Company mixing crypto and SPAC flops with digital coin fans

(Bloomberg) – The buzz that often surrounds cryptocurrencies and blank check companies is more like a buzz-saw for at least one company trying to ride both trends.

MoneyLion Inc. plunged 30% just days after the digital bank and crypto trading platform debuted this month by merging with a specialist acquisition company. This may not bode well for other crypto markets such as eToro USA and Bakkt, whose ongoing deals with PSPC partners have been delayed due to a crackdown by regulators in the States- United, Europe and China on SPAC and digital currencies.

The dismal 28% drop in the large SPAC sector since its peak in February does not help matters. For some fans of digital currency, however, the main problem is that these crypto-SPAC hybrids are just too far removed from the real action.

“People like to own the coins,” says Gurgavin Chandhoke, an Ontario-based individual investor who trades both PSPC and digital currencies. “If I wanted to invest in Bitcoin, I would prefer to own the underlying asset.”

MoneyLion is a 2013 startup that offers a full range of traditional banking services. Just days before the completion of its September 22 merger with Fusion Acquisition Corp. – using Merrill Lynch’s former ML ticker – MoneyLion added the ability to buy and sell Bitcoin and Ethereum on its app, with other capabilities on the way. It didn’t move the stocks, nor a Bitcoin lottery giveaway for new customers that included a $ 1 million prize pool.

MoneyLion shares fell as much as 16% on Wednesday, adding to a 7.5% drop on Tuesday when markets slumped. Representatives for the New York-based company declined to comment.

PSPCs tied to larger, even more crypto-focused stores, such as Israel-based eToro and Atlanta-based Bakkt, haven’t gained much popularity either. The blank check company Fintech Acquisition Corp. Betsy Cohen’s V is expected to buy eToro, while VPC Impact Acquisition Holdings Corp. Bakkt continues. Both of these SPACs are trading just above their $ 10 IPO.

At least two other similar mergers are underway, with equally lukewarm market reactions. Far Peak Acquisition Corp. targets the startup exchange platform known as Bullish, and Concord Acquisition Corp. plans to partner with Circle Internet Financial.

eToro and Bakkt collect fees primarily for processing cryptocurrency transactions, rather than buying and holding coins. EToro says “crypto is going mainstream,” with over 60% of commissions generated in the first half of 2021 via crypto assets.

Bakkt’s early backers included Intercontinental Exchange, which manages the New York Stock Exchange, and Microsoft Corp. The company highlights its “miscellaneous” revenue streams, making money from crypto activity as well as fees for converting airline reward points and travel to cash.

The public debuts of Bakkt and eToro were pushed back to the fourth quarter as part of tighter regulatory scrutiny. EToro said it was working closely with the SEC in the final stages of getting approval, with an additional 20 days needed after that for a shareholder vote and then a few more days to finalize questions. Bakkt did not respond to messages seeking comment.

Double-Whammy

“They are hit with a double whammy,” said Kristi Marvin, managing director of research firm SPAC Insider. “PSPC is under the microscope, but so is crypto. So imagine being a crypto-SPAC.

The average time from announcement to shareholder vote for the roughly 90 PSPC deals announced this year was 5.2 months, according to Marvin. The Bakkt and eToro agreements have already taken longer than that. MoneyLion’s deal took about two months longer than average.

The silver lining is that any regulatory difficulty they endure now should leave these companies better positioned than any rivals trying to keep up, said Mark Yusko, head of Morgan Creek Capital Management.

“Until then, the more compliant they are, the better,” Yusko said. “Every time the price of Bitcoin changes, people trade and they make a little bit of money with it.” As for the latecomers trying to rush through the regulatory process, “I guess they won’t do well”.

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