Credit: Giphy
Also in this letter:
- Jack Dorsey said to exit Twitter
- Paytm shares continue to slide
- upGrad makes first overseas deal
No proposal to recognise Bitcoin as a currency: FM Sitharaman
Finance Minister Nirmala Sitharaman.
The government has no proposal to recognise Bitcoin as a currency in the country, finance minister Nirmala Sitharaman said in a reply to the Lok Sabha today. She also informed the House that the government does not collect data on Bitcoin transactions.
Tell me more: The government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the ongoing winter session of the Parliament. The Bill seeks to ban all but a few private cryptocurrencies to promote underlying technologies while allowing an official digital currency by the Reserve Bank of India.
Moment of truth for crypto: The cryptic language in the Lok Sabha bulletin has pushed the cryptocurrency community in India towards its moment of truth. Never before has the mere description of a bill set to be introduced in Parliament caused such a bloodbath. The proposal for a central bank digital currency (CBDC) backed by RBI may be included in the upcoming bill to regulate cryptocurrency, we reported earlier today citing a top government official.
A crypto IPO? The country’s first cryptocurrency unicorn, CoinDCX, plans to pursue an initial public offering as soon as government regulations allow it, cofounder Neeraj Khandelwal said.
CoinDCX cofounders Neeraj Khandelwal (left) and Sumit Gupta.
The share sale would be a key vote of confidence for India’s digital asset industry similar to Coinbase Global Inc.’s US listing earlier this year, Khandelwal said in an interview with Bloomberg Television Monday.
Quote: “As soon as the government or the situation allows us, we will try for an IPO,” he said. “An IPO gives legitimacy to the industry, just like the Coinbase IPO gave a lot of confidence in the crypto markets. Similarly, we want to instil a similar level of confidence with an IPO of CoinDCX.”
Back & Forth: Regulators have gone back and forth on their stance toward the burgeoning industry. The country effectively banned crypto transactions in 2018, but that restriction was struck down by the Supreme Court last year.
The proposed legislation will have a positive impact as it provides clarity for investors and firms such as CoinDCX, Khandelwal said.
- “The bill coming up at this juncture signals progress and really acknowledgment from the government side of the growing investor base for crypto,” Khandelwal said.
CoinDCX raised Rs 670 crore this year from investors led by Facebook cofounder Eduardo Saverin’s B Capital Group. The funding round valued the firm at $1.1 billion, cofounder and CEO Sumit Gupta said at the time.
Twitter CEO Jack Dorsey said to step down
Twitter CEO Jack Dorsey.
Jack Dorsey, the chief executive officer of Twitter Inc., is expected to step down, CNBC reported on Monday, citing sources. Shares of the microblogging platform surged 9% in early trading, while those of Square Inc., which is also helmed by Dorsey, were up 3%.
Twitter was not immediately available for comment.
In his last tweet on Nov. 28, Dorsey had said, “I love twitter”.
In early 2020, Dorsey faced calls from Elliott Management Corp. to step down, after the hedge fund argued he was paying too little attention to Twitter while also running payments processing company Square Inc. Dorsey fended off this pressure by giving Elliott and its ally, buyout firm Silver Lake Partners, seats on Twitter’s board.
Paytm shares slide as analysts question Q2 results
Paytm founder Vijay Shekhar Sharma.
Shares in India’s One 97 Communications Ltd, the parent entity of Paytm, fell as much as 4.6% on Monday after the fintech company’s net loss widened in the July-September quarter due to a rise in expenses even as revenue rose. The stock pared some of the losses to end the day 2.64% lower at Rs 1,734.20 apiece.
By the numbers: In its first earnings report since going public earlier this month, Paytm said expenses rose 37.1% year-on-year to Rs 1,599 crore and consolidated net loss increased to Rs 474 crore from Rs 437 crore a year ago. Revenue from operations surged 63.6% to Rs 1,086 crore for the quarter ended September.
