Daily Tearsheet: Paxos on tradfi and blockchain, the impact of the infrastructure bill on crypto tax regulation, and Klarna in trouble
- Traditional financial institutions are turning to infrastructure providers to move into blockchain/Web3.
- Also, Klarna's issues are indicative of larger problems in BNPL.
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How companies like Paxos bridge the gap between traditional and blockchain-based finance
Blockchain infrastructure companies like Paxos are imagining a new financial system integrated with blockchain technology, and they want to be a part of building the foundation for it, explained Mike Coscetta, head of revenue at Paxos, a global blockchain infrastructure platform — speaking at Tearsheet’s inaugural bankchain conference.
Initially hesitant, most financial institutions are now growing more comfortable with not doing this by themselves, realizing that they can partner with a blockchain vendor in a compliant and secure way. And having waited on the sidelines for quite a while, they’re now eager to board the blockchain train.
The impact of the infrastructure bill on crypto tax regulation
As institutional adoption of cryptocurrency grows, so is the Internal Revenue Service’s pursuit of Americans who aren’t paying or are incorrectly filing taxes on them.
The rules in the Biden administration’s $1 trillion infrastructure bill passed in November 2021 mandate that brokers must report all digital asset transactions, including new requirements to the Securities and Exchange Commission and the Internal Revenue Service.
At Tearsheet’s inaugural Bankchain Conference, TaxBit‘s Seth Wilks took a deep dive into what the infrastructure bill means for crypto tax regulation, accounting guidance for digital assets, and how can a compliance program be created.
The latest briefing
Embedded Briefing: Klarna (and maybe BNPL) in trouble
BNPL industry leader Klarna announced it’s laying off 10% of its workforce. Citing the impending recession and the onset of war in Ukraine as primary reasons, the Swedish fintech will send packing some 700 members of its global workforce.
This is not the only hit Klarna has taken recently. A few months ago, in February, when the initial news broke that Klarna was looking to raise more funds from new and existing investors, it was reported that the firm was seeking a valuation between $50 billion to $60 billion. This month, reports emerged that the firm is looking to raise $1 billion from investors at a much lower valuation. The new round of funding could see the firm valued at $30 billion, down from $46 billion last June.
This brings us to the question, is BNPL even a viable and sustainable business model?
Read more (exclusive to Outlier members)
Just look at the charts
1. Landscape of incumbent-led banks
Source: Brice GROCHE
2. Daily active users of fintech apps have grown 337%
KeyBank sees a bright future in embedded banking
KeyBank announced the release of its end-to-end payment facilitation capabilities, allowing software companies to easily own and process payments — the new offering stems from its acquisition of digital banking platform XUP Payments in November 2021 (PYMNTS)
The future for a US CBDC could be an opportunity
While President Biden signed an executive order in March 2022 directing the government to explore a U.S. Central Bank Digital Currency by placing urgency on research and development of a potential United States CBD, US banks seem dead against it — here’s what they’re missing (Tom Noyes)
Buy burritos with Bitcoin maybe?
Fast-casual chain Chipotle Mexican Grill has begun accepting cryptocurrency payments through Flexa, a digital payments platform, at any Chipotle restaurant across the U.S. — the Flexa platform supports 98 digital currencies, including Bitcoin, ether, and Solana’s SOL (CoinDesk)
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