Google agreed to pay $391.5 million and make changes to its user privacy controls as part of a settlement with a coalition of 40 state attorneys general. The coalition accused Google of misleading customers about location-tracking practices that informed ad targeting.

---

The deal represents the largest privacy settlement won by states in U.S. history. Even so, the payout amounts to a drop in the bucket for Google’s parent company Alphabet, which reported $13.9 billion in profit from the last quarter alone. In January, a smaller coalition of AGs sued Google over the location-tracking issue. And last month, Arizona attorney general Mark Brnovich won an $85 million settlement from Google over it.

State AGs had been working on this case since 2018, following an Associated Press report that found Google tracked users’ location data even when they explicitly turned off “Location History” tracking in Android or iOS settings. At the time, Google denied wrongdoing and maintained that users could further limit location-tracking services by turning off “Web and App Activity.” The AGs weren’t convinced, likely in part because Google’s in-house copy at the time told customers that “with Location History off, the places you go are no longer stored.”

A Google spokesperson told Protocol that the settlement was consistent with improvements made in recent years, and that the case involved “outdated product policies that we changed years ago.” As part of the settlement, Google will further clarify location-tracking disclosures beginning next year, The New York Times reports.

“The transparency requirements of this settlement will ensure that Google not only makes users aware of how their location data is being used, but also how to change their account settings if they wish to disable location-related account settings, delete the data collected and set data retention limits,” Michigan attorney general Dana Nessel wrote in a press release.

State AGs have had to compensate for a lack of online privacy regulation at the federal level. That may soon be changing, however, as Politico reported on Monday that a bipartisan group of lawmakers intends to push the American Data Privacy and Protection Act through in the lame duck session.

ADPPA includes provisions protecting user geolocation data, including its transfer to third parties. The bill leaves enforcement up to the FTC, state AGs, state privacy authorities, and the California Privacy Protection Agency.

Figures such as House Speaker Nancy Pelosi and Reps. Fred Upton and Billy Long shared concerns over ADPPA preempting state legislation. ADPPA sets out to supersede the existing patchwork of state laws, but in so doing it could crystalize the legislative landscape and make it more difficult for relatively nimble state legislatures to respond to evolving technologies.

Hello, and welcome to Protocol Policy! Today I’m thinking about how quickly things can become nasty in Washington, D.C. — and whether Sam Bankman-Fried’s dealings could accelerate that. Plus, the next Congress is coming into focus, Taiwan tensions are on everyone’s mind at the G20, and Elon Musk thinks he makes the right amount of money.

Before and after

FTX’s sudden, stunning collapse amid allegations that former CEO Sam Bankman-Fried was secretly siphoning off customer money is dragging down the industry and creating louder calls for regulation of the crypto industry. Still, Democratic control of the Senate, and a likely Republican but closely divided House, means that the battles over what regulation will look like are likely going to get more heated than the industry expected just a week ago. It could also mean crypto’s time as a subject of “pre-partisan” curiosity could be drawing to a close.

There’s little that galvinizes Democratic lawmakers and their allies among consumer groups like a bankruptcy in which more than a billion dollars are missing.

• The industry isn’t resisting the calls. Far from it: Major players are arguing that the lack of rules drives companies, like Bahamas-based FTX, offshore in search of clarity.
• Many crypto players say the chaos around SBF actually proves U.S. lawmakers and government agencies should hurry up.
• “This is the reason why policymakers in the United States should be focused on putting a clear regulatory framework in place that builds safe markets in the United States,” Circle CEO Jeremy Allaire told my colleague over at Protocol’s Fintech desk.

Theoretically, that sort of agreement could signal agreement on a legislative approach to the industry’s obligations and the legal classification of various digital offerings.

• In practice, the fact that the industry is grabbing for a talking point about needing regulation shows that any Washington effort could prove complicated.
• Some voices in crypto have, for a long time, actually been seeking federal rules — ones they can help craft, to guarantee weak oversight and protect incumbents — in a bid to escape onerous, case-by-case litigation by financial regulators wielding outdated statutes.
• And of course, U.S. laws haven’t stopped plenty of fraudsters — if that’s what SBF is — and many companies from going to places like the Bahamas because they’re just looking for weak regulation rather than clarity.

All that adds up to a lot of incentive for Democratic lawmakers to try to punish the industry, to which crypto business will cry, “We didn’t mean that kind of regulation!”

