Payments provider Affirm to sunset crypto program after 19% staff cut

February 9, 2023 Coin Telegraph

Affirm

Users will not be able to buy Bitcoin after Mar. 2, and the “Affirm Crypto Program” will officially shut down on Mar. 31.

Max Levchin, the CEO of buy-now-pay-later company Affirm, has confirmed that they will be shutting down their “Affirm Crypto Program” amid dampening consumer spending and a changing macroeconomic environment.

The CEO released a letter to shareholders on Feb. 8 alongside a 19% staff cut. He cited uncertain macroeconomic conditions and the need to offset some liabilities on the firm’s balance sheet as the two main reasons behind the decision:

“In a period of increased economic uncertainty, we are doubling down on our core businesses, delaying projects with less certain revenue timelines, and aligning our operating expenses with revenue. Concurrent with reducing our workforce, we are sunsetting several initiatives, such as Affirm Crypto.”

The firm’s chief financial officer Michael Linford said the decision was made to meet profitability goals.

“We have taken decisive actions to reduce expenses. We believe our cost base is now appropriately sized to meet our profitability goals while still supporting our product roadmap and long-term growth ambitions,” he said.

Affirm is a millennial-facing payments service provider similar to Afterpay which allows customers to purchase a product online and pay later.

The firm launched the “Affirm Crypto Program” in late 2021 near crypto’s market peak when it partnered with Bitcoin payments platform NYDIG to process Bitcoin (BTC) transactions and provide a crypto account for Affirm users.

The program enabled users to set up a scheme where monthly interest accrued from a user’s savings account would be automatically converted into BTC.

However, Affirm noted its cryptocurrency program will officially close on Mar. 31, according to the Affirm website:

“On March 2, 2023, the ability to purchase bitcoin through the Affirm app will end. We will be discontinuing the Affirm Cryptocurrency Program on March 31, 2023.

“Any bitcoin in your account when the program ends will be sold at CME CF Bitcoin Reference Rate (BRR) as of 4:00 p.m. London Time, and the sale proceeds will be deposited into your Affirm Savings account,” the note added.

*As of Mar. 2, Affirm users will no longer be able to buy Bitcoin. Source:* *Affirm.*

The shutdown is of course a part of a larger staff cleanout for the San Francisco-based lending platform. Levchin said the 19% reduction in its workforce took effect today.

In a Feb. 8 note to employees, Levchin shouldered the blame by stating that he acted too slowly to actions from the U.S. Federal Reserve:

“Everything changed in mid-2022. Over the last three quarters, the Fed increased its benchmark rate at an unprecedented pace. This has already dampened consumer spending and increased Affirm’s cost of borrowing dramatically. The root cause of where we are today is that I acted too slowly as these macroeconomic changes unfolded.”

Approximately 2,593 individuals claim to be employed at Affirm, according to current figures from LinkedIn.

This means about 500 people were likely impacted by today’s announcement.

Cointelegraph reached out to Affirm to find out how many employees related to its crypto initiative were impacted, however, no additional information was shared.

The CEO did however state in the letter that he expects to keep the current headcount to remain essentially flat for the foreseeable future.

The price of Affirm’s stock, tickered AFRM, has fallen 19.1% in after-hours trading in the NASDAQ, according to Google Finance.

Afterpay ‘absolutely’ keen to explore crypto services after regulations clarified

September 9, 2021 Coin Telegraph

Afterpay

Afterpay spoke as part of the Senate inquiry into “Australia as a Technology and Financial Center” and Lee Hatton said there would be enough consumer demand to offer crypto services.

Australian buy now pay later (BNPL) giant Afterpay — now part of Jack Dorsey's Square — has said that it is likely to pursue cryptocurrency services once the regulatory framework is clear.

Following on from Afterpay’s submission to the Senate inquiry into “Australia as a Technology and Financial Center” which posited that merchants could slash payment costs by utilizing cryptocurrencies, representatives spoke to the inquiry on Sept. 8.

Afterpay’s vice president for public policy and communications Damian Kassabgi said that “this idea of being able to exchange currencies from person to person or to a merchant without going through the traditional rails could create a lot of efficiencies.”

Crypto-friendly Liberal senator Andrew Bragg asked if Afterpay had plans to offer crypto services in the future. Lee Hatton, the executive vice president at Afterpay responded that once the regulatory path was clear, the firm would be likely to meet the demand of crypto from its customers:

“Once we're able to understand the regulatory framework in this space, we can absolutely see where our customers are going. And it would seem to us that they are going to want to participate in this way.”

“We will absolutely see a part of our customers starting to leverage [Bitcoin] and we would absolutely be looking for a way to support them to do that,” she added.

The regulatory landscape of crypto in Australia remains unclear as the government is yet to put a detailed framework in place. Bragg urged the government back in May to “stay ahead of the game” by introducing regulations to protect consumers and foster innovation.

Relat Blockchain Australia says gov’t still dismissing industry as a ‘wild west’

The discussion moved on to stablecoins, with Kassabgi emphasizing the significance of using an Australian dollar (AUD) backed stablecoin for payments between consumers and merchants.

“It is not hard to imagine a world where a privately issued stablecoin that is pegged to the Australian dollar, one that passes from consumer-to-consumer or consumer-to-merchant with very little friction where the traditional payment rails are not used, where interchange fees are close to non-existent, and where there is no commercial bank as an intermediary,” he said.

“There are many benefits to this future outlook. However, there is work to be done to create a safe and efficient regulatory environment,” he added.

Afterpay tells Senate inquiry crypto could slash merchant payment costs

September 8, 2021 Coin Telegraph

Afterpay

Afterpay told the Australian Senate that using crypto could cut payments costs for merchants, and that the government should work to create a framework for an AUD-backed stablecoin.

Australian buy now pay later (BNPL) firm Afterpay believes that local merchants can slash payment costs by utilizing cryptocurrencies.

In a submission to the Senate inquiry into “Australia as a Technology and Financial Center”, Afterpay stated that the use of blockchain-based transactions would cut the fees associated with traditional payment methods including card issuer, network operator and banking fees:

“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”

Under the crypto model, the customer would front the cost of validating the payment on the blockchain. This could either be relatively cheap or costly depending on which cryptocurrency and blockchain the transaction is conducted with, or how congested a network is at any given time.

If such a scenario were to play out, Afterpay stated that transaction fees would be transparent and customers would be granted the choice to “wait for more favorable network conditions and a lower cost,” before making transactions.

The inquiry is investigating a broad range of factors related to financial tech, such as the economic and employment opportunities posed by crypto and blockchain tech, barriers to the uptake of new technologies, and the impact of corporate law “restraining new investment” in Australia. Afterpay will be speaking before the Senate committee later today (Sept. 8).

While BNPL competitors Zip have outlined plans to offer crypto trading services for its Australian and U.S.-based customers, Afterpay is yet to reveal any plans to work with digital assets. However, crypto-friendly payments firm Square acquired Afterpay in a $29 billion stock deal announced on Aug. 1, which could see the firm enter the space in the future.

In its submission to the senate, Afterpay noted that it "does not currently offer crypto-related products” but is actively “considering” how innovative fintech features could function as a part of the alternative financial platform.

Stablecoins down under

On the topic of stablecoins, Afterpay emphasized that the Australian government should work with the crypto sector to consider what “framework an optimal environment for an AUD-backed stablecoin should look like."

According to Afterpay, the objective should be to provide stablecoin users with protections concerning the asset but regulate it in a way that doesn’t stifle fintech innovation in Australia.

“This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting,” it said.

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