Fintech 🧠 Food - The US Dollar for Non-US Citizens

Plus; Atomic lets users switch recurring payments with one click & Dorsey to takeover at Square.

Hey everyone 👋, welcome to Brainfood, the weekly read to go deeper into Fintech news, events, and analysis. Join the 33,640 others by clicking below, and to the regular readers, thank you. 🙏

Hey Fintech Nerds 👋

How was your higher-rates-for-longer September? It’s clear inflation is sticky, and so are high interest rates. That means lower valuations for tech stocks and more focus on fixed-income products. You can see that shift in the future of embedded finance (last week’s Rant).

But you can also see it in a more general change of attitudes across the industry. Banks are more open to partnerships; Fintech companies are pivoting into cross-selling and focussing on cost-cutting.

The right revenue growth solves everything.

Revenue is oxygen.

It’s runway, it’s growth, but only if it’s profitable.

👀 New customers are new revenue. Atomic launched PayLink to auto-switch recurring payments. Switching direct deposit is easy, but managing the admin of payments? That’s hard. Very curious to see if we get more switching and from who to who.

👀 Square is having a changing of the guard. The CEO is out; Jack Dorsey is in. This likely long-planned switch follows a shift in investor sentiment on payments companies. Can this founder make a leaner, meaner Square? Is he a “wartime” CEO type or too nice?

📣 What if we had an open, FedNow meets UPI for the world? A dollar for non-US citizens. The biggest pain point is still cross-boder. You can see this in Wise partnering with SWIFT, and Moneygram launching a non-custodial wallet. That’s why I think the world is still massively discounting the impact of Stablecoins.

With that, let’s do this 💪

Here's this week's Brainfood in summary

📣 Rant: The US Dollar for Non-US Citizens

💸 4 Fintech Companies:

  1. Caliza - The USD API for Brazil

  2. Moment - Drivewealth for Credit 

  3. Caplight - Bloomberg for the Pre IPO market 

  4. 73 Strings - Private market valuations AI and automation

👀 Things to Know:

You’re probably missing half of Brainfood if you use Gmail. Click below to see the full thing!

Weekly Rant 📣

The US Dollar for Non-US Citizens

Demand for the US Dollar outside the US is exploding, especially in LATAM. 

Citizens and small businesses in LATAM and the global south pay a "not a big country" tax when trying to do basic things. 

  • Want to store local currency? Great. Inflation is going to eat away at that. The rate in Argentina is 124%, and many already use US Dollar Bills instead of local currency.

  • Want to pay or get paid? Great. Your FX is going to suck, and you're going to pay high fees plus local taxes. In Brazil, consumers pay an additional 6.3% tax if they purchase from foreign websites or want to use AWS. 

If you want to work for a US company, use US-based products, or hedge local currency risk, living in dollars as much as possible is far better. 

The US Dollar is stable, has lower fees, and offers global investment opportunities. Corporations have held US Dollars in local banks to solve this for decades. They do this with “Eurodollars” or dollars held in offshore banks.

The rise of Stablecoins mirrors the rise of another “Dollar for everyone else” the Eurodollar.

This option isn't available to consumers.

A new payments rail is emerging to meet this demand.

The US Dollar for everyone else. Also known as a US Dollar Stablecoin.

Now, before you vomit, I want you to read this chart.

It's time to take Stablecoins seriously.

Stablecoins are becoming the killer app for Crypto, and you can no longer afford to ignore the subject.

The parallels with the development of the Eurodollar are more than noteworthy. Those who ignore the past

A huge hat tip to Nic Carter and his exceptional presentation is available here.

Credit also to Izzy Kaminska for first drawing the "Eurodollar" parallel.

At a Glance:

  1.  History lesson: What is the Eurodollar?

    1. A Eurodollar is simply a dollar held in an offshore bank account. 

    2. Why did it evolve to become so big? 1955 to 1962. The London interest rate arbitrage and Midland Bank.

    3. Why did it evolve to become so big? The Eurobond and government debt drove the Eurodollar growth from 1962 to the early 70s.

    4. Why did it evolve to become so big? In the 1970s oil exporters and globalization drove Eurodollar demand.

    5. Today, Sanctions, hyperinflation, and de-risking make the market more complex than ever.

  2. What's a stablecoin?

    1. A digital, programmable, and global dollar payment rail for everyone else

    2. Data now shows it is being used at scale

    3. Stablecoin use cases vary, but the pattern is "where gatekeepers disadvantage us.

    4. Deposit tokens create an "open loop" form of USD deposit

    5. Stablecoins offer faster, lower-cost, global, instant settlement rails that are upgradable, programmable, and permissionless.

