Spot co-working hub allege that Bank of America and Cohen Circle-backed Greenwood — last valued at $325 million — stiffed them and other investors on a "substantial" agreed-upon payment.

Plus: Tuesday's Pro Rata, on the SEC's AI concerns

3. Greenwood's lawsuit drama

Greenwood's Paul Judge and Ryan Glover (left photo) and Ryan Wilson and TK Petersen of The Gathering Spot. Photos: Paras Griffin/Getty Images

Crypto-focused VC firms Polychain Capital and CoinFund have raised new funds amidst the global slowdown for startup investment in the sector, Ryan wrote.

Why it matters: The days of crypto megafunds might be over, but after a brutal 18 months for crypto startups, LPs still see some promise.

Plus: Wednesday's Pro Rata, on the DOJ and FTC's new draft merger guidelines

4. Crypto VCs are fundraising again

Illustration of a crypto block with an image of a one hundred dollar bill on one side.

Karat Financial, a Palo Alto-based provider of corporate credit cards for digital creators, raised $40 million in equity financing and $30 million in debt, Axios Pro Media Deals' Tim Baysinger wrote.

Why it matters: Despite the funding downturn, the creator economy is still a $250 billion business that could swell to $450 billion by 2027.

5. Credit cards for the creator economy 

Illustration of a hand cursor holding four credit cards.

Private equity firm Motive Partners has taken a majority stake in With Intelligence, a data analytics provider to the asset management industry, for £400 million, Ryan wrote.

Why it matters: Investors see a need for better data around alternative assets as the private markets move toward an estimated $15 trillion of assets under management by 2027.

Plus: Thursday's Pro Rata, on the cautious return of public listings

6. With Intelligence taken over for £400M

Illustration of stacks of money progressively getting larger with the last one so tall that it goes off screen. 

Data: GlobalData Financial Deals Database; Chart: Axios Visuals

Four of the five top dealmakers for North American M&A experienced declines in the total value of deals they advised on in the first half of 2023, Axios Closer's Nathan Bomey writes.

Goldman Sachs, Bank of America, JPMorgan and Morgan Stanley deal values were down by 47%, 8%, 33% and 49%, respectively, according to the GlobalData Financial Deals Database.

The impact: Wall Street's biggest banks shed about 21,000 workers in the first half of the year, Bloomberg reports.

7. Charted: North America's M&A advisers

Welcome to Friday, Fintech readers. Research associate Natalie Breymeyer here with your weekly digest. But first, catch Lucinda's interview of Brian Armstrong. 

🏺 Natalie is spending the weekend at the pottery studio, attempting to get better at throwing large amounts of clay on the wheel. She's counting on fun music and the studio's resident dog to keep morale up. 

🙏 Thanks, as always, to Rob Reinalda for today's edits.

And thanks to you for reading. Please tell your fintech friends about this newsletter. They can sign up here.

July 21, 2023

1. Interview: Coinbase’s Brian Armstrong