Insights in India's complex relationship with crypto

Hello fintech family,

FinTech reviews will be particularly interesting in the coming months when investors are trying to reconcile rapid growth with worsening economic outlets. Both the finance and the technology sector have experienced a wide and steep sale this year, as investors are concerned about increasing loan losses and higher interest rates. It is particularly hard hit by listed fintech company.

let's take Affirm, for example: Last week, the "Buy Now, Pay Later" business announced that it is planning to be operational profitably by next July-previously expected than from Wall Street analysts. But instead of making a round of victory, the management spent most of the winning call to assure investors that it could survive.

The online loan was bombarded with questions of how his loan portfolio will develop in a downturn. "There is a fair debate about maybe some players, but to be honest, the debate is wrong when it comes to affirm," Chief Financial Officer Michael Linford.

Most Sell-Side analysts remain optimistic that it will take “several quarters” for the wider market to come on board, James FauCette, analyst at Morgan Stanley, wrote in a note.

In addition, we have to announce some exciting news: In cooperation with S&P Intelligence, Fintechft offers you an exclusive first look at the latest fundraising and deal trends in the fintech sector twice a month. Do you have a friend or colleague who would be interested in getting this data directly into his inbox? You can send you this link to register.

Visit us personally or online at ft Business of Luxury Summit from May 18 to 20, to hear from luxury leaders such as the British Vogue, Valentino, Ermenegildo and Ysl.

India sends mixed signals to the crypto crowd

In all the chaos caused by the recent crypto core melt, including the experiment by Coinbase, to dispel the fears that it could be bankrupt, you may have missed a strange complaint when the crypto exchange in the investor.

Coinbase is one of the greatest crypto outfit that tries to penetrate the second most populous nation in the world. The company listed at the Nasdaq started at the beginning of the last month in India with great sensation and used India's impressive digital payment platform Unified Payments Interface (UPI) to support customers in buying crypto.

But as Chief Executive Brian Armstrong said last week, the Upi party was almost over as quickly as it started.

"A few days after the start, we deactivated Upi due to informal pressure from the Reserve Bank of India," said Armstrong.

Before the failed start of Upi, Armstrong warned that entry into the Indian market was "not an easy step". Nevertheless, the company says that it has invested $ 150 million in Indian crypto startups and increased its workforce in the country from 300 to 1,000

"India is a unique market in that the Supreme Court decided that they could not ban crypto, but there are elements in the government, including the Reserve Bank of India who are not so positive about it."

A CEO who accuses the central bank and banking supervision of a country to put pressure behind the scenes to withdraw a product? Only in crypto. But, as Armstrong admitted, India's relationship with crypto is complicated.

plans for a complete ban for years have been buzzing through the Indian legislator for years, and the RBI ban banks in 2018 even provide services for companies that deal with crypto. But a judgment of the Supreme Court two years later raised the RBI. For many crypto fans, this victory was regarded as the legitimation they needed to go all over-digital coins were still in a legal gray area, but the Supreme Court seemed to have supported them.

Then further good news at the beginning of this year-the Ministry of Finance said it supported a digital central bank Coin and would charge a high tax on crypto transactions. For serious crypto supporters, this was a painful but largely positive development: if the government can tax us, this means that crypto is now legal. Right?

fountain. . . Just three days after Coinbase had connected his crypto exchange with India Upi, which is considered a gateway for hundreds of millions of other potential crypto customers, it found that there was a problem.

The National Payments Corporation of India, the umbrella organization for India's payment and billing systems for retail, said that she was "not aware of any crypto exchange that uses the UPI platform". The NCPI is connected to the RBI. Coinbase pulled the plug.

Although crypto is not strictly illegal, India's central bank governor Shaktikanta said: "Private cryptocurrencies are a great threat to our financial and macroeconomic stability." At a press conference at the beginning of this year, he insisted that Kryptos would even undermine the ability of the RBI to maintain financial stability.

