💰 Fed Eyes Stablecoins for FX

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Hey Fintech Explorers—Welcome back to Money Explored, the essential Sunday newsletter to stay ahead in fintech!

We’re halfway through February, and fintech is shaking up markets. This week, the Federal Reserve signals a shift in how FX markets could work, Grayscale’s XRP ETF inches closer to reality, and Robinhood rides the crypto wave to new highs.

Here’s what we’re diving into:

• Fed embraces stablecoins for FX markets, hinting at a game-changing shift. 💰

• Grayscale’s XRP ETF gains traction, as the SEC formally reviews the application. 🚦

• Robinhood’s crypto revenue explodes, sending its stock soaring. 🚀

It’s all happening—and that’s just the start...

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Let’s dive in!

🌎 3 Major Stories

Dive into this week’s top Fintech developments.

Fed’s Bold Vision: Stablecoins Transform FX Markets 💰

The Big Story 📰: The Federal Reserve is beginning to recognize the potential of stablecoins to transform the foreign exchange (FX) market, which handles a staggering $7.5 trillion daily. Fed Governor Christopher Waller highlighted their benefits in a recent speech, including faster transaction times that could solve the traditional 2-2.5 day settlement lag common in FX trades. This could significantly improve how institutional investors manage currency risks and liquidity. With stablecoins gaining traction and a market cap exceeding $200 billion, their growing institutional acceptance could hint at a pivotal transformation in global FX payment systems.

Key Takeaway ⚡️: The impending shift towards stablecoins in FX markets is a game changer, promising faster settlements and reduced counterparty risk, which traditional banks are starting to take seriously. Waller advocates for a robust regulatory framework to oversee this evolution, indicating that both banks and non-banks should have the ability to issue regulated stablecoins. As these digital currencies emerge as a vital link in global transactions — reminiscent of Eurodollars in the past — market participants would do well to adapt swiftly. The potential for improved efficiency and liquidity means that ignoring the rise of stablecoins might mean falling behind in the ever-competitive financial landscape.

Grayscale's XRP ETF: SEC Signals Green Light! 🚦

The Big Story 📰: Grayscale is inching closer to launching the first-ever spot XRP exchange-traded fund (ETF) as the Securities and Exchange Commission (SEC) officially acknowledges its application. This acknowledgement kicks off a 240-day review period, giving the SEC until mid-October to make a decision. The ETF would provide regulated exposure to XRP, the third-largest cryptocurrency boasting a market cap of $157.4 billion. This development indicates a potential shift in the SEC's regulatory approach towards cryptocurrencies, particularly as it continues its legal battle with Ripple Labs. Grayscale's expansion in the crypto ETF space, following recent approvals for Solana and Litecoin ETFs, signifies a growing acceptance of digital assets in traditional finance.

Key Takeaway ⚡️: Grayscale's XRP ETF application marks a pivotal moment in the evolving landscape of crypto investments. If approved, it could legitimize XRP in the eyes of traditional investors, amplifying interest and potentially influencing market dynamics. The SEC's review process reflects changing attitudes towards cryptocurrency regulation, which could ease compliance concerns for other digital asset ETFs in the pipeline. For fintech stakeholders, this is an opportunity to closely monitor and adapt to the regulatory landscape, as successful ETFs may pave the way for broader adoption and innovation within the crypto investment arena.

Robinhood's Crypto Surge: Game On! 🚀

The Big Story 📰: Robinhood is making significant waves in the crypto trading arena, leveraging its commission-free model to woo cost-conscious customers. The company reported an impressive eight-fold increase in transaction-based revenue from crypto in the last quarter, propelling its stock to a nearly 14% surge—hitting its highest level since 2021. This momentum is buoyed by a renewed enthusiasm for crypto, ignited by Donald Trump's plans to position the U.S. as the "crypto capital of the planet," which has already sent Bitcoin above $100,000. While Robinhood currently lists only 22 tokens compared to Coinbase’s 200, its market share is steadily growing, and industry analysts are optimistic about its future potential under a more accommodating regulatory framework.