• Democrats have an advantage that many political prognosticators didn’t expect: They’ll still be holding power in the Senate next year, and likely will be in the minority in the House only by a few votes.
• They’ll still have to compromise if they want to get anything done in tech (or otherwise), but Democrats will also be in a stronger negotiating position, able to call hearings and decide what bills come up for votes in the chamber that tends to get its way in legislation.
• Crypto, like almost everyone else, had been expecting a much more Republican, pro-business Congress for 2023.
• Instead, bipartisan bills like the proposal from Sens. Gillibrand and Lummis — which crypto saw as, at least, the beginning of a positive conversation — will go away, continue to evolve in a Democratic direction, or simply founder amid partisan bickering.

That bickering may be the greatest risk for crypto.

• Up until now, the industry has mostly managed to have friends on both sides of the aisle in what some insiders have called a “pre-partisan” positioning.
• Sure, the loudest critics have been Democrats, and everyone assumes Republicans’ love of the finance sector makes them natural allies to the industry, but in lieu of staunch party lines there’s been room for nuance on both sides.
• Now, however, some in crypto land are distancing themselves from SBF by pointing out he was a major donor to Democrats, and was somewhat on the regulation train himself.
• The implication, of course, is that Republicans should resist rules fiercely as a matter of both principle and political loyalty.
• It’s a personal attack based on a lot of very large checks, and on top of the way the collapse has vindicated Democratic crypto skeptics, it could prompt lawmakers to take sides.

Crypto might even enjoy some bickering, as Republicans push back on Democratic proposals that would put a lot of digital assets under SEC jurisdiction, require more capital reserves at exchanges, and push know-your-customer rules throughout the ecosystem. Long-term, though, the more partisan crypto becomes, the harder it’ll be to pass the very legislation much of the industry is hoping for.

— Ben Brody (email | twitter)

In Washington

Republicans are on track to take control of the House. Current forecasts suggest they could win 221 seats; they will need 218 to control the chamber.

President Biden and President Xi met in the lead-up to the G20 summit. The leaders are believed to have discussed Taiwan tensions, climate change, and semiconductor export controls.

A group of parents urged congressional leaders to pass the Kids Online Safety Act and Children and Teens’ Online Privacy Protection Act. In the letter, 57 parents whose children have died blamed “Big Tech’s abject failure to regulate themselves and protect the young people using their products.”

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Read more

In the states

Google will pay more than $390 million to a coalition of 40 states over its collection of location data, according to an announcement from the Louisiana attorney general, who led the group.

Peter Thiel acolyte Blake Masters officially lost his bid to become a senator.

In the courts

Elon Musk is defending his Tesla pay package in court. An investor alleges Tesla’s board failed to disclose important information about the pay package, which was agreed upon in 2018 and is estimated to have generated $52 billion in wealth for Musk.

Elizabeth Holmes’ attorneys argue she should receive 18 months of house arrest instead of decades in prison. In the memorandum for the court, the lawyers describe Holmes as “a mentor to young women and entrepreneurs” and “a boss who cared about the company’s employees.”

On Protocol

Today Protocol published “The Future of Mobility,” a special report examining how policy and climate experts can work together to get people moving. Among the highlights:

• The 10 people driving the future of mobility list includes U.S. secretary of energy Jennifer Granholm; China’s head of National Development and Reform Commission, He Lifeng; and Indonesia’s minister of transportation, Budi Karya Sumadi.
• An interview with Michigan chief infrastructure officer Zachary Kolodin about why a net zero future doesn’t need to kill the two-car garage.

A Braintrust that asks industry experts about the biggest electrification milestone that needs to be hit in 2023. Answers included fine-tuning the IRA guidelines, figuring out who pays for decarbonization, and deploying the first round of payments through the National Electric Vehicle Infrastructure program.

​In the media, culture, and metaverse

Jeff Bezos said he will give away the majority of his wealth in his lifetime. In an interview with CNN, Bezos and his partner, Lauren Sánchez, said they were going to give a significant portion of the money to fighting climate change.

Twitter faces a growing list of ad boycotters, and winning them back could prove difficult, according to The Wall Street Journal. Chipotle, General Mills, General Motors, Mondelez, and United Airlines have all paused ad spend on Twitter.

Eli Lilly also paused its Twitter ad campaigns after a spoof account likely wiped billions from its market capitalization. An account that was fake but verified, thanks to the paid Blue Check system, posing as the pharmaceutical giant said it would give away insulin for free.

​In data

10,000: That’s approximately how many employees Amazon intends to lay off, according to The New York Times. The layoffs will reportedly focus on three divisions: devices, retail, and human resources.

