Fintech Fall Fashion

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Adam Atlas Attorneys at Law laying out all the fintech and crypto that’s fit to wear this fall.

1. BAAS APIs. A Banking-As-A-Service (BAAS) API is an API that allows a fintech or other platform to seamlessly roll banking into their services. Long ago, fintechs spent millions on money transmitter licenses, then, a new generation spent hundreds of thousands of dollars to find a bank and build an integration. Now, they spend a few thousand a month to tag along one someone else’s integration. From grand-daddy Synapse to second acts like ColumnMercury and Solid, there seems to be a new API bank launched every week. While the OCC (that regulates banks) favors digitization, it and the Fed are paying close attention to these integrations and the risks they pose for consumers and banks.

2. Fintech-As-A-Service (FAAS) is the broader suite of platforms that offer more than just bank accounts, they also offer card issuing, ACH processing, money transmission, crypto custody or exchange, lending and even custody of securities. Leading institutions behind the smorgasbord of offerings are Silicon Valley Bank (for well funded startups that like the FBO model), Evolve Bank & TrustPrime TrustMetropolitan Commercial BankCross River BankSignature Bank (backing Circle‘s stablecoin USDC), Emigrant Bank and increasingly Zero Hash and Wyre along with Prime Trust for crypto-focused projects. (ps a Stablecoin laugh over here). Caselaw from these new models includes a claim concerning funds in an FBO account, a dispute over frozen fundsissues over state licensing of a trust.

3. Acquiring Consolidation. The boomer acquiring universe continues its cannibalistic consolidation which is putting more fear into market participants than excitement. Lawyers (like us) and investment bankers are, however, earning great fees. The payfac was supposed to spur creativity in acquiring. Payfacs have sometimes had a hard time competing against dominant players like PaypalStripe and Adyen. It seems payfac has settled into a new onramp for ISOs. The payfac model did spawn a clutch of platform integrations that help new payfacs avoid the high cost of tech including PayrixFinix and Infinicept and it gave new life to established gateway platforms like NMI. Btw, congrats to our alumni USAePay and IRISCRM who were both recently acquired by NMI. Everyone and their uncle has an issuing program now, so we won’t reheat that story in this update.

4. Privacy-As-a-Service. PAAS is tomorrow today; it is the first tangible step towards the inevitable automation of law. Why pay us piles of money to read the CCPA and GDPR rules when you can have it done for you on subscription. (Btw, US entities that hold data on EU persons need to comply with GDPR.) We are only too pleased to allow this part of our practice to be automated. As with sanction screening automation privacy policy and practice automation is a step in the right direction. We expect this to eventually become mandatory. Don’t worry, we’ll find another way to add value. 

5. Crypto Winter II: Featuring the Coldest Rug-pulls Ever! When our tally of frozen or lost crypto in the current winter reached $83 billion, we stopped counting. Implosions of CelsiusVoyagerLuna and others are comforting to the platforms that are taking the long route by spending millions to pick up and maintain state money transmitter and virtual currency licenses. As hodlers burn their furniture to keep warm and run their mines this winter, our Altas (haha) of now has a bit on Crypto Skeptics for a few laughs under the blankets: Tolly McTrollface was the pioneer in that space and is now being succeeded by Amy Castor her partner David Gerard, the Crypto Critics’ Corner podcast by
Cas Piancey and Bennett Tomlin
 and a handful of others. No fintech movement is complete without an association, so the crypto skeptics have one also – the Center for Emerging Technology Policy. They also had what Cointelegraph called a ‘haters’ conference which was as funny as it was serious and really a perfect way to begin a plummet to the next bottom.

6. Oh Canada! Thanks to the freedom convoy of truckers, there has been a lot of clucking about increased regulation of payments in Canada. Four highlights emerge: (1) Oddly, Crowfunding platforms need an MSB registration – even if they do not touch funds. (2) Payment processors are supposed to call Fintrac (which now has a youtube channel) and ask if they are MSBs or not; Canadian MSB law and regs are not clear enough, hence the need for a regulator judgment call on each model. (3) Sometime in the next year or so, payment processors (MSB or not) and MSBs will have to register with the Bank of Canada under the new Retail Payments Activities Act. (4) We’ve summarized Canadian crypto law here.Please say hi to us at Money2020 Oct 24-24, we spent all our tooth fairy money on admission.Adam Atlas Attorneys at Law is licensed in New York and Quebec. This email is ATTORNEY ADVERTISING. Nothing in this e-mail should be construed as a legal opinion or commentary on laws other than in the two jurisdictions where the author is admitted.

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Adam Atlas Attorneys at Law