The RBI was beaten by the Supreme Court, but it will not stand by and see how crypto money exchanges across the country open. ( chloé cornish )

Fascination fintech

Instant Coins tether sent shock waves through the cryptom market last week, when his smaller rival terrausd failed, his connection to the dollar was maintained. The binding was quickly remedied, but the Snafu raised new concerns about the risks of stablecoins, which should offer dealers a safe place between bets on volatile tokens.

The Wall Street prepares the stage for the crypto future FTX founder Sam Bankman-Fried, one of the most influential CEOs of Crypto, said the FT that Bitcoin as a payment network has no future. But the Wall Street banks lay the foundation that digital assets play a larger role in the investment industry. Citigroup, Bny Mellon and Wells Fargo joined a financing round for Taslos, a US developer of cryptocurrency trade. Goldman Sachs and Barclays have invested in Elwood Technologies, the trading platform for cryptocurrencies, which was founded by the British hedge fund billionaire Alan Howard, and Nomura is based on a new company to help institutional customers invest in Krypto.

VCS immerse yourself in the art world Two of the largest managers of cryptocurrency venture funds, Andreessen Horowitz and Paradigm, have started to invest directly in NFTS, which underlines the growing interest of professional investors in collectors. The trend will compare fund managers of traditional art collectors who have also accepted digital assets.

deal tracker

The total value of the FinTech fusions and takeovers announced in April fell by 58 percent to $ 870 million compared to over $ 2 billion in the same period of the previous year. According to the S&P analysis, the total number of the deals decreased by 13 percent from 40 to 35.

Quickfire questions and answers

I recently drunk coffee with Pushkar Mukewar, CEO and co -founder of Drip Capital, a company based in Palo Alto that "buy now, pay later" for small and medium -sized companies, also known as trade financing. Although the concept of BNPL has long existed in the B2B area, Mukewar automates its company the underwriting for transactions that were historically too small than that larger banks could take care of it.

How did you start? When we consider trade financing as an industry, SMEs have largely been ignored in the past. The industry is dominated by old banks such as the HSBCs and Citibanks in the world, which have strongly paper -based, manual processes. The industry has not seen much innovation for decades. And most of these banks have concentrated on the company's corporate segment in the past. It is simply not worth taking out an SME because the economy of your transaction does not make any sense at this time. In the SMB segment you will only make secure financing.

What do you offer? We have two main products: the accelerated payment solution that focuses on exporters and we have introduced the BNPP solution for importers based in the USA. We are primarily aimed at exporters from emerging countries. We started in India in 2016-17. And because the idea was always to build a global platform, we also started in Mexico in 2018. For us, these two regions are the prevailing priorities in the exporter solution. In 2020 we also saw a very strong demand for a BNPL solution of importers during the pandemic, and therefore we introduced them. What we do on the US front is the fastest growing business. In the past 18 months it has grown from zero to almost 20 percent of the total business.

How much have you collected so far? As far as equity is concerned, we have so far applied about $ 86 million. And our main investors are accel partners, Sequoia Capital, Y Combinator and Wing VC. . . We are currently working on the financing page or debt page with two large banks and a number of family offices and credit funds. Our biggest partner is Barclays. And the other institutional partner is East West Bank. We have spent over $ 500 million on the financing capital side.

How big is the appetite of investors in this type of debt? We have seen great interest from institutional investors and family offices that deal with engagements in this investment class. We focus on SMEs in emerging countries that lack loans and canalize capital from developed markets such as the USA, where every investor is looking for return. We were able to demonstrate that this is actually an investment class with a very, very high performance, since the returns are high in the face of the short duration of the investment class with very low losses. And I think the problem in the past was that many people were unable to develop this asset class on a large scale.

What is the revenue model? We earn money with every transaction processed on the platform. There is a package fee per transaction and then there is an interest component that depends on the duration of the transaction and the time frame.