WEBVTT - Ape Now, Pay Later 0:00:02.960 --> 0:00:06.760 I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News, 0:00:07.120 --> 0:00:10.800 and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast. 0:00:11.119 --> 0:00:25.080 It's Thursday, August four. If you're an avid online shopper, 0:00:25.440 --> 0:00:28.800 you've probably been prompted to buy now pay later from 0:00:28.800 --> 0:00:32.240 companies like Klarna or after Pay just as you're about 0:00:32.280 --> 0:00:34.839 to hit by your offer. The option of paying in 0:00:34.840 --> 0:00:37.920 installments rather than all at once, and often with the 0:00:37.960 --> 0:00:42.000 promise of no interest on those payments. Digital by now 0:00:42.040 --> 0:00:45.879 pay later options skyrocketed over the last several years, and 0:00:45.960 --> 0:00:49.880 now b NPL has come for crypto through a decentralized 0:00:49.920 --> 0:00:54.200 finance lender called Teller. Is this really a good idea? 0:00:54.800 --> 0:00:57.880 Joining me now? Is Bloomberg reporter Mr Lena A golfer Pulo. 0:00:58.080 --> 0:01:01.320 This is just another way for people to spend money 0:01:01.720 --> 0:01:08.880 on How buy now, payleta fits into the crypto economy? 0:01:09.760 --> 0:01:12.320 Mr really, welcome back. Thank you for having me. I 0:01:12.319 --> 0:01:14.360 feel like whenever you come on the show, it's because 0:01:14.360 --> 0:01:17.000 there's something happening in crypto that I probably should worry about. 0:01:18.080 --> 0:01:20.960 Oh I'm sorry. I mean, it's not your fault personally, 0:01:21.160 --> 0:01:25.080 but you know, I was reading your story about by 0:01:25.120 --> 0:01:27.319 Now pay Lata coming to n f T S, and 0:01:27.360 --> 0:01:30.400 I was like, hmm, interesting time for this to be happening. 0:01:30.959 --> 0:01:33.360 Before we jump into the crypto part of this, can 0:01:33.400 --> 0:01:35.080 you just talk us through a little bit like what 0:01:35.160 --> 0:01:38.960 by now pay leta is, particularly in this modern digital context. Yeah. 0:01:38.959 --> 0:01:41.040 I think the easiest way to describe it is like 0:01:41.200 --> 0:01:46.080 a modern layaway option where you know, individuals who are 0:01:46.120 --> 0:01:49.400 trying to purchase something that might be you know, a 0:01:49.440 --> 0:01:53.760 big price tag on it, UM have the option through 0:01:53.760 --> 0:01:56.280 these new companies that have come into the market to 0:01:56.680 --> 0:02:01.760 pay an installment. Sometimes there's intra, sometimes there's not, depending 0:02:01.880 --> 0:02:05.720 on what the price tag is. And so say, for example, 0:02:05.800 --> 0:02:07.800 you want to buy a pair of shoes that costs 0:02:07.840 --> 0:02:10.760 two ars, you can pick an option to pay with 0:02:10.840 --> 0:02:12.560 by now pay Later, and so you'd pay you know, 0:02:12.680 --> 0:02:15.160 fifty dollars now fifty dollars in two weeks, all the 0:02:15.160 --> 0:02:18.920 way up until you pay UM your your your shoes off. 0:02:19.160 --> 0:02:22.880 So what experts have warned recently about by Now Pay 0:02:22.960 --> 0:02:26.480 Later is that it tends to make people overspend because 0:02:26.480 --> 0:02:29.320 the money you're spending in that given moment in time 0:02:29.400 --> 0:02:32.560 may not be enough, but over time you've basically borrowed, 0:02:32.600 --> 0:02:36.000 You've taken a little loan on on something that you 0:02:36.080 --> 0:02:40.000 can't necessarily afford, yet you're still purchasing. And there's there's 0:02:40.040 --> 0:02:43.639 a you know, pro argument here as well. When you're 0:02:43.680 --> 0:02:46.160 we're dealing with an inflationary environment like the one now 0:02:46.240 --> 0:02:49.920 where everything just costs more, it's