Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast.
Speaker 1: It's Thursday, August four. If you're an avid online shopper,
Speaker 1: you've probably been prompted to buy now pay later from
Speaker 1: companies like Klarna or after Pay just as you're about
Speaker 1: to hit by your offer. The option of paying in
Speaker 1: installments rather than all at once, and often with the
Speaker 1: promise of no interest on those payments. Digital by now
Speaker 1: pay later options skyrocketed over the last several years, and
Speaker 1: now b NPL has come for crypto through a decentralized
Speaker 1: finance lender called Teller. Is this really a good idea?
Speaker 1: Joining me now? Is Bloomberg reporter Mr Lena A golfer Pulo.
Speaker 1: This is just another way for people to spend money
Speaker 1: on How buy now, payleta fits into the crypto economy?
Speaker 1: Mr really, welcome back. Thank you for having me. I
Speaker 1: feel like whenever you come on the show, it's because
Speaker 1: there's something happening in crypto that I probably should worry about.
Speaker 1: Oh I'm sorry. I mean, it's not your fault personally,
Speaker 1: but you know, I was reading your story about by
Speaker 1: Now pay Lata coming to n f T S, and
Speaker 1: I was like, hmm, interesting time for this to be happening.
Speaker 1: Before we jump into the crypto part of this, can
Speaker 1: you just talk us through a little bit like what
Speaker 1: by now pay leta is, particularly in this modern digital context. Yeah.
Speaker 1: I think the easiest way to describe it is like
Speaker 1: a modern layaway option where you know, individuals who are
Speaker 1: trying to purchase something that might be you know, a
Speaker 1: big price tag on it, UM have the option through
Speaker 1: these new companies that have come into the market to
Speaker 1: pay an installment. Sometimes there's intra, sometimes there's not, depending
Speaker 1: on what the price tag is. And so say, for example,
Speaker 1: you want to buy a pair of shoes that costs
Speaker 1: two ars, you can pick an option to pay with
Speaker 1: by now pay Later, and so you'd pay you know,
Speaker 1: fifty dollars now fifty dollars in two weeks, all the
Speaker 1: way up until you pay UM your your your shoes off.
Speaker 1: So what experts have warned recently about by Now Pay
Speaker 1: Later is that it tends to make people overspend because
Speaker 1: the money you're spending in that given moment in time
Speaker 1: may not be enough, but over time you've basically borrowed,
Speaker 1: You've taken a little loan on on something that you
Speaker 1: can't necessarily afford, yet you're still purchasing. And there's there's
Speaker 1: a you know, pro argument here as well. When you're
Speaker 1: we're dealing with an inflationary environment like the one now
Speaker 1: where everything just costs more, it's giving people away to
Speaker 1: spend money um that they otherwise wouldn't be able to.
Speaker 1: So it's sort of like a double edged sword, as
Speaker 1: are so many things in finance. One of the criticisisms
Speaker 1: that I've read about this is that you might have
Speaker 1: a BNPL account at and after Pay, and another one
Speaker 1: at Clarina, and another one like three or credit card company,
Speaker 1: and there's no single dashboard that you can sort of
Speaker 1: look at and see how much how much you owe?
Speaker 1: Is that is that a kind of a common thing
Speaker 1: that's happening. People are like, oh wow, I forgot that
Speaker 1: I bought shoes over here and this furniture over here. Yeah.
Speaker 1: I mean if you're using one or more of these apps.
Speaker 1: So so you're using a firm Clarina and after Pay,
Speaker 1: you have different open loans on on all of them,
Speaker 1: and you have to check, you know, what you owe
Speaker 1: for each one of them individually, similarly to if you
Speaker 1: have like multiple credit cards. So this is just another
Speaker 1: way for people to spend money, um to to take
Speaker 1: on debt. In some ways that doesn't feel like a
Speaker 1: credit card um because oftentimes, again you don't have to
Speaker 1: to pay interest. But you know, in the traditional banking world,
Speaker 1: this is something that affects your credit score. So oftentimes
Speaker 1: if you you know, keep purchasing through buy now, pay
Speaker 1: later programs, you'll see your credit score take a hit.
