Crypto and the trust issue

Technology sector updates

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And we’re back. #techFT returns from its summer break to discover plenty of familiar themes recurred while we were away — the semiconductor shortage, the gig economy and workers’ rights, China’s tech crackdown, Nvidia’s regulatory hurdles for its deal to buy Arm beginning to look insurmountable, the growth of “buy now pay later” fintech, further attempts to curb Big Tech’s power.

Cryptocurrencies are back as the FT’s main story today. The chair of the US Securities and Exchange Commission has warned their trading platforms are putting their own survival at risk unless they heed his call to work within the nation’s regulatory framework.

Gary Gensler told Gary Silverman and Kiran Stacey that while he remained “technology neutral”, crypto assets were no different than any others when it came to such public policy imperatives as investor protection, guarding against illicit activity and maintaining financial stability.

“At about $2tn of value worldwide, it’s at the level and the nature that if it’s going to have any relevance five and 10 years from now, it’s going to be within a public policy framework,” he said. “History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.”

Gensler expressed disappointment with the industry’s response to his suggestion that trading platforms should register with the SEC on the grounds that a sufficient number of cryptocurrencies qualify as securities. “Talk to us, come in,” he said. “There are a lot of platforms that are in operation today that would do better engaging and instead there is a bit of . . . begging for forgiveness rather than asking for permission.”

Cryptocurrency trading platforms are a big business in the US — New York-listed Coinbase reported a $1.6bn profit in the second quarter. However, it is unclear which US financial regulator is supposed to oversee them and Gensler has called on Congress to make such authority more explicit.

In other crypto news while we were away, the Pyth Network, a crypto project built by some of the world’s largest high-speed traders, launched last week and FT Wealth has looked at the scores of rich individuals who are investing not just in cryptocurrencies, but in the industry that underpins it — exchanges, asset management companies and technology providers. Finally, we reported on a revival for bitcoin miners helped by its rising value and China’s clampdown on its domestic industry.

The Internet of (Five) Things

1. S Korea attacks app store model
South Korea has become the first country in the world to attack the lucrative commissions charged by Google and Apple’s app stores, after passing a law that will let mobile phone users pay software developers directly for their apps. If they fail to comply, app stores can be fined up to 3 per cent of their revenue in South Korea. Apple and Google at present take a commission of up to 30 per cent. Lex says the new law could set a precedent for elsewhere.

2. Amazon’s growing air power
Amazon’s presence in the skies continues to grow rapidly, according to a new report, with an average of 164 flights a day now dedicated to moving the ecommerce giant’s stock across the US. The company’s air cargo expansion, which included the opening of an 800,000 sq ft hub in Cincinnati in August, point to it positioning itself as a provider of delivery services to third parties, in competition with the likes of UPS and FedEx.

3. Tencent’s overseas push
Tencent has increased its investments in overseas start-ups more than sevenfold this year, accelerating the global expansion of China’s most valuable company as Beijing tightens regulatory scrutiny of tech groups. The social media, gaming and fintech group struck a record 16 deals in Europe, bringing its total number of international investments to 34 for the first six months of 2021, according to data from Refinitiv. That compared with four overseas deals in the same period in 2020 and three in 2019. 

4. Prosus pays $4.7bn for BillDesk
Prosus, the investment arm of South Africa’s Naspers internet group, has agreed to buy India’s BillDesk for $4.7bn and merge it with its own PayU payments business. The deal for India’s oldest payment gateway will create one of the world’s biggest online payment providers with $147bn in annual total payment volume. Lex says Prosus should be able to extract cost and revenue synergies with the combination.

5. Theranos founder’s trial begins 
Elizabeth Holmes, founder of the blood testing start-up, appeared in court yesterday as jury selection began in one of the largest trials involving alleged fraud in Silicon Valley.

Tech tools — Cowboy 4

The Dutch ebike maker VanMoof announced a $128m funding round today, with the money due to be spent on increasing its production capabilities, developing new tech and improving its bikes’ specs and reliability. It’s as big a boost as . . . well, adding a battery to a bike, and signals a new level of intensity for competition in the sector.

I’ve been riding its Belgian rival’s latest bike for the past two weeks and have found the Cowboy 4 to be a big advance on its 3 predecessor. I was trying the C4 ST option of its first step-through bike — there is no crossbar — and really appreciated the more upright riding position and its many refinements, such as the more comfortable and better shaped handlebar grips, while the suspension seemed to give a smoother ride.

The bike is still simplicity and minimalism itself, with no gears and a carbon belt instead of an oily chain. There is now a central cockpit where you can snap on your smartphone and use the improved Cowboy app to unlock the bike and control the lights and battery assistance. You can also check the weather, your speed, and plan and record journeys. I complained that the app drained my phone battery too quickly on the 3, but the 4 automatically charges your phone from the bike’s internal battery, whose range is up to 70km.

A levels indicator on the 4’s battery itself would help when taking it out and charging it, rather than just the green light on the charger, which led me to falsely believe my flat battery was fully charged on one occasion.

The bike has an extra zip compared to the current 3 version — 50 per cent more torque now powers the automatic transmission — but I also would have appreciated an extra boost option on some hills that became quite tough climbs despite the aid of the battery.

The C4 and C4 ST are being delivered this month and include mudguards, with options to add a rear rack and kickstand. Colours are Absolute Black, Peyote Green and Sand Dune and both bikes are priced at £2,290. I’d advise a test ride to see if this bike is for you, but I was very impressed by my experience with it and rate it much improved and a major upgrade that could put Cowboy ahead of the peloton in the ebike race.