Inflation Holds Steady; Alpaca is a Unicorn; Old Glory SPACs

Fed drama. Inflation holds steady. Retail sales rebound. Rain raises $250Mn. Alpaca is a unicorn now. VelaFi bags new funding. Old Glory SPACs. Checkout.com wins approval for MALPB. Valt applies for OCC charter. Jenius is shutting down.

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Fed Drama Takes Center Stage

The Federal Reserve and Chairman Powell were in the spotlight again last week. Powell revealed that the Fed had been served with a grand jury subpoena by the Department of Justice. The DOJ is threatening a criminal indictment related to the ongoing renovation of the Federal Reserve’s headquarters and testimony Powell gave to Congress about it. In an unprecedented move, Fed Chair Powell released a written and video statement reiterating the importance of Fed independence. Powell said in part, “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.” Former Fed chairs and other former senior officials echoed Powell’s comments, condemning what is widely regarded as the unprecedented challenge to the Fed’s independence. The heads of numerous foreign central banks, including the Bank of England, Bank of Canada, and European Central Bank also expressed solidarity with Powell.

Meanwhile, inflation held steady in December. Consumer prices were up 2.7% year over year, according to the latest report from the BLS. The inflation rate in December was unchanged from November’s reading and was consistent with analysts’ expectations. Finally, U.S. retail sales in November rebounded, rising the most since July. Holiday spending and an increase in auto purchases helped drive the growth.

Rain Raises $250Mn

Crypto cards-as-a-service issuer Rain announced it has raised a $250Mn Series C. The round values the company, which secured a $58Mn Series B just four months ago, at $1.95Bn. The latest investment was led by ICONIQ, with participation from Galaxy Ventures, Endeavor Catalyst, FirstMark, Bessemer Venture Partners, Dragonfly, Lightspeed, and Norwest. Rain’s platform enables clients to issue Visa cards for spending from an underlying stablecoin balance. Rain supports over 200 companies, including Nuvei, Western Union, and KAST. The company claims to have grown to facilitate more than $3Bn in transactions on an annualized basis. Rain plans to use the new funding to continue expanding across global markets. The company also said it plans to make additional investments that make spending stablecoin balances “feel like any other transaction.”

Alpaca is a Unicorn

Brokerage infrastructure firm Alpaca has become a unicorn with its latest $150Mn funding round. The Series D fundraise, led by Drive Capital, values the company at $1.15Bn. BNP Paribas’ Opera Tech Ventures, MUFG Innovation Partners, Citadel Securities, DRW Venture Capital, Kraken, and others participated in the round. Apart from the equity fundraise, Alpaca has also secured a $40Mn line of credit. Alpaca’s API-based, scalable infrastructure enables more than 300 clients to offer global access to stocks, ETFs, options, crypto, and fixed-income products. Alpaca CEO Yoshi Yokokawa commented on the fundraise, saying, “Our mission is to open financial services to everyone on the planet. We are building the global standard for brokerage infrastructure so our partners can bring investing to more people. This raise gives us the fuel to deliver more faster to both our enterprise partners and active traders globally.”

VelaFi Raises $20Mn for Stablecoin Infra

Stablecoin infrastructure platform VelaFi has raised a fresh $20Mn in funding. The round was co-led by Ikuyo and XVC, with participation from Alibaba, Planetree, and others. VelaFi, a subsidiary of Galactic Holdings, was previously known as TruBit. The company offers business with access to multi-currency accounts and payment infrastructure. The company began with a focus on LatAm but is looking to expand to global markets. Company CEO and cofounder Maggie Wu commented, “By strengthening our licensing footprint and deepening our connectivity across these critical economic corridors, we aim to build the unified settlement layer that modern global businesses urgently need but that traditional financial infrastructure has not been able to provide.”

Old Glory SPACs

Old Glory Bank is going public via SPAC. The company will merge with “blank check” vehicle Digital Asset Acquisition Corp. The transaction values Old Glory at $250Mn on a pre-money basis. The combined entity will come with the $176Mn the SPAC currently holds, and the parties intend to arrange at least an additional $50Mn in PIPE or other financing. Old Glory is a digital-first bank that currently serves about 80,000 consumer and business customers. The bank has also expanded to serve the crypto community and plans its own USD-pegged stablecoin, OGBUSD. Old Glory cofounder and chief innovation officer Michael Staw commented, “We are confident that, in the future, our customers will have the ability to easily move money on and off chain, as well as instantly deposit crypto into their bank account, by exchanging crypto into fiat utilising our patent-pending OGB Freedom Offramp.”

Checkout.com Wins Approval for MALPB

Payment processor Checkout.com has won approval of its Georgia merchant acquirer limited purpose bank charter application, often referred to by its acronym, MALPB. While the charter type has existed for years, uptake had been limited until a number of recent applicants that include Fiserv and Stripe. Checkout said securing and operationalizing the MALPB license will enable it to operate as its own acquirer in the U.S., with direct integrations to card networks. The CEO of the newly chartered MALPB entity and head of North American banking at Checkout commented, “With our MALPB charter now approved, the ‘definitive catalyst’ we identified in October is officially activated. This milestone paves the way for a new era of payment performance.”

Valt Seeks OCC Full-Service Charter

In other charter-related news, business banking startup Valt has filed an application to charter a national bank with the OCC and a corresponding application for deposit insurance with the FDIC. Valt was formed in the wake of the collapse of Silicon Valley Bank in 2023 and the subsequent “regional” banking crisis. Valt cofounder Matt Gediman told Fintech Futures, “We saw an opportunity to build a resilient, well-governed bank designed specifically for SMBs, using modern technology to address long-standing friction points in business banking.” Valt is the latest in growing list of firms applying for OCC charters, whether to form national trust banks or full-service deposit-taking institutions.

Digital-Only Jenius Bank Is Shutting Down

Jenius Bank, the digital-only consumer division of Tokyo-based Sumitomo Mitsui Banking Corp., is shutting down. Jenius’ parent reported a nearly $40Mn loss in Q1 2024, which it largely attributed to supporting the upstart bank in the U.S. As part of the shutdown, the company will lay off 161 employees. Jenius’ withdrawal from the U.S. market is the latest data point demonstrate the challenges faced by foreign entrants competing in a very crowded financial services market.