Coinbase shares surge as Cboe and Nasdaq refile for Bitcoin ETF
Coinbase shares rally as Cboe and Nasdaq refile for Bitcoin ETF, FIS is allegedly in advanced talks to sell Worldpay, and JPMorgan and other big banks raise dividends after Fed’s stress test
The US markets were closed yesterday and had a short trading day on Monday in celebration of Independence Day. My sincerest congrats to those who celebrated! 🎆 🎇 🇺🇸 Here is what you might have missed:
Coinbase shares rally as Cboe and Nasdaq refile for Bitcoin ETF,
FIS is allegedly in advanced talks to sell Worldpay, and
JPMorgan and other big banks raise dividends after Fed’s stress test
Thank you for reading and have a great day!
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Coinbase Shares Surge as Cboe and Nasdaq Refile for Bitcoin ETF
Shares of Coinbase (NASDAQ: COIN), the largest U.S. cryptocurrency exchange, surged by more than 11% during the short trading day on Monday, after Cboe and Nasdaq named Coinbase in their refiled applications to launch a spot bitcoin Exchange-Traded Fund. Cboe filed the application with the U.S. Securities and Exchange Commission on behalf of Fidelity, WisdomTree, VanEck, Invesco, and Ark Investment Management, while Nasdaq filed on behalf of BlackRock. The SEC tried to reject the initial filings as “inadequate” because they failed to name the Bitcoin exchange that the subject ETFs would collaborate with.
The potential of a spot Bitcoin ETF is seen as a significant development for the cryptocurrency industry. An ETF would offer broader access to Bitcoin, allowing investors to easily buy and sell it through a brokerage account, similar to trading stocks. However, the U.S. Securities and Exchange Commission has consistently rejected such funds since 2017, citing concerns about fraud and market manipulation. While several ETFs that own bitcoin futures already exist, the market views BlackRock's and Fidelity’s bids for a spot bitcoin ETF as the most promising, given the track record of successful applications from this asset managers.
✔️ Coinbase surges after Cboe names crypto exchange in bitcoin ETF application
✔️ Nasdaq refiles BlackRock's bitcoin ETF application with SEC
✔️ SEC Says Spot Bitcoin ETF Filings Are Inadequate
✔️ Cathie Wood’s ARK Says It’s First in Line for Spot-Bitcoin ETF
FIS Is In Advanced Talks to Sell Worldpay
Private equity firm GTCR is in advanced discussions to acquire a majority stake in the merchant business of payment processing company FIS, according to Reuters. The deal, which values FIS’s (NYSE: FIS) merchant business at $15 billion to $20 billion, would be GTCR's largest ever and would allow FIS to recover from its troubled $43 billion acquisition of Worldpay in 2019. The bulk of the FIS merchant business consists of Worldpay, which handles payment processing for various companies. GTCR's offer reportedly outperformed rival buyout firm Advent.
FIS acquired Worldpay for more than $30 billion with the goal of creating a diversified financial technology company offering payment processing services to large banks and retailers. However, after pressure from the activist investors DE Shaw and Jana Partners, the company’s management initiated a review of its business structure and eventually agreed to spin off its merchant business as a separate publicly traded company. The company announced the decision in February this year, and planned to complete the spin-off “within a year.”
JPMorgan and Other Big Banks Raise Dividends After Federal Reserve’s Stress Test
JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Morgan Stanley (NYSE: MS), and Goldman Sachs (NYSE: GS) have announced higher dividends after passing this year's Federal Reserve stress tests. All 23 major US banks that were subject to the stress test, were found to be capable of withstanding a severe recession and a real estate market turmoil. This year's stress test included a simulation of a severe global recession with a 40% decline in commercial real estate prices, a 38% decline in house prices, and an unemployment rate of 10%. Stress test results are used by the Federal Reserve to define capital requirements.
The results allow banks to return billions of dollars to investors through dividends and stock buybacks. Although all banks passed the test, the results were diverse. Thus, for JPMorgan this year’s results marked a reversal from the previous year, when the bank had to suspend share buybacks to build capital and meet its capital requirements. Citigroup, on the contrary, will face a higher stress capital buffer, which the company is trying to challenge by entering discussions with the Federal Reserve on the test’s projections. Banks saw their stock prices rise following the release of the stress results and announcements of increased dividends.
✔️ JPMorgan, Wells Fargo to Pay Higher Dividends After Stress Tests
✔️ Bank of America Says it Started Talks With Fed After Stress Test Results
✔️ Federal Reserve Board releases results of annual bank stress test
The big banks did well in the Federal Reserve’s stress test, but their stocks are still underperforming the S&P Market this year. Invesco KBW Bank ETF (NASDAQ: KBWB), which tracks the performance of the KBW Nasdaq Bank Index, is down 17.58% YTD, while S&P 500 is up 16.06%. This index is also underperforming S&P 500 on a 1-year, 3-year, 5-year, and 10-year basis 🤷🏻♂️
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Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.