giving people away to 0:02:50.040 --> 0:02:53.240 spend money um that they otherwise wouldn't be able to. 0:02:53.320 --> 0:02:55.919 So it's sort of like a double edged sword, as 0:02:55.919 --> 0:03:00.279 are so many things in finance. One of the criticisisms 0:03:00.280 --> 0:03:03.400 that I've read about this is that you might have 0:03:03.680 --> 0:03:07.880 a BNPL account at and after Pay, and another one 0:03:08.000 --> 0:03:11.160 at Clarina, and another one like three or credit card company, 0:03:11.520 --> 0:03:14.040 and there's no single dashboard that you can sort of 0:03:14.080 --> 0:03:16.320 look at and see how much how much you owe? 0:03:17.000 --> 0:03:18.680 Is that is that a kind of a common thing 0:03:18.720 --> 0:03:21.480 that's happening. People are like, oh wow, I forgot that 0:03:21.520 --> 0:03:24.520 I bought shoes over here and this furniture over here. Yeah. 0:03:24.560 --> 0:03:27.760 I mean if you're using one or more of these apps. 0:03:27.760 --> 0:03:30.520 So so you're using a firm Clarina and after Pay, 0:03:30.800 --> 0:03:34.240 you have different open loans on on all of them, 0:03:34.240 --> 0:03:36.240 and you have to check, you know, what you owe 0:03:36.240 --> 0:03:38.600 for each one of them individually, similarly to if you 0:03:38.600 --> 0:03:41.320 have like multiple credit cards. So this is just another 0:03:41.840 --> 0:03:45.360 way for people to spend money, um to to take 0:03:45.400 --> 0:03:48.040 on debt. In some ways that doesn't feel like a 0:03:48.080 --> 0:03:51.160 credit card um because oftentimes, again you don't have to 0:03:51.240 --> 0:03:55.080 to pay interest. But you know, in the traditional banking world, 0:03:55.120 --> 0:03:57.640 this is something that affects your credit score. So oftentimes 0:03:57.840 --> 0:04:00.760 if you you know, keep purchasing through buy now, pay 0:04:00.840 --> 0:04:03.600 later programs, you'll see your credit score take a hit. 0:04:03.640 --> 0:04:05.640 It's not a massive hit, the same way you would 0:04:05.680 --> 0:04:09.080 say if you had thousands of dollars in credit card debt, 0:04:09.120 --> 0:04:12.000 but it does start to sort of, you know, bite 0:04:12.000 --> 0:04:16.000 into your score. Everyone has taken out debt. It makes 0:04:16.040 --> 0:04:20.640 sense rates are very very low. So my concern is 0:04:20.680 --> 0:04:24.120 that when inflation comes back, and I think a misconception 0:04:24.200 --> 0:04:28.240 globally in the markets that inflation as an economic phenomenon 0:04:28.480 --> 0:04:31.360 is dead and buried. When it does come back, we're 0:04:31.360 --> 0:04:36.040 gonna see some pain. Now we've talked about this in 0:04:36.120 --> 0:04:38.080 kind of the context of your buying shoes, you're buying 0:04:38.120 --> 0:04:41.800 furniture BNP L for n f T S. Yeah, I mean, 0:04:41.839 --> 0:04:46.640 I can't stress how awful the timing was for this announcement, 0:04:46.880 --> 0:04:49.640 and we can, I guess, just even start by the 0:04:49.680 --> 0:04:51.680 fact that this is something that's happening in the n 0:04:51.720 --> 0:04:55.320 f T market, which was extremely hot last year. You know, 0:04:55.800 --> 0:04:58.719 Board eight, yacht Club, Crypto Punks, all of those popular 0:04:58.960 --> 0:05:01.280 n f T collections that came into the market and 0:05:01.320 --> 0:05:04.520 really had people excited. That is not what you know, 0:05:05.200 --> 0:05:07.479 it's not the vibe. I mean, we you know, we've 0:05:07.520 --> 0:05:10.640 calculated that the floor price for some of these n 0:05:10.680 --> 0:05:14.320 f T s has fallen since May, so numbers are down. 0:05:14.360 --> 0:05:16.800 The interest is just isn't there. And that's you know, 0:05:16.920 --> 0:05:19.600 