​No such thing as a free lunch

Twitter’s workforce has become a shell of its former self — in part because that’s how Elon Musk planned it, and in part because many employees found his management style too abrasive to endure. The latest affront? Taking away free lunch. Musk reportedly plans to make Tweeps pay for food at the company cafeteria. It isn’t the end of the world, but it certainly won’t ease employee tensions.

​A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

The speed of business has never been faster than it is today. For small business owners, time is at a premium as they are wearing multiple hats every day. Macroeconomic challenges like inflation and supply chain issues are making successful money and cash flow management even more challenging.

Read more

Thanks for reading — see you Wednesday!

Good morning, and welcome to Protocol Fintech. This Monday: why crypto firms are publishing proof of reserves and everything you need to know about the FTX collapse.

Off the chain

Crypto is all about transparency and accountability now! I think I read that on Twitter, unless the person who wrote it deleted their tweet, which seems to be happening a lot now. On Thursday, Pershing Square’s Bill Ackman praised then-FTX CEO Sam Bankman-Fried: “I have never before seen a CEO take responsibility as he does here.” Bankman-Fried politely thanked him … and then Ackman removed his tweet. “The problem with Twitter is that it is too easy to tweet,” Ackman then posted. “The good news is that you can recall the missile before it causes too much collateral damage.” FTX customers might define “collateral damage” a little differently here.

— Owen Thomas (email | twitter)

The wonder of transparency

A common theme in the liquidity crunches that struck crypto firm after crypto firm this year is allegations — often later substantiated — that they mishandled customer funds. Even if they hadn’t, how would they prove they were above board? That lack of transparency has only fueled the bank-run-like behavior of crypto customers. With Celsius and Voyager Digital’s bankruptcies fresh in their minds, FTX customers piled on the withdrawal orders before it, too, filed for Chapter 11.

In the case of FTX, suspicions were well-founded: Despite CEO Sam Bankman-Fried’s claims otherwise, his firm lent out more than half of customer assets — up to $10 billion — to Alameda Research, the investment firm he also controlled, according to The Wall Street Journal.

To save crypto, the industry’s turning to the blockchain. A number of crypto exchanges are pledging to publish “proof of reserves,” blockchain-based evidence that they actually hold the assets they claim.

• Why doesn’t this already exist? That’s a fair question, and the lack of answers shows the opaque business practices that have sprung up around crypto. Think hedge funds but with even less regulation. It took the collapse of one of the world’s largest exchanges to force a rethink.
• “We need consumers to have more trust in crypto in order to drive more mainstream adoption,” said Jason Baptiste, CEO and co-founder of crypto app YDY. “Proof of reserves does this.”
• After CEO Changpeng “CZ” Zhao pledged to publish Binance’s reserves, the exchange put up a page on its website that links to various crypto wallets it claims to control. Binance says it has $2.2 billion in bitcoin and $2.5 billion in ether, among other tokens.
• OKX and Huobi also said they’d publish proof of reserves.

Transparency is just a stopgap. This type of transparency is a good step by the industry to demonstrate security and solvency, said Michael Fasanello, crypto compliance officer at Anchain.AI, but ultimately regulation is necessary to ensure safety and security of assets, he added.

• Congress is considering bills to regulate crypto, but none are close to passage. The EU’s MiCA rules are expected to roll out in 2024. Until those arrive, the industry will have to come up with its own measures, including proof of reserves or a self-regulatory organization like FINRA, to provide peace of mind to consumers and investors, Fasanello said.
• There is no standard for what or how companies should publish, which is a problem, said Denelle Dixon, CEO and executive director of the Stellar Development Foundation: “Simply publishing documents without consistent standards doesn’t help the investing public much."
• Coinbase argued in a blog post that there can’t be a bank run at Coinbase because it keeps all its customer funds secure and does not trade or use customer assets without their consent. “As you can review in our publicly filed, audited financial statements, we hold customer assets 1:1. Any institutional lending activity at Coinbase is at the discretion of the customer and backed by collateral,” wrote CFO Alesia Haas.

The outside world is now considering centralized crypto exchanges’ lack of transparency, but insiders in the DeFi camp have long criticized it. DeFi applications, they point out, automatically provide transparency on the blockchain. The problem with centralized crypto is that they haven’t fully embraced the blockchain, to their thinking. “The whole damn point of crypto is so that you don’t have to say, ‘I wonder what that company is actually doing with my money,’” Robert Leshner, founder of DeFi firm Compound Labs, wrote on Twitter. The real wonder is that we’ve had to wonder at all.