  3. Stablecoin usage patterns in payments (sampled)

    1. PayPal is largely signaling long-term intent but has limited volume (for now).

    2. WorldPay plays in long-tail markets and can accept more payments there.

    3. Lemoncash is a Crypto wallet with 1.6m users in Argentina solving cross-border payroll.

    4. MFS Africa connects mobile money to payment rails in Africa

  4. The risks

    1. Lack of interoperability (between stablecoins, networks, and TradFi)

    2. A lack of credibility

    3. Compatibility with the official system's processes (AML etc)

    4. Being too closely tied to the systemic risk and flaws of the existing financial system

    5. Relative lack of yield compared to current TradFi offerings

  5. The opportunity

    1. Mainstream adoption through "trusted brands.

    2. Automating payment “schleps.”

    3. A dollar rail for everyone else

    4. Adopted standards would be a huge unlock

    5. Let's make a better global payment rail

  6. Meet the StableEuroDollar

1. History Lesson: What's a Eurodollar?

a) What is a Eurodollar? A Eurodollar is simply a dollar held in an offshore bank account. These banks are not subject to the jurisdiction of the Federal Reserve and may be subject to "less regulation" than deposits held in the US. 

The term "Eurodollar" applies to any dollar deposit held offshore. The "Euro" part has no relationship to the European Union (and the term pre-dates it). It works for other offshore currencies; a Euro outside Europe is a Euroeuro, and Yen becomes the Euroyen.

In 2016, the Eurodollar market was estimated to be worth $13trn.

b) Why did it evolve? The term Eurodollar comes from the evolution during the post-war era, when, as Europe was rebuilding, European banks had an excess of US Dollar banknotes. There are several theories for why the first account appeared. These include 

  • The Soviet Union's need to trade internationally 

  • The fall of the British Pound and current account deficit 

  • The limited yield on domestic USD (owing to Regulation Q) 

  • A surplus of offshore dollars following WW2. 

A deeper analysis from here is summarized below.

c) The Eurodollar 1955 to 1962. The history of the Eurodollar in popular discourse is reduced to a surplus of offshore dollars following the WW2 era. This paper reads much more into the loss of confidence in the pound and the rise of the dollar globally, combined with the rate restrictions on domestic dollars. During this time, investors needed a stable asset, yield, and the ability to trade across borders. The offshore dollar was the perfect solution. 

In 1955, Midland Bank began offering the ability to deposit USD at a rate higher than any domestic US bank could offer due to Regulation Q. Midland was able to arbitrage the USD stability vs. the rate they'd receive on Sterling from the Bank of England. The central bank stated it would "much prefer" the bank to accept Sterling deposits but "would not object" to them receiving dollar deposits.

👉 Takeaway: The market finds a way to meet an unmet need.

👉 Takeaway: If it's useful to the local economy the regulator will typically not object

d) The Eurodollar 1962 to early 70s. The spread available between dollars held in London vs. New York meant European banks began holding short-term assets in London, followed by several North American banks. 1962 saw the launch of the Eurobond, loans to Governments issued by banks backed by dollar deposits held in London. Belgium was the first known country to take such a bond. 

While there was nervousness about the abundance of "hot money" moving through London, it was also clear the Eurodollar market was helping London retain its position as a global financial center. The US view then was that a crisis and volatility would soon wipe out the risky Eurodollar market. 

👉 Takeaway: The apathy of incumbents and home markets when an asset is viewed as "too risky" for the mainstream.

👉 Takeaway: The controls the US placed to try and stop the outflow of dollars are a major reason why Bretton Woods fell apart in the 1970s.

e) The 1970s and beyond. During the oil crisis of the early 1970s, oil-exporting countries in the Middle East had an excess of US dollars. In 1970, the net size of the Eurodollar market was estimated at $42bn. By 1982, it was $925 billion. As supply chains became global, the USA became a net importer, key global commodities were priced in dollars, and the dollar became the world's reserve currency. 

f) Today: Sanctions, hyperinflation, and de-risking. The world has changed since the pandemic, the invasion of Ukraine, and the inflation spike that followed. Countries are "de-risking" their supply chain to avoid overreliance on one country, such as China. Driven by a mix of demands to avoid shutdowns like the pandemic or to keep up with the US import controls.

