Issue #169: Increase Buys Itself A Bank, New York Wants $36B From Kalshi, And X Money Finally Lands
The week's biggest fintech moves, broken down and delivered to your inbox
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š¦ Increase buys itself a bank, Banking Dive
š The Rundown: Increase, the banking infrastructure company founded by early Stripe employee Darragh Buckley, launched Increase Bank last week. Itās a rebuilt Twin City Bank, a single-branch community lender in Longview, Washington, which Buckley took full control of after the Federal Reserve Bank of San Francisco approved his purchase of the holding companyās voting shares in June 2025. The bank holds about $114 million in assets and the Longview branch carries on under the Twin City name. Increase says companies including Stripe, Ramp and Gusto move more than $500 billion a year across its infrastructure, and its existing sponsor partners Grasshopper, First Internet Bank of Indiana and Core Bank stay in place alongside the new bank.
š„” Takeaway: āWhy donāt you just buy a bank?ā has been kicking around fintech for years, usually asked by someone who has recently been quoted a sponsor bankās pricing. You can, and a few people have, but itās rather like buying a vintage car. Wonderful in principle, then you meet the oil leaks and work out that realistically you get to drive it about twice a month.
A bank arrives with examiners, capital ratios, a BSA program, a board that has to be fit and proper, and a supervisory relationship. All great until you need to rebuild the core, and all of a sudden that charter you bought sets the ceiling on what the engineering team is allowed to ship. Buckley likely knows this better than most. When he first bought into Twin City last year he told TechCrunch the bank shouldnāt support sponsor banking at all, because āonly specialized banks should do itā. He then spent a year building the specialised bank rather than bending a community one into the job, and the Longview branch still serves the customers it always had.
This has shades of Jackie Reses buying Kansas Cityās Lead Bank in 2022 for around $56 million, and of William Hockey buying a single-branch lender in Chico before relaunching it as Column. Find a small, clean community charter, buy the holding company, leave the branch alone, rebuild everything behind it.
What Buckley is buying is the Federal Reserve master account (i.e. direct access to settlement). Twin City has one, so Increase has one, and its connections to the Fed, The Clearing House and Visa now sit under its own core instead of behind somebody elseās. That also collapses the middleware layer that broke in Synapse, where the ledger lived at one company and the money at another (the classic issue that every neobank has to deal with). Direct access to the pipes rather than the rented version is the actual game in fintech, and master accounts are the part of it that money alone doesnāt buy.
Zooming out, the direction of travel this year has been de novo. Circle finished its national trust charter this month, Klarna has applied, and thereās a queue behind them at the OCC. Buying is the older and less fashionable route, and it comes with someone elseās legacy attached, oil leaks and all. It also gets you a master account without the wait, which is why it keeps happening.
šø X Money starts rolling out in the US, TechCrunch
š The Rundown: X began rolling out X Money to US Premium and Premium+ subscribers last week, following an invite-only beta. The product bundles a deposit account, peer-to-peer payments and a Visa debit card inside the X app, with deposits held at Cross River Bank and insured to $250,000. Premium+ subscribers get up to 6% APY, Premium subscribers reach the same rate by linking a direct deposit, and card purchases earn up to 3% cash back. Every user gets a virtual card that works with Apple Wallet and can order a physical metal card showing their name or X handle. There is no crypto in the launch build.
š„” Takeaway: Two years of X Money being three months away, and here it actually is. Iāve covered the Smart Cashtags version and the April launch that didnāt happen. This one is a shipping product with an FDIC-insured account behind it.
No funding cost supports 6% APY plus 3% cash back. Itās a customer acquisition number, paid for out of a subscription business and gated behind Premium at $8 a month or Premium+ at $40. The deposits are there to make the subscription harder to cancel. Thatās a different product from Venmo or Cash App, and partially explains why the rollout is subscriber-only rather than switched on for every account.
They built on Cross River rather than chasing a charter of their own, which sort of feels a little less like Elon than Iād expect. After all, even Palmer Luckey went and got a charter. Come on, Elon, be more ambitious!
What X Money doesnāt have yet is a reason to move your primary relationship across. Uber Money had distribution too. The thing that makes a wallet stick is direct deposit, and X is clearly aiming straight at it, since the 6% rate for ordinary Premium subscribers is conditional on exactly that. Whether people will route their salary through a social network is the open question, and I honestly donāt know how that lands. The audience most likely to try it first is also the audience most likely to have strong views about who owns the app.