— Tomio Geron (email | twitter)

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Read more

On the money, FTX edition

On Protocol: FTX filed for bankruptcy Friday, sending further shockwaves through the crypto industry. Reuters reported that at least $1 billion in customer funds had gone missing.

Even before that, FTX had the White House's attention. “The administration has consistently maintained that without proper oversight, cryptocurrencies risk harming everyday Americans,” press secretary Karine Jean-Pierre said Thursday.

The fallout goes international. The Securities Commission of The Bahamas already suspended FTX’s license. Now, it’s “working closely” with the country’s Financial Crimes Investigation Branch to look into possible criminal misconduct.

Also on Protocol: Circle CEO Jeremy Allaire said FTX’s collapse will speed the arrival of regulation.

FTX.US resigned from the Crypto Council for Innovation.

FTX Arena is no more. Miami-Dade County and the Miami Heat have terminated their relationship with the bankrupt crypto exchange. The signage is already coming down.

​On the money, everything else edition

Crypto.com made a $400 million oopsie. The exchange accidentally transferred 320,000 ether to another exchange rather than a cold wallet. Crypto.com recovered the assets.

Toast shares soared after reporting a positive outlook. The payments and software company boosted its guidance for the fourth quarter and the full year as it reported earnings Thursday.

JPMorgan Chase and Mastercard have teamed up on direct payments. The pay-by-bank product would allow merchants to take ACH payments directly from a person’s bank account.

On Protocol: Fraud is the most common type of crypto complaint sent to the CFPB.

Credit card interest rates are going up — way up. The cost of carrying a balance on your credit card is now the highest it's been in more than 30 years.

​Overheard

Struggling to explain the FTX crisis to people outside the industry? You’re not alone. Here’s what podcaster Laura Shin is going with: “It’s like if the person you thought was Hermione actually turned out to be Voldemort.”

The Bank Policy Institute had its own spin: “Trading one token for another token or for a nonbank stablecoin is unconnected to the real economy. So, concerns about financial stability risks of crypto appear to have been overstated.”

And former SEC official John Reed Stark had a historical call-back: “This is Bank of America buys Countrywide redux.”

Kristin Smith, executive director of the Blockchain Association, took the occasion to tidy up her Twitter timeline: “Just unfollowed SBF on Twitter. Felt good. Excited to move forward. Lots of work to do.”

Coming up

The Financial Brand Forum, which started Sunday, continues through Wednesday in Las Vegas. Magic Johnson, Jay Leno, and “Shark Tank’s” Daymond John are among the speakers and performers.

The Fintech Talents Festival is today and tomorrow in London. FTT brings together credit unions, technology providers, and fintechs to discuss how to evolve U.K. banking.

FinVolution Group reports earnings today. Its EPS was $0.34 for this quarter last year.

The U.S. House Committee on Financial Services will have a hearing tomorrow on U.S. capital flows to foreign adversaries. Congress is considering several bills meant to increase transparency and accountability in business dealings with foreign companies, particularly those in China.

The U.S. Senate Committee on Banking, Housing, and Urban Affairs will also have a hearing on Tuesday. The hearing covers regulatory oversight of banks and credit unions, with witnesses representing the Board of Governors of the Federal Reserve System, the National Credit Union Administration, the FDIC, and the Office of the Comptroller of the Currency.

The sixth annual RegTech Summit happens in New York this Wednesday. The all-day event focuses on compliance innovation and supporting regulatory change.

FIMA Europe is this Wednesday and Thursday in London. The financial data management trade show includes speakers from HSBC, Deutsche Bank, and BNP Paribas Fortis.

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

The speed of business has never been faster than it is today. For small business owners, time is at a premium as they are wearing multiple hats every day. Macroeconomic challenges like inflation and supply chain issues are making successful money and cash flow management even more challenging.

Read more

Thanks for reading — see you tomorrow!

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Penny Lee, Chief Executive Officer, Financial Technology Association

Financial technology is breaking down barriers to financial services and delivering value to consumers, small businesses, and the economy. Financial technology or “fintech” innovations use technology to transform traditional financial services, making them more accessible, lower-cost, and easier to use.

Fintech puts American consumers at the center of their finances and helps them manage their money responsibly. From payment apps to budgeting and investing tools and alternative credit options, fintech makes it easier for consumers to pay for their purchases and build better financial habits.

Nearly half of fintech users say their finances are better due to fintech and save more than $50 a month on interest and fees. Fintech also arms small businesses with the financial tools for success, including low-cost banking services, digital accounting services, and expanded access to capital.

