Kiffmeister’s #Fintech Daily Digest (01/03/2021)

On the 12th anniversary of the mining of the first Genesis block, Bitcoin (BTC) hit another all-time high, briefly trading above $34,700 this morning (ET). “Analysts Decrypt spoke to attribute the boom to three things: retail investors, institutional investors balancing the books, and a single whale’s trade that set an army of algo-traders chomping in search of a profit.” But for contrarian views these year-end wraps from Amy Castor and David Gerard are well worth a read! 

And there’s this article that claims that bitcoin is a Ponzi scheme. A Ponzi scheme is a type of investment fraud with five features; (1) people invest into it because they expect good profits, (2) that expectation is sustained by such profits being paid to those who choose to cash out, but (3) there is no external source of revenue for those payoffs which come entirely from (4) new investment money, while (5) the operators take away a large portion of this money. Investing in bitcoin (or any crypto) checks all these items; the investors are all those who have bought or will buy bitcoins; they invest by buying bitcoins, and cash out by selling them. The operators are the miners, who take money out of the scheme when they sell their mined coins to the investors. The article rejects the idea that the stock market is a Ponzi, but there are those that differ, and some even so-characterize modern central banking.

LendingClub’s Acquisition of Radius Bank Approved by the OCC

The Office of the Comptroller of the Currency (OCC) approved LendingClub’s acquisition of Radius Bank. LendingClub had previously announced it would pay around $185 million to buy the bank. The merger is subject to certain conditions including day-one capital of $410 million, including a capital contribution from LendingClub of no less than $250 million. This marks the end of LendingClub’s transition from the P2P lending model under which the company was launched to a digital banking model.