Speaker 1: It's not a massive hit, the same way you would
Speaker 1: say if you had thousands of dollars in credit card debt,
Speaker 1: but it does start to sort of, you know, bite
Speaker 1: into your score. Everyone has taken out debt. It makes
Speaker 1: sense rates are very very low. So my concern is
Speaker 1: that when inflation comes back, and I think a misconception
Speaker 1: globally in the markets that inflation as an economic phenomenon
Speaker 1: is dead and buried. When it does come back, we're
Speaker 1: gonna see some pain. Now we've talked about this in
Speaker 1: kind of the context of your buying shoes, you're buying
Speaker 1: furniture BNP L for n f T S. Yeah, I mean,
Speaker 1: I can't stress how awful the timing was for this announcement,
Speaker 1: and we can, I guess, just even start by the
Speaker 1: fact that this is something that's happening in the n
Speaker 1: f T market, which was extremely hot last year. You know,
Speaker 1: Board eight, yacht Club, Crypto Punks, all of those popular
Speaker 1: n f T collections that came into the market and
Speaker 1: really had people excited. That is not what you know,
Speaker 1: it's not the vibe. I mean, we you know, we've
Speaker 1: calculated that the floor price for some of these n
Speaker 1: f T s has fallen since May, so numbers are down.
Speaker 1: The interest is just isn't there. And that's you know,
Speaker 1: just a byproduct of the so called crypto winter that
Speaker 1: we're going through right now. Even so, this company's teller
Speaker 1: announced that they are launching a buying out, pay later
Speaker 1: option for n f T s that they very aptly
Speaker 1: coined ape now pay later. Very catchy, very catchy um.
Speaker 1: And you know, it's meant to function the same way
Speaker 1: it does in traditional finance in some ways, where if
Speaker 1: you want to buy an n f T you have
Speaker 1: to put um of the total price down up front,
Speaker 1: and then after that you can choose to pay in installments. Now,
Speaker 1: for the companies we talked about before, the affirms, the climates, etcetera.
Speaker 1: When I'm using them, I'm entering into a loan agreement
Speaker 1: with a comp any. Am I entering into a loan
Speaker 1: agreement with Teller? If I do this? Round? Is like,
Speaker 1: how does this work? No? So that is I think
Speaker 1: the main difference here is that what Teller is doing
Speaker 1: is it's offering a marketplace where people who want to
Speaker 1: lend money can enter and people who want to borrow
Speaker 1: money money can enter. And so how this would work
Speaker 1: is you would want to purchase an n f T
Speaker 1: in installments, and there would have to be another person
Speaker 1: on the other side that would be willing to become
Speaker 1: the lender for you for that project. So it's an
Speaker 1: individual to individual kind of transaction. It's one on one
Speaker 1: UM And you know, I think that's what causes a
Speaker 1: lot of maybe the red flags here because if um,
Speaker 1: someone isn't able to pay back their loan, that falls
Speaker 1: on a specific individual versus a company, and that protections
Speaker 1: just wouldn't be there for that individual. And while the
Speaker 1: company says that that individual can sort of do whatever
Speaker 1: they need to do in order to determine the credit
Speaker 1: worthiness of whatever person wants to buy an n f
Speaker 1: T with um I'll pay later. It's hard to know.
Speaker 1: It's hard to know. I mean, one way you could
Speaker 1: potentially determine someone's credit worthiness in the crypto world is
Speaker 1: just to look at their wallets and be able to
Speaker 1: see how many assets they have in it. But that's
Speaker 1: pretty much it. And again we're talking about an industry
Speaker 1: that's based primarily on anonymity. No one really knows so
Speaker 1: anyone is, and no one really knows what they actually
Speaker 1: own or don't own. So it's a really tricky kind
Speaker 1: of arrangement. Um. But again something that came to us,
Speaker 1: you know, in this so called crypto winter, and we'll
Speaker 1: just have to see how it goes. We'll be right
Speaker 1: back with more from Bloomberg report to Mr Lena a
Speaker 1: gulf of Polo on how buy Now pay Lata is
Speaker 1: shaping the present of crypto. I also have a question about,
Speaker 1: like where does the n f T come into this.
Speaker 1: So it sounds to me like this is a marketplace
Speaker 1: for money to buy n f T s, But in
Speaker 1: the meantime, is there is teller also facilitating a relationship
Speaker 1: with the seller of that n f T. Does the
Speaker 1: n f T become transferred to you after the first
Speaker 1: payment if you don't make the second payment, like, does
Speaker 1: it go back to someone? Like what is that mechanic?