The Financial Technology Association represents the innovators shaping the future of finance, whether it’s streamlining online payments, expanding access to affordable credit, giving small businesses and creators the tools for success, or empowering everyday investors to build wealth. We advocate for modernized financial policies and regulations that allow fintech innovation to drive competition in the economy and expand consumer choice.

Join FTA’s inaugural Fintech Summit in partnership with Protocol on November 16 as we discuss these themes. Spots are still available for this hybrid event, and you can RSVP here to save your seat. Join us as we discuss how to shape the future of finance.

Alex Marsh, Global Head of Policy, Klarna

In its broadest sense, Open Banking has created a secure and connected ecosystem that has led to an explosion of new and innovative solutions that benefit the customer, rapidly revolutionizing not just the banking industry but the way all companies do business. Target benefits are delivered through speed, transparency, and security, and their impact can be seen across a diverse range of use cases.

Sharing financial data across providers can enable a customer (individual or business) to have real-time access to multiple bank accounts across multiple institutions all in one platform, saving time and helping consumers get a more accurate picture of their own finances before taking on debt, providing a more reliable indication than most lending guidelines currently do.

Open Banking can also widen the net of prospective lenders by providing an immediate and accurate understanding of a customer’s financial history, allowing more lenders to better understand the specific risk profile and hence drive a more competitive loan product for the end customer.

Companies can also create carefully refined marketing profiles and therefore, finely tune their services to the specific need. Open Banking platforms like Klarna Kosma also provide a unique opportunity for businesses to overlay additional tools that add real value for users and deepen their customer relationships.

The increased transparency brought about by Open Banking brings a vast array of additional benefits, such as helping fraud detection companies better monitor customer accounts and identify problems much earlier. The list of new value-add solutions continues to grow.

Todd Denbo, Commercial Leader of Money & CEO of Intuit Financing, Inc., Intuit

The speed of business has never been faster than it is today. For small business owners, time is at a premium as they are wearing multiple hats every day. Macroeconomic challenges like inflation and supply chain issues are making successful money and cash flow management even more challenging. In fact, according to a recent Intuit QuickBooks survey, 99% of small businesses are concerned about inflation.

This presents a tremendous opportunity that innovation in fintech can solve by speeding up money movement, increasing access to capital, and making it easier to manage business operations in a central place. Fintech offers innovative products and services where outdated practices and processes offer limited options.

For example, fintech is enabling increased access to capital for business owners from diverse and varying backgrounds by leveraging alternative data to evaluate creditworthiness and risk models. This can positively impact all types of business owners, but especially those underserved by traditional financial service models.

When we look across the Intuit QuickBooks platform and the overall fintech ecosystem, we see a variety of innovations fueled by AI and data science that are helping small businesses succeed. By efficiently embedding and connecting financial services like banking, payments, and lending to help small businesses, we can reinvent how SMBs get paid and enable greater access to the vital funds they need at critical points in their journey.

Overall, we see fintech as empowering people who have been left behind by antiquated financial systems, giving them real-time insights, tips, and tools they need to turn their financial dreams into a reality.

Mahesh Kedia VP, GTM Strategy, New Market Entry and Revenue Operations, Marqeta

Innovations in payments and financial technologies have helped transform daily life for millions of people. Despite these technological advances, 22% of American adults fall in the unbanked or underbanked category (source: Federal Reserve). People who are unbanked often rely on more expensive alternative financial products (AFPs) such as payday loans, money orders, and other expensive credit facilities that typically charge higher fees and interest rates, making it more likely that people have to dip into their savings to stay afloat. Now that more of the under/unbanked population has access to web-enabled smartphones, there are many advances in fintech that can help them access banking services. A few examples include:

Mobile wallets - The unbanked may not have traditional bank accounts but can have verified mobile wallet accounts for shopping and bill payments. Their mobile wallet identity can be used to open a virtual bank account for secure and convenient online banking.

Minimal to no-fee banking services - Fintech companies typically have much lower acquisition and operating costs than traditional financial institutions. They are then able to pass on these savings in the form of no-fee or no-minimum-balance products to their customers.

Help building credit - Some fintech companies provide a credit line to the under/unbanked against a portion of their personal savings, allowing them to build a credit history over time.This enables immigrants and other populations that may be underbanked to move up the credit lifecycle to get additional forms of credit such as auto, home and education loans, etc.

By providing access to banking services such as fee-free savings and checking accounts, remittances, credit services, and mobile payments, fintech companies can help the under/unbanked population to achieve greater financial stability and wellbeing.

Katherine Carroll, Global Head of Policy and Regulation, Stripe

Entrepreneurs from every background, in every part of the world, should be empowered to start and scale global businesses.