Countries like India and much of the global south rely on exports from Russia for staples like grain, oil, and gas. While they can't pay in US dollars, the dollars will find a way. The offshore Eurodollar is exchangeable for non-sanctioned currencies in markets like Dubai or Singapore. If you're a big enough business or a country, business still needs to get done and still will get done, regardless of the geopolitics.

Then there are consumers and businesses in the global south whose own local currencies have massively devalued against the US dollar and are subject to heavy local taxes and export duties.

What do they do?

Enter: Stablecoins. 

2. What is a Stablecoin?

a) A digital, programmable, and global dollar (or Euro) rail for everyone else. A Stablecoin is a digital representation of a currency (e.g., the US Dollar) designed to maintain a "peg." Popular Stablecoins like USDC, USDP, and the new PayPal PyUSD are backed by reserves of US Dollars (or equivalents). There are other types (that long-term I'm much more interested in), but these 1:1-backed Stablecoins are the subject of discussion for today.

We had digital money before. When you give PayPal $1 USD from your bank account, they move that $1 USD into a PayPal bank account, and you now have "digital money" sitting in a digital wallet. The dollar is still there; it's just we now have an accounting abstraction over the top. 

This type of digital money is unique because it is usually issued as a token on a globally accessible, interoperable network

Unlike other digital money, this network is global, permissionless, and programmable. 

Money in your PayPal wallet can be sent to other wallets, sure. But it's not default compatible with any other wallet. PayPal (or Square or Apple or whomever) has to do work to integrate various payment rails, networks, and types. 

It's a protocol like email.

💡 Permissionless: I need a wallet address to send you $1 as a stablecoin.

💡 Programmable: I could write code to send you that $1 if you send me 1 ETH, and that would happen automatically, regardless of what wallet you use

Stablecoins are quietly becoming the killer app for "Crypto." 

b) Data shows it is being used at scale. The annual volume transacted in Stablecoins is now approaching Visa and ahead of PayPal. This chart isn't perfect because Stablecoins aren't used purely for payments (they're settling trades too).

Perhaps the more important point is that in a market where everyone is down on Crypto and ignoring it, it has become the dominant use case in "Crypto." It averages 5m weekly active and 10m monthly active users.  

Stablecoin Usage in rising economies has been consistent since the “bull market” of 2021. An obvious hypothesis is that for these markets, it has found utility. (Yellow line, full report, and context here).

c) Stablecoin use cases vary, but the pattern is "where gatekeepers disadvantage us." Perhaps more important is who is using it and what for. Payment companies like Mercardo Libre, Visa, Nuvei, and WorldPay all have different challenges with gatekeepers.

An acquirer processor might not also be an acquiring bank. If you have processed a payment, you often must wait days to be made whole and receive that transaction (especially over weekends.) If you could receive Stablecoins directly, backed by real USD, that's as good as having the dollar because you're not a bank. The money is always somewhere else.

A payments company or bank with customers in LATAM might have consumers who want to buy from the US or have their savings avoid local hyperinflation. Those consumers are subject to high fees and taxes, but they are allowed to hold USD. If you provide that USD and issue them a type of USD that is becoming more widely accepted, they could pay with it.

There's also the whole "RWA" or "Real World Asset" conversation. The idea is that a debt instrument (like a loan made in Brazil) could be tokenized and sold on a global market. What currency would you buy once it exists on a global market? USD. 

If you're a person or business in the US, transacting primarily with the US, then Stablecoins have almost no value. But the Eurodollar wasn't about you and yet enabled the dollar to cement its position as the global reserve currency. The Stablecoin might not be for you (initially), but it does open innovation possibilities.

d) Deposit tokens create an "open loop" form of USD deposit. Where Stablecoins at Paxos or Circle are held across multiple asset classes (like treasury bills, bank deposits, or in trust), a deposit token is held 1:1 with bank deposits. JPMC has "JPM Coin, " an abstraction of dollars held at JP Morgan by their corporate client. It allows the corporate to "move" dollars around the world 24/7 instead of not being available on evenings and weekends. Being closed loop means it's only from JP Morgan to JP Morgan. (Citi just announced something similar, and HSBC has operated a service along these lines for a year or two.)