Analyst speak: “Paytm faces stiff challenges in its customer acquisition engine which would slow down its revenue growth in the core payments business while scale-up of its related ecosystem businesses (commerce, cloud and financial services) leaves much to be desired,” analysts led by Sameer Bhise at JM Financial Institutional Securities wrote in a note, initiating coverage with a sell rating and Rs 1,240 price target.
Paytm CEO Vijay Shekhar Sharma highlighted the company’s ramp-up in the key segment of lending—an important and fast-growing market in credit-starved India, where digital fintechs such as Paytm are serving millions of consumers and merchants.
Quote: “We are fully committed to head down and execute and deliver great results quarter-on-quarter, year-on-year forward on that,” Sharma said in his opening comments.
Paytm raised $2.5 billion in its IPO but its debacle of a debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s.
Also Read: Behind Paytm’s dismal IPO and its constant valuation catchup
The company’s path to profitability could be through accelerating lending, commerce and cloud services as well as cutting down on marketing expenditure, Anand Dama of Emkay Global Financial Services told Bloomberg. Expected moderation in the high-margin wallet business could lead to sustained pressure on revenue growth especially in the payments business, he said.
Tweet of the day
Facebook-Giphy deal set to be blocked by UK regulator
The United Kingdom’s competition regulator is expected to block Facebook’s acquisition of GIF platform Giphy in the upcoming days in an escalation of the watchdog’s assault on Big Tech, the Financial Times reported.
Tech crackdown: The Competition and Markets Authority is set to reverse the Facebook-Giphy deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said.
Penaly on Facebook: The regulator had in October fined the social media giant £50.5 million for breaching an order that was imposed during an investigation into its purchase of Giphy. The regulator had also imposed an additional £500,000 penalty for changing a chief compliance officer twice without consent.
Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app Instagram. The deal was then pegged at $400 million by Axios.
Meanwhile, Australian Prime Minister Scott Morrison said that Facebook will show it has no interest in making the online world safe if it quits the country over laws holding it liable for defamtion on its platform.
Australian Prime Minister Scott Morrison.
Holding ’em accountable: Australia plans to make social media platforms share the identities of people with anonymous accounts if another person accuses them of defamation. If they fail to give that information, it must assume legal liability. The proposed law would also make social media operators legally responsible for defamatory comments beneath publishers’ posts on their platforms.
Quote: It was not free speech “to hide in your basement as a masked troll and abuse and harass and stalk people”, he said. “If you want to say something, then you should say who you are, and if the social media company lets you do that with a mask on, then we’ll hold them to account.”
In February, global social media companies threatened to quit Australia over laws making them pay media outlets for the content appearing on their websites.
upGrad makes first overseas deal
upGrad cofounder Ronnie Screwvala.
upGrad has agreed to acquire Global Study Partners (GSP), the largest study abroad company in Australia, for A$16 million, with a commitment of a further A$10 million in the future.
The edtech unicorn, which has earmarked $250 million for M&A deals, has entered into an acquisition agreement to buy 100% of Global Study Partners for A$16 million with a commitment of a further A$10 million in the future, the Ronnie Screwvala-promoted firm said.
The acquisition marks the first international acquisition for upGrad and strengthens its foray into the study abroad space, one of the fastest-growing segments worldwide.
Quote: “As an integrated edtech leader, we span the entire gamut of a learner’s need from the age of 18-50, and in that, study abroad is a key growth initiative for us—not just out of India, which is one of the two largest markets but also for our learners internationally,” Screwvala said.
Consolidation move: upGrad recently consolidated its three Indian subsidiaries—upGrad Campus, upGrad Jeet and upGrad KnowledgeHut—to create one parent company in India. The merged entity would cover the entire gamut of higher educational technology offerings, catering to college learners and working professionals.
Other Done Deals
■ Private equity firm Clearlake Capital has struck a deal to buy Quest Software Inc. from Francisco Partners, valuing the Aliso Viejo, California-based company at $5.4 billion including debt, WSJ reported.
Today’s ETtech Top 5 newsletter was curated by Arun Padmanabhan in New Delhi.