Speaker 1: Do we know? Maya understanding is you purchase the n
Speaker 1: f T put down and that is your n f
Speaker 1: T afterwards, UM, if you're unable to make payments. That
Speaker 1: is not something that was clearly laid out in their
Speaker 1: press release announcement about how it would work, and I
Speaker 1: assume it would have to be you know, a case
Speaker 1: by case scenario. But they did team up with a
Speaker 1: couple of different n f T collections that they say
Speaker 1: they have UM you know, build a sort of arrangement
Speaker 1: with one of them being um UGA Labs and all
Speaker 1: of the different collections that are under you know that company,
Speaker 1: so board it, y'all club me bits, so be it
Speaker 1: UM and so again. I think, as with so many
Speaker 1: things in crypto, the details here of what happens when
Speaker 1: this goes wrong, because it will UM are just not
Speaker 1: clear and so the risk is is a big part
Speaker 1: of this conversation. I remember there is an an entrepreneur
Speaker 1: named Webb Smith who many moons ago at this point,
Speaker 1: you know me, the incredibly insightful observation that one of
Speaker 1: the big attractions of n f t s, particularly the
Speaker 1: Ugal abs n f t S, is feeling like you're
Speaker 1: joining an exclusive and rarefied club. And I'm fascinated by
Speaker 1: introducing this dynamic of even if you are not wealthy
Speaker 1: enough to join that club on the first try, you
Speaker 1: can still get in. And I do wonder, just as
Speaker 1: like a social experiment, if there's going to be this
Speaker 1: hierarchy in the thing, if people who like bought their
Speaker 1: eight apes out right sort of looking down at the
Speaker 1: people who are like, I'm sorry you hear in law,
Speaker 1: like you know, there's like a classism elements discussion. Yeah,
Speaker 1: I mean, that's a great question, and I think that
Speaker 1: I think really touches upon this fomo culture that you
Speaker 1: feel with n f he's I mean, it's the club
Speaker 1: that you want to be a part of. And especially
Speaker 1: projects like Board eight Yacht Club have just so much
Speaker 1: social commentary and like social media culture presence um and
Speaker 1: so it's hard to ignore them. It's hard not to
Speaker 1: want to be a part of them. And this definitely
Speaker 1: gives um anyone who wants to, even if they can't
Speaker 1: afford it, to be part of this really exclusive club,
Speaker 1: and the whole thing was like, well, you're supposed to
Speaker 1: be rubbing shoulders with Snoop Dogg or virtual snoop Dogg
Speaker 1: is the case maybe, And now it's like, can anyone
Speaker 1: just rub shoulders with snoop dogs? Shocking? I mean, I
Speaker 1: think that the way this company is pitching the buy now,
Speaker 1: pay later option is back to this idea of democratization, decentralization,
Speaker 1: a place where everyone can come be a part of
Speaker 1: and really nothing else matters. And I think that that
Speaker 1: was sort of a message that got lost in the
Speaker 1: wave of you know, everybody's making a ton of money exactly,
Speaker 1: and and when you know boarded yacht club owners became
Speaker 1: crypto millionaires and billionaires, I think that conversation really shifted.
Speaker 1: But the idea here is like anyone who can jump
Speaker 1: into crypto should be able to no questions asked, and
Speaker 1: this is just another way for them to do so,
Speaker 1: I'll be it quite risky. Well, this is certainly something
Speaker 1: I will be keeping an eye on. So maybe come
Speaker 1: back in a few months and let us know how
Speaker 1: this is all going. Yeah, let's check in and see
Speaker 1: who actually used this and and how it's going. Um,
Speaker 1: I think It's going to be very interesting. Thank you,
Speaker 1: Mr Lena. You can find more of Mr Lena's reposing
Speaker 1: on the Bloomberg terminal on Bloomberg dot com or follow
Speaker 1: her on Twitter. She's an original member of the First
Speaker 1: Name Club and her Twitter is at m I S
Speaker 1: Y R l E n E. On the next episode
Speaker 1: of Bloomberg Crypto, with every additional bankruptcy filing or accusation
Speaker 1: of insider trading, regulators seemed to turn up the heat
Speaker 1: ever so slightly when it comes to their attention on
Speaker 1: the digital set industry. But who is doing the regulating
Speaker 1: and what does that even look like? And what does
Speaker 1: it mean that the regulators themselves don't seem to entirely
Speaker 1: agree on these questions. Bringing us up to speed on
Speaker 1: what's happening here in the US with crypto regulation will
Speaker 1: be Bloomberg Reports Allison vers Brill and Alex Newn. This
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