Project Guardian by JPMC and DBS attempted to test Stablecoins, backed by bank deposits, to create an open loop USD. The project took place in partnership with the Singaporean regulator MAS. The goal was to answer the question, "Could a regulated offshore dollar become a "JPMC coin" available to non-JPMC clients or banks?"

Stablecoins become the way to tokenize. Their ability to operate on a shared network makes them open-loop. This lends itself to networks like Stellar, Solana, and the Eth L2.

e) What are the benefits of a Stablecoin? Faster, lower cost, global, instant settlement rails that are upgradable, programmable, and permissionless. Provided you have a compatible wallet and an internet connection.

  1. Global. You can send a Stablecoin to anyone, anywhere, 24/7. All they need is compatible software and internet access.

  2. Instant settlement. When a USD stablecoin moves, it is a bearer instrument; the money has fully settled. If I send you a Stablecoin, you can send it to someone else when you receive it and spend it. 

  3. Lower cost money movement. When you default to the dollar, you avoid costly conversion and the complexity of accessing multiple banks and intermediaries.

  4. Upgradeable rails. SWIFT estimates that by 2030, 80% of global payments will use the ISO20022 XML standard. Barely any modern software engineer uses XML by choice, and most of the world is still struggling to adopt a standard from 2002. Meanwhile, Stablecoins can be upgraded instantly. 

  5. Permissionless. Anyone with compatible software can use, send, receive, or write new code on top of a Stablecoin on a public network.

  6. Programmable. Today, commercial contract logic is external to a payment system. Some payment systems can be driven with APIs, and you can write software to drive them. But consider the permissionless point. Any wallet, software engineer, or company can transact or write new code to interact with a Stablecoin on a public network. That is not true of deposits in a digital wallet like Venmo or AliPay.

  7. Remove intermediaries. The rationale for WorldPay adopting USDC with Visa was to get paid sooner. Traditionally, it would take days for money to move from Visa's bank to the processor's bank. With USDC, that settlement is instant. That benefit applies to any business or consumer.

  8. Avoid being "de-risked." If you're a Crypto exchange trying to accept consumer payments, the bank might "de-risk" you. It puts risk appetite closer to the merchant. Banks act as gatekeepers for better and worse. If you're a regulator, a way around that might be bad. But consider the history of the Eurodollar. The market finds a way. The question is how you adapt.

Just as "market pull" created the Eurodollar market, market pull is creating a Stablecoin market.

The strategy question for governments, regulators, banks, Fintech companies, payment companies, and you, Anon, is: 

How do you adapt accordingly?

3. Stablecoin usage patterns in payments

This is more of a sampling than a full overview, but it gives some context to where the demand is vs. the hype.

a) PayPal is largely signaling long-term intent but has limited volume. Early adoption of PyUSD is limited and only available in the US. To be fair to them, they also just launched the thing. For a company of that size, limiting its risk surface area in the short term makes sense. Long term, the value is in the cross-border dollar payment rail that's low cost and helps them around the gatekeepers.

b) WorldPay plays in long-tail markets. If you look at Stripe, Adyen, and their younger counterparts like Checkout or Nuevi, you'll spot an Achilles heel. They all operate in ~40 markets or less. For all its incumbency and challenges, WorldPay accepts payments in more than 100. If the future of Stablecoins is long-tail, global-south markets, WorldPay might be well positioned. 

c) Lemoncash is a Crypto wallet with 1.6m users in Argentina. Global workers need better global payouts. Services like Wise and Revolut work everywhere SWIFT or the USD does. Stablecoins work where the USD rails are too expensive or slow to be practical for locals. Argentina is the best example of that. 

d) MFS Africa connects mobile money to payment rails in Africa. They see high demand for Stablecoins in markets where "USD liquidity is low." South Africa is a USD hub for the formal banking system and payment rails, making intra-African trade incredibly expensive and slow. Most foreign exchange involves dollars, but being able to move those peer-to-peer, lower cost, and nearly instantly has a huge appeal for SMBs. 

4. The risks

a) Interoperability. Stablecoins themselves are not interoperable. Today, you must go to an exchange to swap one USDT for USDC, and the PayPal USD (PyUSD) doesn't interoperate with USDC. That makes a terrible UX. Stablecoins also exist on multiple networks. You can hold USDC on Ethereum, Eth L2s, Avalanche, Solana, Stellar, and more. An analogy would be if each email client had its own email standard, and each internet service provider required the user to "exchange" between ISPs and email types. 