just a byproduct of the so called crypto winter that 0:05:19.640 --> 0:05:22.320 we're going through right now. Even so, this company's teller 0:05:22.360 --> 0:05:26.000 announced that they are launching a buying out, pay later 0:05:26.080 --> 0:05:28.520 option for n f T s that they very aptly 0:05:28.600 --> 0:05:35.839 coined ape now pay later. Very catchy, very catchy um. 0:05:35.880 --> 0:05:38.560 And you know, it's meant to function the same way 0:05:38.640 --> 0:05:41.520 it does in traditional finance in some ways, where if 0:05:41.560 --> 0:05:43.880 you want to buy an n f T you have 0:05:43.960 --> 0:05:48.400 to put um of the total price down up front, 0:05:48.600 --> 0:05:52.080 and then after that you can choose to pay in installments. Now, 0:05:52.160 --> 0:05:55.679 for the companies we talked about before, the affirms, the climates, etcetera. 0:05:55.800 --> 0:05:59.479 When I'm using them, I'm entering into a loan agreement 0:05:59.560 --> 0:06:02.120 with a comp any. Am I entering into a loan 0:06:02.160 --> 0:06:04.680 agreement with Teller? If I do this? Round? Is like, 0:06:04.680 --> 0:06:08.320 how does this work? No? So that is I think 0:06:08.320 --> 0:06:10.880 the main difference here is that what Teller is doing 0:06:11.000 --> 0:06:13.919 is it's offering a marketplace where people who want to 0:06:14.839 --> 0:06:17.320 lend money can enter and people who want to borrow 0:06:17.440 --> 0:06:19.560 money money can enter. And so how this would work 0:06:19.720 --> 0:06:22.640 is you would want to purchase an n f T 0:06:23.080 --> 0:06:25.520 in installments, and there would have to be another person 0:06:25.560 --> 0:06:28.119 on the other side that would be willing to become 0:06:28.160 --> 0:06:30.760 the lender for you for that project. So it's an 0:06:30.800 --> 0:06:34.240 individual to individual kind of transaction. It's one on one 0:06:34.720 --> 0:06:37.360 UM And you know, I think that's what causes a 0:06:37.360 --> 0:06:41.120 lot of maybe the red flags here because if um, 0:06:41.160 --> 0:06:44.359 someone isn't able to pay back their loan, that falls 0:06:44.400 --> 0:06:47.800 on a specific individual versus a company, and that protections 0:06:47.920 --> 0:06:50.240 just wouldn't be there for that individual. And while the 0:06:50.279 --> 0:06:54.120 company says that that individual can sort of do whatever 0:06:54.160 --> 0:06:56.440 they need to do in order to determine the credit 0:06:56.440 --> 0:06:59.039 worthiness of whatever person wants to buy an n f 0:06:59.080 --> 0:07:02.080 T with um I'll pay later. It's hard to know. 0:07:02.400 --> 0:07:04.600 It's hard to know. I mean, one way you could 0:07:04.600 --> 0:07:07.960 potentially determine someone's credit worthiness in the crypto world is 0:07:08.000 --> 0:07:11.840 just to look at their wallets and be able to 0:07:11.840 --> 0:07:14.800 see how many assets they have in it. But that's 0:07:14.800 --> 0:07:17.000 pretty much it. And again we're talking about an industry 0:07:17.000 --> 0:07:20.400 that's based primarily on anonymity. No one really knows so 0:07:20.520 --> 0:07:22.800 anyone is, and no one really knows what they actually 0:07:22.800 --> 0:07:26.160 own or don't own. So it's a really tricky kind 0:07:26.240 --> 0:07:30.120 of arrangement. Um. But again something that came to us, 0:07:30.400 --> 0:07:33.160 you know, in this so called crypto winter, and we'll 0:07:33.160 --> 0:07:36.000 just have to see how it goes. We'll be right 0:07:36.000 --> 0:07:38.400 back with more from Bloomberg report to Mr Lena a 0:07:38.440 --> 0:07:41.200 gulf of Polo on how buy Now pay Lata is 0:07:41.240 --> 0:07:50.360 shaping the present of crypto. I also have a question about, 0:07:50.360 --> 0:07:52.080 like where does the n f T come into this. 0:07:52.640 --> 0:07:55.600 So it sounds to me like this is a marketplace 0:07:56.160 --> 0:07:58.240 for money to buy n f T s, But in 0:07:58.240 --> 0:08:02.400 the meantime, is there is teller also facilitating a relationship 0:08:02.400 --> 0:08:04.440 with the seller of that n f T. Does the 0:08:04.800 --> 0:08:07.000 n f T become transferred to you after the first 0:08:07.000 --> 0:08:08.960 payment if you don't make the second payment, like, does 0:08:09.000 --> 0:08:11.480 it go back to someone? Like what is that mechanic? 0:08:11.520 --> 0:08:14.600 Do we know? Maya understanding is you purchase the n 0:08:14.600 --> 0:08:18.000 f T put down and that is your n f 0:08:18.040 --> 0:08:22.680 T afterwards, UM, if you're unable to make payments. That 0:08:22.840 --> 0:08:25.400 is not something that was clearly laid out in their 0:08:25.440 --> 0:08:28.400 press release announcement about how it would work, and I 0:08:28.440 --> 0:08:30.800 assume it would have to be you know, a case 0:08:30.920 --> 0:08:33.320 by case scenario. But they did team up with a 0:08:33.360 --> 0:08:36.120 couple of different n f T collections that they say 0:08:36.160 --> 0:08:39.640 they have UM you know, build a sort of arrangement 0:08:39.679 --> 0:08:43.000 with one of them being um UGA Labs and all 0:08:43.000 --> 0:08:46.640 of the different collections that are under you know that company, 0:08:46.679 --> 0:08:49.080 so board it, y'all club me bits, so be it 0:08:49.640 --> 0:08:52.560 UM and so again. I think, as with so many 0:08:52.600 --> 0:08:55.720 things in crypto, the details here of what happens when 0:08:55.720 --> 0:09:00.640 this goes wrong, because it will UM are just not 0:09:00.760 --> 0:09:04.680 clear and so the risk is is a big part 0:09:04.679 --> 0:09:09.080 of this conversation. I remember there is an an entrepreneur 0:09:09.559 --> 0:09:13.600 named Webb Smith who many moons ago at this point, 0:09:14.040 --> 0:09:16.800 you know me, the incredibly insightful observation that one of 0:09:16.800 --> 0:09:19.400 the big attractions of n f t s, particularly the 0:09:19.480 --> 0:09:21.760 Ugal abs n f t S, is feeling like you're 0:09:21.800 --> 0:09:26.480 joining an exclusive and rarefied club. And I'm fascinated by 0:09:26.600 --> 0:09:31.560 introducing this dynamic of even if you are not wealthy 0:09:31.679 --> 0:09:34.000 enough to join that club on the first try, you 0:09:34.040 --> 0:09:36.800 can still get in. And I do wonder, just as 0:09:36.840 --> 0:09:38.800 like a social experiment, if there's going to be this 0:09:38.960 --> 0:09:41.880 hierarchy in the thing, if people who like bought their 0:09:41.920 --> 0:09:44.240 eight apes out right sort of looking down at the 0:09:44.240 --> 0:09:45.880 people who are like, I'm sorry you hear in law, 0:09:46.320 --> 0:09:52.400 like you know, there's like a classism elements discussion. Yeah, 0:09:52.440 --> 0:09:54.760 I mean, that's a great question, and I think that 0:09:55.080 --> 0:09:59.080 I think really touches upon this fomo culture that you 0:09:59.120 --> 0:10:01.120 feel with n f he's I mean, it's the club 0:10:01.200 --> 0:10:03.440 that you want to be a part of. And especially 0:10:03.440 --> 0:10:06.640 projects like Board eight Yacht Club have just so much 0:10:07.240 --> 0:10:12.920 social commentary and like social media culture presence um and 0:10:12.960 --> 0:10:15.040 so it's hard to ignore them. It's hard not to 0:10:15.080 --> 0:10:17.480 want to be a part of them. And this definitely 0:10:17.760 --> 0:10:21.280 gives um anyone who wants to, even if they can't 0:10:21.280 --> 0:10:24.400 afford it, to be part of this really exclusive club, 0:10:24.760 --> 0:10:26.439 and the whole thing was like, well, you're supposed to 0:10:26.440 --> 0:10:28.839 be rubbing shoulders with Snoop Dogg or virtual snoop Dogg 0:10:28.920 --> 0:10:31.160 is the case maybe, And now it's like, can anyone 0:10:31.200 --> 0:10:36.800 just rub shoulders with snoop dogs? Shocking? I mean, I 0:10:36.840 --> 0:10:40.600 think that the way this company is pitching the buy now, 0:10:40.600 --> 0:10:46.640 pay later option is back to this idea of democratization, decentralization, 0:10:46.720 --> 0:10:49.199 a place where everyone can come be a part of 0:10:49.400 --> 0:10:53.280 and really nothing else matters. And I think that that 0:10:53.360 --> 0:10:55.960 was sort of a message that got lost in the 0:10:56.120 --> 0:10:59.559 wave of you know, everybody's making a ton of money exactly, 0:10:59.720 --> 0:11:03.800 and and when you know boarded yacht club owners became 0:11:04.240 --> 0:11:08.359 crypto millionaires and billionaires, I think that conversation really shifted. 0:11:08.440 --> 0:11:11.640 But the idea here is like anyone who can jump 0:11:11.640 --> 0:11:14.679 into crypto should be able to no questions asked, and 0:11:14.720 --> 0:11:16.800 this is just another way for them to do so, 0:11:17.040 --> 0:11:19.440 I'll be it quite risky. Well, this is certainly something 0:11:19.480 --> 0:11:22.320 I will be keeping an eye on. So maybe come 0:11:22.320 --> 0:11:23.520 back in a few months and let us know how 0:11:23.520 --> 0:11:25.440 this is all going. Yeah, let's check in and see 0:11:25.480 --> 0:11:28.720 who actually used this and and how it's going. Um, 0:11:28.760 --> 0:11:30.640 I think It's going to be very interesting. Thank you, 0:11:30.720 --> 0:11:33.360 Mr Lena. You can find more of Mr Lena's reposing 0:11:33.360 --> 0:11:36.720 on the Bloomberg terminal on Bloomberg dot com or follow 0:11:36.760 --> 0:11:39.360 her on Twitter. She's an original member of the First 0:11:39.440 --> 0:11:42.280 Name Club and her Twitter is at m I S 0:11:42.480 --> 0:11:47.120 Y R l E n E. On the next episode 0:11:47.160 --> 0:11:52.239 of Bloomberg Crypto, with every additional bankruptcy filing or accusation 0:11:52.280 --> 0:11:55.760 of insider trading, regulators seemed to turn up the heat 0:11:55.880 --> 0:11:59.280 ever so slightly when it comes to their attention on 0:11:59.320 --> 0:12:03.400 the digital set industry. But who is doing the regulating 0:12:03.800 --> 0:12:06.439 and what does that even look like? And what does 0:12:06.480 --> 0:12:10.520 it mean that the regulators themselves don't seem to entirely 0:12:10.559 --> 0:12:14.120 agree on these questions. Bringing us up to speed on 0:12:14.160 --> 0:12:17.360 what's happening here in the US with crypto regulation will 0:12:17.360 --> 0:12:26.040 be Bloomberg Reports Allison vers Brill and Alex Newn. This 0:12:26.080 --> 0:12:29.120 is Bloomberg Crypto, a daily podcast from Bloomberg and I 0:12:29.240 --> 0:12:32.480 Heart Radio. For more shows from I Heart Radio, visit 0:12:32.480 --> 0:12:35.520 the I heart Radio app, Apple Podcasts, or wherever you 0:12:35.559 --> 0:12:39.600 get your podcasts. Send us your comments, questions, or suggestions 0:12:39.600 --> 0:12:42.640 for the show to Crypto at Bloomberg dot net or 0:12:42.640 --> 0:12:48.600 find us on Twitter. We're at crypto. The supervising producer 0:12:48.600 --> 0:12:52.280 of Bloomberg Crypto is Vicky very Galina. Our senior producer 0:12:52.360 --> 0:12:56.880 is Janet Babin. Our producer is Mohammed Perup. Our producer 0:12:56.960 --> 0:13:01.360 is Sharon burriro Desta wonder At is our engineer. Original 0:13:01.440 --> 0:13:06.880 music by Leo Sidran. I'm Stacy Maria Shmal. We'll be 0:13:06.920 --> 0:13:07.520 back tomorrow.