Most businesses still face daunting challenges with very basic matters. Incorporation. Tax. Payments. These are still very manually intensive processes, and they are barriers to entrepreneurship in the form of paperwork, PDFs, faxes, and forms. Stripe is working to solve these rather mundane and boring challenges, almost always with an application programming interface that simplifies complex processes into a few clicks.

Whether it’s making it easy for businesses to accept payments from around the world, helping anyone, anywhere incorporate correctly in a matter of hours, or tailoring loans to businesses’ needs, Stripe services are making it possible for businesses of all sizes to use the tools that formerly were reserved for big companies in big cities. Of the companies that incorporated using Stripe, 92% are outside of Silicon Valley; 28% of founders identify as a minority; 43% are first-time entrepreneurs. Stripe powers nearly half a million businesses in rural America. Collectively, they outpace urban business revenue by 30%.

The internet economy is just beginning to make a real difference for businesses of all sizes in all kinds of places. We are excited about this future.

Teddy Flo, Chief Legal Officer, Zest AI

What I believe is most important — and what we have honed in on at Zest AI — is the fact that you can’t change anything for the better if equitable access to capital isn't available for everyone. The way we make decisions on credit should be fair and inclusive and done in a way that takes into account a greater picture of a person. Lenders can better serve their borrowers with more data and better math. Zest AI has successfully built a compliant, consistent, and equitable AI-automated underwriting technology that lenders can utilize to help make their credit decisions. Through Zest AI, lenders can score underbanked borrowers that traditional scoring systems would deem as “unscorable.” We’ve proven that lenders can dig into their lower credit tier borrowers and lend to them without changing their risk tolerance.

Andrew Gray, Partner, Morgan Lewis

While artificial intelligence (AI) systems have been a tool historically used by sophisticated investors to maximize their returns, newer and more advanced AI systems will be the key innovation to democratize access to financial systems in the future. Despite privacy, ethics, and bias issues that remain to be resolved with AI systems, the good news is that as larger datasets become progressively easier to interconnect, AI and related natural language processing (NLP) technology innovations are increasingly able to equalize access. The even better news is that this democratization is taking multiple forms.

AI can be used to provide risk assessments necessary to bank those under-served or denied access. AI systems can also retrieve troves of data not used in traditional credit reports, including personal cash flow, payment applications usage, on-time utility payments, and other data buried within large datasets, to create fair and more accurate risk assessments essential to obtain credit and other financial services. By expanding credit availability to historically underserved communities, AI enables them to gain credit and build wealth.

Additionally, personalized portfolio management will become available to more people with the implementation and advancement of AI. Sophisticated financial advice and routine oversight, typically reserved for traditional investors, will allow individuals, including marginalized and low-income people, to maximize the value of their financial portfolios. Moreover, when coupled with NLP technologies, even greater democratization can result as inexperienced investors can interact with AI systems in plain English, while providing an easier interface to financial markets than existing execution tools.

John Pitts, Global Head of Policy at Plaid

Open finance technology enables millions of people to use the apps and services that they rely on to manage their financial lives – from overdraft protection, to money management, investing for retirement, or building credit. More than 8 in 10 Americans are now using digital finance tools powered by open finance. This is because consumers see something they like or want – a new choice, more options, or lower costs.

What is open finance? At its core, it is about putting consumers in control of their own data and allowing them to use it to get a better deal.

When people can easily switch to another company and bring their financial history with them, that presents real competition to legacy services and forces everyone to improve, with positive results for consumers. For example, we see the impact this is having on large players being forced to drop overdraft fees or to compete to deliver products consumers want.

We see the benefits of open finance first hand at Plaid, as we support thousands of companies, from the biggest fintechs, to startups, to large and small banks. All are building products that depend on one thing - consumers' ability to securely share their data to use different services.

Open finance has supported more inclusive, competitive financial systems for consumers and small businesses in the U.S. and across the globe – and there is room to do much more. As an example, the National Consumer Law Consumer recently put out a new report that looked at consumers providing access to their bank account data so their rent payments could inform their mortgage underwriting and help build credit. This is part of the promise of open finance.

At Plaid, we believe a consumer should have a right to their own data, and agency over that data, no matter where it sits. The CFPB's recent kick off of its 1033 rulemaking was particularly encouraging as is the agency’s commitment to strong consumer data rights and emphasis on promoting competition. This will be essential to securing benefits of open finance for consumers for many years to come.