The likes of processors and networks like Visa could play an interesting role in removing some of this pain. There's work by Chainlink, SWIFT, and even platforms like Layer0 to try and solve these challenges. 

But they're not solved.

An interesting question: who should do this for the maximum possible benefit to the global economy and population?

b) Credibility. When Facebook announced Libra and China announced DCEP, the word "Stablecoin" became dirty. Every time I write about this topic, the same 6 people will reach out to say Stablecoins will never happen or everything can be done with some other technology. 

The parallel with Eurodollars is astonishing. 

(Credit Nic Carter)

The intentional signaling by credible organizations like Visa, Mastercard, and WorldPay is slowly turning the tide. The EU, UK, Hong Kong, Singapore, and UAE have regulations for Stablecoins. You have to think globally to see the big picture. 

c) Compatibility with the official system (AML etc). One of the obvious benefits of the Stablecoin network is avoiding being "de-banked" or "de-risked." this suits the vulnerable, but it also suits criminals and nefarious actors. (Which goes back to the previous point). By default, most 1:1-backed USD Stablecoins comply with sanctions and AML rules (as will many wallets be). 

Wallets can adopt fraud screening and AML checks, and they can do it without sacrificing the privacy needed to operate in a global public network. But this is a delicate balance.

d) Being too closely tied to the systemic risk and flaws of the existing financial system. At the opposite end of the spectrum for 1:1 backed Stablecoins is that many rely on the financial system. Some of the market pull might wane if there is substantial regulatory capture. There's a fine line between serving an unmet need with better technology.

e) Yeild. Why would anyone hold USDC that yields 0% but is backed by T-Bills when they could hold T-bills giving 5%? Or better yet, could they have a tokenized T-bill? Stablecoins are still serving the long tail, but to get mainstream adoption, they must become hyper-competitive.  

5. The opportunity

a) A dollar for the rising economies. The future of global trade is new routes like LATAM, India, and the ASEAN region. These rising economies have payment systems like Pix and UPI that are strong locally but weak internationally. Efforts to connect them to the “formal” SWIFT banking system will lag. Generally, Stablecoin (and new payment providers) are placed ideally to solve these challenges.

a) Mainstream adoption through "trusted brands." If I'm sitting in a bank thinking about how to attract deposits, this Stablecoin thing might be interesting. If I'm wondering where new revenue lines come from, helping an increasingly immigrant population remit money home for lower cost would be a great new service to launch. Like Wise has partnered with SWIFT to become a platform, banks can partner with Stablecoin providers. NuBank did it. Mercardo Libre is heading that way too. 

(It's staggering to me Wise hasn't leaned in, but then, given they just did a partnership with SWIFT, perhaps timing matters. Still, a huge missed opportunity.)

b) Automating payment “schleps.” One of the breakthrough innovations of the Uber experience was the ability to get out of the car "without paying." Payments happen so much faster when they disappear. The problem is payments are easy; edge cases are hard. All kinds of conditions have to be met for a payment to be triggered. 

Uber is aware of all those (with the mobile phone of both rider and driver sending real-time data). That's not true in commerce. Where multiple parties must meet conditions to drive the payment, Stablecoin's programmability comes into its own.

c) A dollar rail for everyone else. The market finds a way. As governments push to contain risk, they create unintended consequences. "High-risk" countries are also high-growth countries in the global south. Bank "de-risking" is also bank de-platforming. On some level, we can't have growth without risk; the question is how you manage that risk as you grow a new payments rail. 

d) We need standards for the love of jeebus. This is where processors, card networks, and platforms like SWIFT could re-invent themselves for the next century. They're actually good at getting large parts of the market to adopt a standard. The partnership between Chainlink and SWIFT often goes unnoticed, but this is a trial and pilot. We need more, and it has to be industry-led.

If we don't get our act together as an industry to adopt a standard, one day, the EU will choose violence and enforce it. If they can get Apple to adopt USBC, what can't they do? That's why I wanted to build the Open Standards Council. It is an effort to draw a big circle around anything that looks like a standard, catalog it, and make it easy to almost pull request the whole lot. (Reply to this email if you can help.)

For Stablecoins, this is extra important. The issuers, wallets, and processors need to lean in harder.

e) Let's make a better global payments rail. The existing global payment rails allow criminal networks to launder trillions annually. Sadly, the world of Crypto is still rife with scams and fraudsters despite its promise of a much fairer, transparent global financial system. 

