News Briefing - Crowdfunding, SME And Alternative Finance

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1.UK – FinTech 

Crypto-friendly digital payments company Wirex has been forced to pause the onboarding of new clients in the UK at the behest of the Financial Conduct Authority in order to strengthen its anti-money laundering controls, according to Finextra. 


“The FCA took on supervisory responsibility for anti-money laundering in January last year and required existing crypto busineses to register with it by 15 December this year in order to enforce compliance.

The Wirex app allows users to buy, exchange and spend both cryptocurrencies and traditional fiat currencies in conjunction with a multicurrency payment card.

The company - which serves nearly 3.5 million customers worldwide - says it will dedicate resources to further strengthen its 5AMLD compliance protocols.” 

 

 

2. UK - FinTech 

 

AltFi reports: 


“The pandemic has prompted a wave of new people towards fintech investment apps. But this younger generation of investors are taking on bigger financial risks than they should, the Financial Conduct Authority (FCA), the UK financial regulator, has warned. 

Research from the FCA says a younger cohort of people, more skewed more towards being female, under 40 and from a BAME background, are looking more to financial investment products.  

It flags cryptocurrencies and foreign exchange as particular areas of concern as well as saying that 38 per cent of those surveyed did not list a single "functional reason" for investing in their top three reasons. In addition, more than 4 in 10 did not view ‘losing some money’ as one of the risks of investing.” 

 

3. UK – FinTech 


Finextra reports: 


“HSBC has launched a mobile banking offshoot, Kinetic, to cater to the needs of the UK business community. 

Developed on the back of insights from over 3,000 small business owners, HSBC Kinetic will enable small to medium sized businesses (SMEs) to open savings and current accounts within minutes, and efficiently manage business transactions such as direct debits, standing orders and future payments. 

The launch of this platform is a timely development for small business owners and the self-employed, the number of which have spiked in recent months because of the economic downturn, as HSBC’s global head of digital business banking channels Nadya Hijazi and head of small business banking Peter McIntyre explained to Finextra. 

According to HSBC’s research, less than a third of UK-based SMEs feel completely confident in their ability to stay on top of their finances in real-time. Top areas for concern include finding time to manage their cash, and identifying what actions to take as a result of what their finances are telling them. 

HSBC Kinetic goes some way to resolving this issue – already boasting over 5,000 users, from food delivery and technology companies to small retailers, and even entities in the medical sector. 

The app’s unique selling point, however, is that it is built on Google Cloud technology, which enables HSBC to leverage its existing infrastructure in order to scale-up the service with speed, if needed, and efficiently implement any updates, in line with customer feedback.” 

 

4. UK – FinTech 

 

Commission-free share trading platform Freetrade has closed a £50m series B funding round, coming less than a year after a huge crowdfunding round, according to AltFi. 


Freetrade has been one of the fintech companies to benefit from the pandemic, which has seen a growing number of retail investors put their cash into stocks. Initially seeing a surge in interest in the March market turmoil in 2020, Freetrade has gone on to launch a paid-for service as well as lay the groundwork for international expansion since the start of the coronavirus pandemic. It is now seeing quarterly trading volumes exceed £1bn. 

The deal saw participation from Left Lane Capital, The Growth Fund of L Catterton, the largest global consumer-focused private equity firm, and LSE-listed VC, Draper Esprit. 

The round would be one of the largest fundraises by a savings and investment-focused fintech, following Nutmeg's £45m raise led by Goldman Sachs two years ago. 

Led by CEO Adam Dodds, who confirmed the story of the new fundraise on social media yesterday, Freetrade last raised £7.1m in May 2020 in a public crowdfunding round. In total 8,500 retail investors participated in the crowdfunding.” 

 

5. US – FinTech 


Crowdfundinsider reports on regulatory rumbles in cryptoland: 


“US Federal Reserve Chairperson Jerome Powell has cautioned that transacting in digital currencies such as Bitcoin can pose significant risks due to the high volatility nature of these new assets. 

Powell noted that virtual currencies remain highly volatile. He pointed out that Bitcoin may not serve as an effective store of value, especially considering that these so-called currencies are not “backed by anything.”  

Powell, whose comments came during a panel discussion on Monday that was hosted by the Bank of International Settlements (BIS), stated that cryptocurrencies are primarily used for “speculation,” instead of serving as a medium-of-exchange or “means of payment.” 

Powell pointed out that they’re “more of an asset for speculation, so they’re also not particularly in use as a means of payment.” He added that it’s “more a speculative asset that’s essentially a substitute for gold, rather than for the dollar.” 

He went on to comment on whether the Fed would issue its own digital currency by noting that they were “exploring” the feasibility or usefulness of providing such an option. However, he clarified that they are “not in a mode of trying to make a decision at this point.”  

Powell also mentioned that the Fed is currently experimenting with this new technology and looking into various policies. 

Last month, Powell had returned to Capitol Hill for a hearing on the House side pertaining to Monetary Policy and the State of the Economy. Once again, much of the discussion hovered around COVID, monetary policy and his opinion on the economy, but at one point Powell was asked about the possibility of a Central Bank Digital Currency (CBDC) or digital dollar. Similar to his statements during the Senate hearing last month, Powell said there are many technology and policy questions that need to be answered. 

Powell said that 2021 is going to be an important year for the Fed initiative on CBDCs as they will be engaging with the public including forthcoming events that he did not want to announce at the hearing. 

“We want to have a public dialogue,” said Chairman Powell. 

As covered in February 2021, US Treasury Secretary Janet Yellen had stated that Bitcoin is an “extremely inefficient” way to settle financial transactions. 

Yellen had commented on how the digital currency’s price fell sharply (as usual) during morning trading hours (on Feb 22), but then stayed above the $53,000 mark for an extended period of time. 

The Treasury Secretary’s statements came after Elon Musk’s Tesla acquired $1.5 billion in Bitcoin (BTC) and had already made around a billion dollars in unrealized profits when the crypto’s price surged past the $57,000 mark last month. 

Bitcoin is trading at well over $54,000 at the time of writing, after surpassing the $61,000 mark briefly but then correcting to current levels.”