Good morning! Adam Selipsky’s goal as CEO of AWS is to help customers use the cloud to operate more efficiently amid a challenging economic environment. And that will be one of the main focuses of this year’s re:Invent. Let’s dig in!

What's next for Adam Selipsky’s AWS

AWS re:Invent starts two weeks from now, an end-of-year showcase typically reserved for the dominant cloud provider’s biggest service announcements, technology sessions, and customer success stories.

This year’s re:Invent comes amid global economic pain, months of tech layoffs, and a general belt-tightening that includes many companies curtailing their cloud spending.

• But CEO Adam Selipsky suggested that the worst of times often are the best time when it comes to enterprises investing in new services or modernizing their IT approach.
• When a challenge or crisis hits, companies who are prepared and able to move fast will gain advantage, he told Protocol’s Donna Goodison. “So we see a lot of customers actually leaning into their cloud journeys during these uncertain economic times,” he said.

Cost-efficiency is front and center now for some AWS customers, thanks to the state of the economy.

• Customers are looking to save money versus their committed spend, and AWS is proactively working to help them cost-optimize, “just as we've done throughout AWS’ history, especially in periods of economic uncertainty,” he said.
• AWS continues to see a strong customer appetite for signing longer-term commitments, according to Selipsky, which was part of a big push under the last several years of Jassy’s tenure as CEO.
• “But every customer is welcome to purely 'pay by the drink' and to use our services completely on demand,” Selipsky told Donna.

AWS is experimenting with some new approaches to billing, Protocol has learned that , charging its customers by tying its fees to whether they realize predetermined results from the cloud. That will be particularly helpful for enterprises that, amid the uncertainty, are taking a closer look at their ROI on cloud spending

• And as AWS looks to further help enterprises operate more efficiently and solve their business problems, data will be a big focus at this year's conference.

“Succeeding with data in today's world really requires taking the end-to-end view of your data and not looking at point solutions along the journey,” Selipsky said. “A lot of people are drowning in their data and don't know how to use it to make decisions.”

Read more: AWS is "not done building" as cloud computing matures

Can crypto prove its liquidity?

A lot happened with FTX this weekend: The company filed for bankruptcy on Friday; reports of missing customer funds surfaced on Saturday; and authorities in the Bahamas have started a criminal probe of the company.

A common theme in the liquidity crunches that have struck crypto firm after crypto firm this year are allegations — often later substantiated — that they mishandled customer funds. And a lack of transparency has only fueled the bank-run-like behavior of crypto customers, writes Protocol’s Tomio Geron.

• With Celsius and Voyager Digital’s bankruptcies fresh in their minds, FTX customers piled on the withdrawal orders before it, too, filed for Chapter 11.
• In the case of FTX, their suspicions were well-founded: Despite CEO Sam Bankman-Fried’s claims otherwise, his firm lent out more than half of customer assets — up to $10 billion — to Alameda Research, the investment firm he also controlled, according to The Wall Street Journal.

To save crypto, the industry’s turning to ... the blockchain. A number of crypto exchanges are pledging to publish “proof of reserves,” blockchain-based evidence that they actually hold the assets they claim.

• Why doesn’t this already exist? That’s a fair question, and the lack of answers shows the opaque business practices that have sprung up around crypto.
• “We need consumers to have more trust in crypto in order to drive more mainstream adoption,” said Jason Baptiste, CEO and co-founder of crypto app YDY. “Proof of reserves does this.”

This type of transparency is a good step by the industry to demonstrate security and solvency, said Michael Fasanello, crypto compliance officer at Anchain.AI, but ultimately regulation is necessary to ensure safety and security of assets, he added.

• Congress is considering bills to regulate crypto, but none are close to passage. The EU’s MICA rules are expected to roll out in 2024.
• Until those arrive, the industry will have to come up with its own measures, including proof of reserves or a self-regulatory organization like FINRA, to provide peace of mind to consumers and investors, Fasanello said.

DeFi advocates have long criticized centralized crypto and the way its exchanges lack transparency: DeFi applications, they point out, automatically provide transparency on the blockchain; the problem with centralized crypto is that it doesn't fully embrace the blockchain, to their thinking.

• “The whole damn point of crypto is so that you don’t have to say, ‘I wonder what that company is actually doing with my money,’” Robert Leshner, founder of DeFi firm Compound Labs, wrote on Twitter. The real wonder is that we’ve had to wonder at all.

A version of this story will appear in today’s Fintech newsletter. Sign up here to get it in your inbox every weekday.