We can do better. 

Have you ever noticed how governments don't complain about Bitcoin lately? Did you notice how that follows the rapid shutdown of dark net markets? Turns out this transparent global ledger thing is quite useful.

Let's innovate to find the line between privacy and preventing criminality. 

Let's sandbox these new concepts on an upgradable, global payments rail. 

6. The StableEuroDollar

Just as London retained its global position by supplying the Eurodollar, today we see countries jockeying for a place to be the home of the Stablecoin. Singapore, the UAE, Hong Kong, and possibly London (the survivor) have a shot.

In doing so, they could re-cement the dollar as the world global reserve,

(Unless the US defaults on its debt, which is a non-zero possibility over a 30-year time horizon at the current rate. That’s why projects like MakerDAO and M^Zero are worth your attention. That said).

I've harped on about Stablecoins more than just about any other topic. 

And I think it's because they're so often met with skepticism, and yet seem so f*cking obviously the right answer to me.

A bank C-suite asked me recently, "What three things should we do to prove we can innovate and deliver." One of those three things I suggested was becoming the trusted gateway to the Stablecoin ecosystem.

Silicon Valley is bored of Crypto and doesn't want to hear it.

Old-school payment types think it's still too early.

That's your opportunity. 

Oh, who's this as one of the 4 Fintech companies this week?

BTV backed Caliza. 

Wonder what they do? 👀


4 Fintech Companies 💸

1. Caliza - The USD API for Brazil

Caliza allows users of its API to create USD accounts so their customers can "save, transact, and invest with confidence." Banks outside the US don't make US dollar accounts available to consumers, meaning Brazilians pay a premium to access services like Amazon Web Services or Walmart. Caliza has integrated compliance, a Stablecoin (USDC), and local bank partnerships in Brazil to allow digital dollars to be embedded. This means a Fintech app could offer conversion from local currency to USD and USD cross-border payments.

🤔 The killer app for Crypto is Stablecoins, and the killer app for Stablecoins is the USD Dollar for the LATAM consumer and SMB. Most global corporates held offshore dollars (Eurodollars) to hedge local currency risk and transact internationally. Much of Latin America is dollarizing. It's a sort of defacto regional currency like the Euro by accident. As the world balkanizes between east and west there's a ton of geopolitical advantage to the demand for the offshore dollar. 

2. Moment - Drivewealth for Credit 

Moment provides an API to deploy fixed-income products. This allows Fintech companies to offer Credit (debt) like they would offer stock or other investible assets. It gives market and pricing data, enables users to create custom risk management policies, and automates trade execution. Moment aims to accelerate time to market from years to weeks to give an "equities-like experience." 

🤔 API companies like Drivewealth made stock trading a feature in every product. Will Moment do the same for Credit? Credit markets lack the infrastructure of the stock market. They lack public data sources and are often highly peer-to-peer and manual. Rising interest rates have made these markets much more attractive than they used to be. Creating an API for this feels like a huge unlock. Atomic Invest allowed clients to offer REITs, private equity, and venture capital but not Credit. For its part, Drivewealth says Fixed Income is "coming soon." Game On.

3. Caplight - Bloomberg for the Pre IPO market 

Caplight provides pricing data for private stocks like Klarna, Brex, Plaid, or Kraken. Users can monitor their portfolio and provide insights from broker dealers' recent derivatives trades. It also provides a derivatives trading service so companies can go short or long on a stock they may hold the underlying asset for. This means stock owners can "hedge without selling," and potential buyers can "get exposure without buying." 

🤔 Surely every investor wants to hedge their startup portfolio rn? 😂 In all seriousness, though. This is one part, which also provides pricing and is gaining some traction. Notice prices like a fund, combining multiple mark-to-markets and valuation metrics to produce a "fair price." As a specialist focussed on just that, they get to remove legwork from their clients. By layering over the derivatives trading, Caplight combines the two and gets a unique dataset. (If you're interested, Hiive Markets is a registered broker-dealer that benchmarks prices and has a secondary market for private stock). Three approaches. One goal. Better pricing in private markets. 

🤔 For a comparison, Notice estimates Brex at a $3.2bn valuation, Caplight at $3.13bn, and Hiive displays a bid-ask of $7 to $9 per share or an implied $2.5bn to $3.1bn. Not to pick on Brex; all three had data on them.

