As the crypto winter shows signs of slowing, companies are rushing to become compliant after a string of bankruptcies within the space. Regulatory compliance is critical to improving crypto’s reputation among investors. It is also essential for mitigating liquidity risks, an issue that caused crypto giants Voyager Digital and Celsius to file for bankruptcy. Last week, Payments giant PayPal Holdings, Inc. (NASDAQ:PYPL) joined Coinbase Global’s (NASDAQ:COIN) Travel Rule Universal Solution Technology (TRUST) network. The TRUST network, which was launched in February by 18 virtual asset providers, was created to “protect the security and privacy” of customers, while complying with the bank industry’s Travel Rule. In the past, companies like Block Inc. (NYSE:SQ) (formerly Square Inc.) have rejected proposed FinCEN regulations, while companies like WonderFi Technologies Inc (TSX:WNDR) (OTCQB:WONDF) and CME Group (NASDAQ:CME) are focused on exceeding regulatory requirements.
WonderFi Technologies Inc (TSX:WNDR) (OTCQB:WONDF) is a technology company providing greater access to digital assets through centralized and decentralized platforms.
WonderFi has continued to make strategic acquisitions that have positioned the company as one of the largest combined digital currency companies in Canada. On July 4, the company closed the acquisition of Coinberry, one of Canada’s leading crypto trading platforms with over $1 billion traded to date.
The acquisition of Coinberry makes WonderFi Technologies the first company in Canada, and one of the first globally, to own and operate more than one licensed,crypto asset trading platforms that is regulated by applicable securities commissions.
Coinberry brings with it over 225,000 users and $99.5 million of client assets under custody, giving WonderFi over half a billion dollars in approximate total client assets under custody as of the acquisition.
“This acquisition further solidifies WonderFi as a leader amongst crypto companies in Canada, and along with our acquisition of Bitbuy, establishes a great foundation for our expansion into global markets” said WonderFi CEO Ben Samaroo. “Further, as we’ve seen over the past few weeks, the crypto market downturn has had a massive impact on the viability of unregulated crypto trading platforms and WonderFi’s value proposition as one of the few regulated crypto businesses makes us well positioned to continue our growth.”
Earlier this month, WonderFi reported its Q3 2022 financial results, reporting revenues of $2.9 million, compared to $nil in the prior-year quarter. The increased revenue is due to the acquisition of Bitbuy, which was completed in July 2022. WonderFi also reported $356 million in total assets as of June 30, 2022, including $15 million in cash, $5.6 million in crypto assets and inventory and $187 million of Assets Under Custody for customers.
The company’s operating expenses were $13.3 million for the three months ended June 30, 2022, compared to $705,000 in Q3 2021.
Financial Companies Launch New Products
Payments giant PayPal Holdings, Inc. (NASDAQ:PYPL) joined the Coinbase compliance initiative, the Travel Rule Universal Solution Technology (TRUST). This market-driven solution, which was introduced in February, enables crypto exchanges to deliver the data that is legally needed by the Travel Rule in a secure manner. In order to avoid any problems with US authorities, TRUST offers its members a variety of tools and features like evidence of ownership and thorough adherence to the Travel Rule. More recently, PayPal partnered with the National Philanthropic Trust (NPT) and Vanguard Charitable, to launch Grant Payments, a new product that allows sponsors of the Donor-Advised Fund (DAF), community foundations and other funders to make grants to charities quickly and electronically through PayPal. Grant payments will allow charities to receive grants soon after the grantor approves the funds. Funders and charities will have access to full details of available grants, including donor information where provided, via a PayPal dashboard. Eligible and participating charities have been vetted against PayPal‘s strict compliance standards.
In a shareholder letter released on August 9, Coinbase Global, Inc. (NASDAQ:COIN) said that the decline in crypto asset prices had a significant impact on its Q2 2022 financial results, which were in line with the outlook provided in May. Net revenue was $803 million, down 31% compared to Q1, due to lower transaction volume. Total operating expenses were $1.9 billion, up 8% compared to Q1. Net loss was $1.1 billion and was heavily impacted by non-cash items impairment charges. In the absence of non-cash impairment charges, the net loss would have been $647 million. Adjusted EBITDA was negative $151 million. Total trading volume fell to $217 billion, down 30% from the first quarter. On the other hand, the total spot crypto trading volume decreased by 3% sequentially, leading to a lower trading market share by volume.
On April 28, Block Inc. (NYSE:SQ) announced the launch of Square Loans in Canada, giving small businesses quick and easy access to funds and eliminating another major hassle associated with running a business. Using transaction data, Square Loans proactively delivers personalized offers to eligible sellers, providing them with a simple, paperless application process and delivering funds the next business day. Businesses have a clear, up-front loan fee, which is automatically repaid as a set percentage of daily card sales with Square – so sellers repay more when sales are strong and less during slower times. Loan fees never increase for the seller, so it’s always clear how much they owe. In July, Block provided the Scotiabank Saddledome and McMahon Stadium with a full Point of Sale (POS) makeover. New in-stadium technology includes more than 350 Square Register and Square Terminal units to power sales and manage operations, which are integrated with Square for Restaurants and Square for Retail software.
On August 18, CME Group (NASDAQ:CME) announced plans to launch options on Ether futures on September 12, pending regulatory review. These new contracts offer a futures contract on one Ether, valued at 50 Ether per contract, and based on the CME CF Ether-Dollar benchmark rate, which serves as the daily benchmark rate for the US dollar price of Ether. These new contracts will also expand CME Group’s existing suite of cryptocurrency options contracts, which includes Bitcoin options, as well as micro-sized Bitcoin and Ether options.
WonderFi Technologies has applied to list its common stock on the Nasdaq Capital Market® (NASDAQ). At the same time, the company has filed a registration statement with the Securities and Exchange Commission (SEC) in the United States.
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