Key Takeaway ⚡️: Robinhood's ascent in the crypto trading market signifies a pivotal moment in the competitive landscape. By appealing to a younger generation of traders who value low-cost options, Robinhood is reshaping the financial trading narrative. This shift represents both a challenge and an opportunity for established players like Coinbase, which cater to a more dedicated crypto audience. As Robinhood continues to expand its offerings and capitalize on this bullish sentiment in the crypto space, it encourages other fintech firms to innovate and adapt. For investors and businesses, recognizing this trend could unlock new avenues for growth, making it critical to stay ahead of the evolving market dynamics.

🔍 What Else We’re Watching

Keep an eye on these evolving Fintech Narratives.

• SEC Requests Extra Time for Coinbase Appeal ⏳: The U.S. SEC is asking for an additional 28 days to review Coinbase’s appeal in the ongoing legal battle over alleged unregistered securities. Citing the potential help from its new crypto task force, the SEC aims to ensure a thorough evaluation of the case. Coinbase’s appeal to clarify if crypto transactions qualify as securities is critical for the industry’s future. The deadline has now been extended to March 14, highlighting the SEC's ongoing scrutiny of crypto regulations and its impact on major exchanges.

• AI Summit: Growth Over Guardrails 🌍: The AI Action Summit in France marked a significant shift in global AI discourse, focusing on innovation and economic growth rather than safety. Leaders pledged a staggering €200 billion to fuel AI advancements, with French President Macron urging reduced red tape. U.S. Vice President JD Vance emphasized seizing AI opportunities across sectors like healthcare and national security. While critics argue that France can't rival the U.S. and China, the U.K. is positioning itself as an AI hub, coupling talent migration with strategic investments in tech. The AI race is heating up!

• OpenAI Unveils Deep Research Tool 🚀: OpenAI is on a roll, launching its new Deep Research feature just days after o3-mini hit the scene. This tool allows ChatGPT to scour and synthesize hundreds of online sources, producing reports comparable to those of research analysts. Users can upload PDFs and spreadsheets while the algorithm works away, turning hours of research into a brief wait of 5 to 30 minutes. While it does face challenges like occasional inaccuracies and formatting errors, OpenAI believes these will improve over time. The tool launches for ChatGPT Pro users at $200/month, with broader access coming soon.

💸 Major Money Moves

Tracking big market shifts in Fintech this week.

• Tabby Hits $3.3B Valuation with $160M Raise! 🤯: Saudi fintech Tabby has successfully secured $160 million in a Series E round, elevating its valuation to an impressive $3.3 billion and making it the most valuable fintech in the MENA region. The funding comes just months after nearly doubling its transaction volumes to over $10 billion. With plans to expand its product offerings, including digital spending accounts and enhanced payment options, Tabby is positioning itself for a strong IPO while supporting Saudi Arabia's Vision 2030 goals. This aggressive growth strategy is backed by key investors, underscoring Tabby's innovative potential and market leadership.

• OneID Secures £16M for Digital ID Boost! 🚀: OneID, the London-based startup specializing in bank-verified digital identification services, has successfully raised £16 million in its latest funding round, led by ACF Investors. With backing from over 200 angel investors across the UK, Sweden, and the US, the company aims to expand its operations and enhance its offerings. CEO Paula Sussex highlights that OneID’s service allows for a hassle-free, document-free digital ID process, completed in just 12 seconds. Emphasizing user privacy and consent, OneID is set to empower businesses by streamlining onboarding and reducing fraud risks, ultimately driving engagement and sales.

• Zeta Hits $2B Valuation with $50M Boost 💰: Zeta, the US banking tech and credit card processor, has secured a fresh $50 million from an undisclosed investor, soaring its valuation to $2 billion. This funding leap from a previous $1.15 billion pre-money valuation comes on the heels of significant backing from industry giants like SoftBank and Mastercard. Since its inception in 2015, Zeta has rolled out a microservices-based platform allowing banks and fintechs to efficiently manage diverse financial products. With plans to expand rapidly, Zeta supports over 25 million accounts on its cloud-native processing platform and aims to add another 25 million soon!

Thanks for reading and have a relaxing Sunday,

— The Money Explored team