4. 73 Strings - Private market valuations AI and automation

73 Strings automates the process of valuing private equity or debt portfolios. It pulls data from private sources, public markets, and earnings transcripts to perform discounted cash flow, benchmarking public comps, and custom valuation metrics. Users can export this with an audit trail and any required regulatory reports. 

🤔 Great timing. It seems anything disrupting private markets is hot right now. A tiny percentage of readers have been through the pain of valuing a private stock or credit transaction. It's still largely spreadsheet and PDF document hell. 

Things to know 👀

The new service from Atomic will allow a customer to switch direct deposits and all recurring payments without sharing login credentials. The goal is to remove the barrier to "account primacy" and ensure more consumers can switch bank accounts without the headache of setting up recurring payments. 

🤔 Automagically setting up recurring payments has a "just works" feel that could be massive for conversion. It's one thing to be able to set up a new account and have your Payroll go there, but can you even remember all of your recurring payments? Never mind setting them all up again, one by one. Instead, with one click, done.

🤔 I also imagine the "not having to use login credentials" to start the process boosts conversion massively. Logging into your payroll provider or old bank account with those credentials still feels janky. Securely doing that is hard but has precedent. The whole "login with Google or Auth0" has become a default for enterprises that can be secure. Why shouldn't that work for Payroll too?

🤔 This "without sharing login credentials" thing is becoming a theme. We saw Rightfoot re-launch recently with a similar story on credentials for open banking. It seems everyone has a "patent pending" on this stuff lately. Will the market figure out its own ways to do this before those are granted? I imagine so; this feels like such a no-brainer that everyone will make it a default feature and copy rapidly.

🤔 I'm excited to see the data on the "real-time and one-click" aspect and how that impacts conversion. The UK has had a guarantee that all recurring payments would be switched by banks within 7 days of switching for a decade (Current Account Switching Service). But it led to almost zero uplift in people switching banks. My gut says that's because the "7 days of anxiety" doesn't feel auto-magic.

According to a regulatory filing, Alyssa Henry will leave Block on October 2 after 9 years with the company. 

🤔 It looks like a firing, but it's not a firing. The timing right after Square's massive outage impacted its merchants is likely a coincidence. These moves involve regulatory fillings that are hard to rush. (ICYMI, merchants could not accept payments for more than 24 hours after a DNS issue caused a major outage).  

🤔 It will be fun to contrast Dorsey taking over vs. Elon at Twxtter. Dorsey has always had a very mellow, thoughtful, product-led vibe. When he returned to Twitter, he focused on fixing tech debt and getting the org back into shape. Maybe that will get some focus now at Square?

🤔 Big events like this capture investor attention, but as an employee, they are super counterproductive and annoying. It feels weird as the world's gaze focuses on this one config error in 14 years. As the media discusses stock prices and leadership changes, they're not discussing what most staff work on. This takes the focus from an excellent PINK campaign by CashApp. If you didn't see it

🤔 I don't have any stock in Block (coincidence, not investment advice), but I'm generally bullish on them and companies like them. They'll be just fine, as will Adyen, Stripe, and the newer market players. We now have a lot of founder-led Fintech companies in more "wartime" mode. Stripe has to get to IPO, Adyen has to prove the market wrong, and Square has to prove this was a one-off, not a pattern.

Good Reads 📚

The most important law you've never heard of came into force on September 20, 2023. It transforms a paper bill of lading into a digital asset. This important legal document is crucial to the $25.2 trillion global trade market and historically required a "wet signature." 

🤔 Making this digital creates a new asset class. Not only would we see faster settlement, but we'd also open up new markets like more automated debt financing and loan syndication. If I were in web3's "Real World Asset" conversation, I'd be talking to the wave of new Fintech companies building in trade finance for global south to global south trade routes (e.g., India to LATAM). Read more on why Trade Finance is the end boss of Fintech here.

🤔 The UK is having a moment. Visiting West Coast VCs, and getting plenty of press in USA today. But the one thing it must fix is access to accounts for Fintech and Crypto businesses.

That's all, folks. 👋

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Disclosures: (1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. (2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a (3) Any companies mentioned in Rants are top of mind and used for illustrative purposes only. (4) I'm not an expert at everything you read here. Some of it is me thinking out loud and learning as I go; please don't take it as gospel—strong opinions, weakly held.