Robinhood’s compliance issues show the dangers of fintech hypergrowth
Show me a fast growing fintech, whether in crypto or elsewhere, and I’ll show you a company that’s struggling to scale their compliance operations.
Driving the news: Robinhood, fresh out of last week’s $ 70 million FINRA fine, is Planning to pay another eight-figure fine to the New York State Department of Financial Services for violating cybersecurity and anti-money laundering regulations.
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What we read: ProPublica has a deep dive on how hundreds of clients of Chime, America’s most valuable neobank, have been stranded in their accounts.
And after: Crypto giant Circle plans to go public through SPAC, at a valuation of $ 4.5 billion. Risk factors in his business sheet include ongoing investigations conducted by both the SEC and OFAC, the Office of Foreign Assets Control.
The bottom line: Fintechs learn from their mistakes. If you’re dealing with a startup, you should expect mistakes – and if it’s growing quickly, you shouldn’t expect to be able to reach a human who can help you solve the problem.
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