Two-wheelers to the rescue

Road transport is responsible for 12% of global greenhouse gas emissions. Decarbonizing how we get around and doing so as efficiently as possible — given the tight supply of critical minerals needed for batteries — is vital to stave off the most catastrophic impacts of climate change. And electric two-wheelers might the answer, writes Protocol’s Brian Kahn.

Just how big is the electric two-wheeler market? Last year, nearly 17 million passenger EVs were in operation globally. Meanwhile, a BloombergNEF analysis found that 275 million electric motorcycles, tuk-tuks, mopeds, and scooters were in operation globally at the same moment. And 42% of all two- and three-wheelers sold last year were of the electric variety.

• Together, those electric two- and three-wheelers are displacing the use of more than 1 million barrels of oil a day, more than all electric passenger vehicles, vans, trucks, and buses combined.
• The vast majority of those vehicles are being sold in Asia, with China taking up the lion’s share of the market. In 2021 alone, the country saw roughly 9.5 million new two-wheel EVs registered. Other countries, though, are also seeing two- and three-wheel EVs make in-roads.

What’s driven the rise of electric two-wheelers is a suite of policies and tech innovations that has made them accessible — and appealing — to the masses.

• In China, for instance, a number of major cities banned the sale of new motorcycles due to air-quality concerns in the 2000s. Those policies accidentally created a market for two-wheel e-mobility whole cloth.
• Technological innovation has also spurred two-wheel EV adoption, with the likes of Taiwan's Gogoro growing a huge network of users thanks partly to its convenient battery-swapping technology.

The inherent efficiency and affordability of small, two-wheeled EVs mean they could play a vital role in speeding up the electrification of transportation. The incentives and innovations currently being developed in emerging economies could be used to reshape transit in developed nations — and reduce carbon emissions more effectively than fleets of Teslas ever could.

Read more: The EV revolution is here, and it’s happening on two wheels. Also check out the rest of Protocol’s Special Report on the future of mobility.

​A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

People are talking

Circle CEO Jeremy Allaire said FTX’s collapse is “very comparable” to the fall of luna and UST:

• “This is the reason why policymakers in the United States should be focused on putting a clear regulatory framework in place that builds safe markets in the United States and doesn't have people moving into opaque jurisdictions.”

Klarna CEO Sebastian Siemiatkowski worries that FTX's failure could bring about tighter regulation across all of fintech:

• “I’m a little bit concerned that these debacles that we’ve seen will again inhibit that and continuously prolong the overly large profitability that we’ve seen in the banking industry.”

• "We do need some regulations, we do need to do this properly, we do need to do this in a stable way."

Elon Musk admitted that he is overloaded right now:

• "I have too much work on my plate that is for sure."

Coming this week

Elon Musk is back in court to defend is compensation package at Tesla.

Financial services tech convention CrossTech World starts tomorrow and runs until Thursday in Miami.

Nodes 2022, a free online graph tech conference for developers and data scientists, runs Wednesday and Thursday.

Software delivery conference Unscripted will take place on Wednesday in San Francisco.

Cisco and Nvidia report earnings on Wednesday.

Tech leadership conference CIO & CISO Perspectives will take place in Chicago on Thursday and New York on Friday.

In other news

Binance paused accepting deposits of FTX's FTT token on its platform. CEO Changpeng Zhao warned other platforms to do the same.

The latest development in Twitter verification? "Rolling out soon, Twitter will enable organizations to identify which other Twitter accounts are actually associated with them," Elon Musk tweeted.

Twitter cut 80% of its contractors, according to Platformer, or about 4,400 of 5,500 such workers. Full-time employees who worked with them reportedly weren't given any notice.

SpaceX bought a huge Twitter ad campaign, according to CNBC, which could have cost $250,000 or more. Sources told CNBC that it's the first time SpaceX has done this.

Big Tech's share prices rebounded some last week. But some investors think that's temporary.

Salesforce recently updated its internal policies to make it easier for managers to terminate employees for performance issues without HR involvement.

The CFPB said fraud and scam reports are among the top complaints it receives regarding crypto. Customers are finding little help from companies when it happens.

Apple is enlisting developers to help build a 3D mixed-reality world for its upcoming headset, Bloomberg reports.

Neither (light) rain, nor heat, nor gloom of night

Amazon’s delivery drones are getting just a little bit tougher. The company unveiled drones that can fly through light rain and make less noise. Though they’re quick — the company promises delivery times of 30 minutes — the compact drones can only carry loads of up to 5 pounds, so don’t count out delivery trucks just yet. The company has also unveiled a new robotic arm, called Sparrow, that can pick a wide variety of individual items using suction cups.

​A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.