Friday Briefing: About that crypto winter

June 17, 2022

#TopStory 🔝

About that crypto winter

Bitcoin’s value has tumbled to US$20,000 per unit as global economic turbulence hits crypto exchanges, wiping out trillions of dollars in assets and triggered thousands of layoffs (Coinbase!).

The impact has been considerable in our region. And when the dust settles, we will likely be faced with a different business and slower growth, given users’ increased risk aversion and the likelihood of more stringent regulation.

Liquidity problems at crypto-lending platform Celsius, which froze redemption for clients with assets equivalent to $1.7 billion, will increase regulatory pressure in the U.S. A Treasury official spoke this week about the “urgent need” for a legal framework to oversee the sector.

Countries such as Brazil and Panama are working on rules of their own to regulate fintechs engaged in the purchase and sale of bitcoins and other tokens. And no doubt local authorities will be taking note of what their counterparts in the U.S. decide.

“Bitcoin has all the potential to be one of the main digital assets and be profitable. The gains will resume, but we have to wait,” Santos Barrio, cofounder and CFO of Argentine exchange Let’sBit, told iupana.

We’ll explore the topic of investments in the fintech sector at our event on June 28. You can register here: LatAm Fintech Investment: What’s ahead for 2022 & 2023?

#Investments  📈

Habi obtains US$75 m credit line

Colombian proptech unicorn Habi lined up a US$75 million credit line from institutions including TriplePoint Capital, other fintechs and local banks. The proceeds will be invested in improvements to the platform, which provides financial services for people buying and selling real estate. The financing comes on top of the US$200 million Habi raised a month ago in its Series C.

KEO raises US$20 m

Keo, a B2B lending fintech, raised US$20 million in a round led by Montreux Growth Partners. The proceeds will be used to expand its SME financing in the U.S. and LatAm.

#Regulation 📜

Ecuador: Banking regulator presents its own fintech bill

The country’s banking superintendency and finance ministry are drafting a new fintech law, after a previous proposal sparked controversy. The new proposal aims to create a sandbox for testing the ecosystem, granting licenses and regulating new businesses.

Mexico: Migration to electronic invoices 4.0 faces obstacles

Technological adaptation by financial institutions and distrust surrounding the handling of taxpayer data are the biggest challenges to implementing the electronic invoice system 4.0. The tax agency has postponed its implementation to January 1, 2023

Peru: Regulator completes rules on crowdfunding

The country’s securities regulator, the SMV, presented a draft resolution that imposes stricter obligations and sanctions on crowdfunding platforms. The SMV’s research and innovation division will provide guidance to platforms.

#Strategic plays 📊

Fintech license applications pile up in Mexico

Since the enactment of Mexico’s Fintech Law in 2018, the National Banking and Securities Commission (CNBV) has received 139 applications from companies seeking a fintech license, of which only 33 have been approved to date.

Elo and abastece-aí launch prepaid card

Elo, a Brazilian payment technology fintech, teamed up with BV Financeira’s digital account to launch a prepaid card, which will allow the use of QR via the app.

Ualá unveils credit analysis engine

The Argentine unicorn Ualá will start approving loans using UaláScore, a credit risk engine that compares information from its ecosystem in order to assess user applications.

Sezzle to start operations in Brazil

Sezzle, a U.S. fintech focused on buy now, pay later services, began operations in Brazil, offering its product via Brazilian e-commerce platform Nuvemshop.

In addition …

• Pinbank, a Banking as a Service (BaaS) platform in Brazil, will start offering loans at the end of the year.
• In Guatemala, Paggo will launch a POS focused on SMEs wanting to receive electronic payments. The fintech plans to expand to Honduras in the fourth quarter.
• Nubank’s financial assistance platform Olivia, which it acquired in 2021, will cease to operate independently and be fully merged into its services.
• Mexican fintech Kueski expanded its alliance with Provenir, a company that provides AI-based financial services. It will make use of its Porvenir’s risk platform to improve customer evaluations in a bid to fuel the expansion of Kueski Pay.

#iupanaExclusive 🔥

The complex global economic landscape is reducing the availability of capital in LatAm. As financial conditions tighten, pressure is mounting on fintech startups to show results—and returns. Experts expect investments in the region to continue declining into next year.

• Fintechs that raised large amounts in 2021 must now turn that capital into products, says Softbank Latin America Fund’s Eduardo Vieira.

• Fintechs need to see sustained revenue-based growth, says Laura Martinez, investment analyst at Magma Partners.

• The real crisis will begin in 2023 as venture capital firms put together new funds, says Rodrigo Garcia, CEO and founder of Finnovating.

Find out more details in our exclusive report.

Over and out