š ICE buys MarketAxess for $6 billion, Intercontinental Exchange
š The Rundown: Intercontinental Exchange agreed last week to acquire MarketAxess for $167 a share in cash, a 33% premium, valuing the equity at roughly $6 billion and the enterprise at about $5.7 billion. MarketAxess operates electronic trading platforms for global institutional fixed income. ICE is funding the deal entirely with newly issued debt and expects $100 million in annual run-rate expense synergies. Both boards approved it unanimously, and it is expected to close in the first half of 2027, subject to shareholder and regulatory approval.
š„” Takeaway: Equities went electronic decades ago and the economics settled into thin margins, enormous volume and a handful of venues. Corporate bonds never fully made that trip. A meaningful chunk of institutional fixed income still runs on voice and chat, and MarketAxess has been trying to drag it onto a screen since 2000.
ICE already owns the New York Stock Exchange and a large fixed income data and index business. MarketAxess brings the institutional trading venue. Putting them together is a bet that the last manual corner of a very large market is finally about to give, and that whoever owns the venue when it does gets the data business that comes with it.
At roughly 10.6x EBITDA after full synergies, ICE has decided the platform is worth more inside its stack than MarketAxess could reach on its own. Thatās usually what you see when a standalone venue has proved the demand but canāt fund the distribution to finish the job.
Once it closes, ICE will hold the exchange, the mortgage technology, the fixed income data and the venue where the bonds actually trade. On that mix the exchange is close to the least important part, and the real product is the infrastructure sitting underneath everything else.
āļø New York sues Kalshi over an āillegal gambling operationā, CNBC
š The Rundown: New Yorkās attorney general Letitia James filed a petition in Manhattan state court last week alleging that Kalshi runs an illegal, unlicensed gambling operation, having never obtained a New York State Gaming Commission licence. The state wants a permanent injunction, restitution to users and penalties of three times Kalshiās gains, which the filing puts at a minimum of $36 billion pending a full accounting. It also objects to Kalshi accepting 18 to 20 year olds when the state floor for mobile sports betting is 21. James filed near-identical petitions against Coinbase Financial Markets and Gemini Titan in April, and the CFTC has since sought a temporary restraining order to halt the stateās case. Days earlier, brokerage tastytrade launched its own CFTC-regulated prediction markets on Apex Fintech Solutionsā turnkey infrastructure.
š„” Takeaway: Back in April, when New York went after Coinbase and Gemini, the read here was that the whole category had been built on regulatory ambiguity rather than regulatory clarity, and that the underlying question had only been postponed. It is now being asked properly, and New York has put $36 billion behind the asking.
That figure sits against a company reportedly valued at $22 billion, so this is a shutdown demand dressed as a penalty. Whether the state gets anywhere near it is another matter, and the CFTC moving for a restraining order against a state attorney general tells you this has stopped being about Kalshi and become a straight federal-versus-state jurisdiction fight. Kalshiās position has always been that event contracts are federally regulated derivatives and states have no say. New Yorkās position is that calling a bet a derivative doesnāt stop it being a bet.
None of which has slowed anyone down, and Robinhoodās Q2 numbers explain why. Event contracts brought in $156 million of transaction revenue for the quarter, ahead of both stocks at $129 million and crypto at $100 million, and they did it on $6.8 billion of contracts traded against $956 billion of stock. Sheel Mohnot worked out the take rates (see tweet below): about $23 of Robinhood revenue per $1,000 traded on prediction markets, against $2.50 on crypto, $1.47 on options and 13 cents on stocks. The options and event-contract figures rest on assumed average contract prices, so hold the exact ratios loosely. The order of magnitude is what is worth noticing here.
That is why the infrastructure turned up before the law did. Apex has built turnkey rails so a brokerage can switch prediction markets on without standing up its own futures clearing, and tastytrade is the first to use it, after Robinhood and moomoo got there their own way. A category monetising at something like 170 times stocks gets productised long before the courts catch up.
Others have listed Fed decisions, CPI, nonfarm payrolls, the VIX and crude. Macro contracts, not sports. Almost everything New York is angry about is sports betting and under-21 access, so the macro end of the category looks a great deal more defensible than the sports end. My guess is thatās where this eventually divides, though Iāve been wrong about regulatory outcomes before and the CFTC action could make the whole question moot. A super fascinated story on a few different fronts.
š¦ Western Union is shutting its digital bank, FinTech Futures
š The Rundown: Western Union is discontinuing Western Union Digital Bank, its European digital banking service, with all accounts closing two months after each customer receives their individual closure notice. Launched in 2022 and operated by Western Union International Bank in Austria, it offered IBAN current accounts, savings, debit cards, multicurrency wallets and recurring payments across markets including Germany, Italy, Poland and Romania. The company said the decision followed a routine review of its products. The core money transfer business is unaffected. Austriaās regulator recently fined the bank about ā¬42,000 over reporting breaches under DORA.
