What's going on?
Revolut announced on Monday that it saw losses from business activities double last year, as the British fintech giant tried to cash in on the crypto boom.
What does this mean?
With 15 million customers, Revolut is one of Europe’s hottest startups: its last fundraising round valued the company at a cool $5.5 billion. But expanding from simple banking-style services into things like stock and crypto trading doesn’t come cheap: figures out on Monday showed Revolut’s operating losses doubled to $280 million in 2020, with staff costs tripling. And though a surge in new customers – as well as a tidy return on the company’s own crypto holdings – helped revenue increase by 57% compared to the same time in 2019, profitability may be a ways off yet. Not for lack of trying, mind you: Revolut has grand plans to disrupt financial services across the US, Latin America, India, and Southeast Asia.
Why should I care?
The bigger picture: At crypto cross-purposes.
Revolut – along with many major payments providers – might be keen to expand its crypto offering, but British companies with full banking licenses are headed in the opposite direction. TSB Bank announced at the weekend that it was banning customers from buying cryptocurrencies, joining the likes of Barclays, Monzo, and Starling in temporarily blocking cash transfers to crypto trading platforms like Binance. It’s a security issue, after all: TSB estimates that one in every eight payments to crypto trading platforms ended up with fraudsters, compared with one in 5,500 non-crypto transactions.
For markets: Speaking of which…
While Revolut pocketed a $50 million gain from its crypto portfolio last year, 2021 mightn’t be quite so kind. Bitcoin is still 50% down from its mid-April highs, and there was more bad news over the weekend: China extended its crackdown on cryptocurrency mining and urged several major banks – as well as payments giant Ant Group – to stamp out all bitcoin-linked activity.