š„” Takeaway: While a queue of fintechs is working very hard to get chartered, a 175-year-old company that already held a European banking licence has decided it doesnāt want to run a bank on top of it. Surprise, surprise.
You can see why they tried. Western Union has the remittance customer, very often a migrant worker sending money home, and thatās precisely the person a local high-street bank serves badly. Turning them from a transaction into an account holder is the obvious play, and it broadly makes sense. Wise and Revolut built real businesses on the idea. The catch is that remittance and banking are different businesses with different shapes. A remittance customer turns up when they need to send money and you earn on the spread. A transactional relationship. A current account customer needs onboarding, support, fraud cover, deposit protection and a reason to keep their salary with you, and the revenue per customer stays thin until they do. A much deeper relationship that needs time to pay off.
Four years is not a long run at it, and the DORA fine hints that operating a regulated bank in Austria was absorbing more attention than the product was giving back.
Western Union hasnāt said what happens to the Austrian banking licence itself, and thatās the detail Iām sort of interested in. A European banking licence with nothing attached to it is a valuable thing to be holding at the moment.
š° LemonEdge raises a $21M Series A, Finextra
š The Rundown: Londonās LemonEdge announced a $21 million Series A last week, led by Blackstone Innovations Investments with BNY joining and existing investor Sidekick Partners participating. Founded in 2020 by Gareth Hewitt and Jamie Nascimento, LemonEdge builds fund accounting software for private markets and says its clients manage more than $2.5 trillion. The round takes total funding past $30 million and will fund expansion across the US and Europe.
š„” Takeaway: Private markets have grown enormously over the past decade while the accounting underneath them has mostly not. A lot of fund administration still runs on overnight batch jobs, so a secondary transfer or a restructuring doesnāt show up in the accounting model until the next morning, and anything the system canāt handle gets pushed into a spreadsheet. LemonEdge processes ownership changes as they happen, which it reckons takes a quarterly close from something like 90 days to 30.
Unglamorous, and thatās rather the point. This is the system of record for how much of a fund somebody owns, and once itās in nobody rips it out casually. Hence a $21 million Series A sitting underneath clients who run $2.5 trillion.
š° Freehand raises $75M for supply chain spend agents, FinTech Futures
š The Rundown: Freehand announced a $75 million Series B last week, co-led by Battery Ventures and NewRoad Capital Partners, with PSP Growth and Nexus Venture Partners participating. The San Francisco company builds AI agents that run supply chain spend for large enterprises and came out of stealth in February. The round takes total funding to $100 million.
š„” Takeaway: Most of the agentic payments money this year has gone to the consumer end. Checkout standards, agent wallets, identity for machines. Freehand is at the other end of the pipe, where agents read a contract, check whether an invoice matches what was actually agreed, negotiate the difference with the supplier and then pay it. Meta, Pfizer, Johnson & Johnson and Cardinal Health are named customers, and the company says it moves billions across 60 to 70 countries without a human in the loop.
Thatās a considerably larger amount of trust than anyone is currently extending to an agent at a checkout, and accounts payable is a sensible place to put it. High volume, rule-bound, and the failure mode is an overpayment you can claw back rather than a customer youāve lost. Freehandās own numbers on spend recovery arenāt independently audited, so take them as the companyās. But the first agents genuinely trusted with corporate money have shown up in the least glamorous corner of finance, which is usually where this sort of thing starts.
š§ Lessons From Backing The Best Founders In Fintech, Founders (August 2)
Micky Malka was early into Revolut, Robinhood, Nubank and Coinbase, and he traces a straight line from the branchless bank he nearly went broke building in Brazil in his twenties to OnePay with Walmart two decades later. Well worth a listen.
š§ Why Card-Linked Installments is a Better Form of BNPL With Nandan Sheth, CEO of Splitit, Fintech One-on-One (July 30)
Sheth makes the case for running instalments on a customerās existing card line rather than originating new credit each time, which is a genuinely different model from the one most BNPL players run. Add this one to your playlist.
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One point for Banking as a Service from Increase's purchase in Washington State! It highlights the opportunity as infrastructure mega-fintechs are avoiding this path. Take Block, for exampleātheir PE has nearly doubled recently as Dorsey successfully positions an AI unit alongside their core fintech offerings. The market rewards that tech/AI expansion. On the other hand, the Stripe founders have their own side-ventures with agentic commerce and blockchain rails and billion$ M&A deals. Taking on the regulatory overhead and the lower valuation multiples that is associated with being a "bank" won't get Stripe the massive IPO valuation they are targeting. Letting a focused (and well trusted) player like Increase own the master account and the oil leaks is the smarter play.