Great article, WISE choosing not to withdraw is odd but I'd emphasize that the OCC decided to make decisions public as of Jun'26. WISE is the first decision to be published since this change, and perhaps their communication to applicants changed as well, maybe as an effort to show the new baseline. The next data point is the large early-2026 cohort of applicants coming up on the ~120 day mark, (especially Payoneer and Revolut's (2nd app)). We should get much more color on the OCC's new standards in the coming weeks
Assuming the worst case scenario (license delayed 3-5 years, profits affected by increased regulatory requirements, short term impacts in the form of fines, remedial work, reputational impact…) the market reaction might be an underestimate. We might be completely correct about the long term trajectory of the business, but how much those FCFs are being discounted to the present day matter just as much if not more than the intrinsic valuation of the business. What I want to say with this is that if you have a stock whose intrinsic valuation is 5x at a certain discount rate, but the forecast period is 20 years and the implied discount rate is 13%, and another one where the stock is worth 3x but cash flows are being discounted by 20%, the second might be the better option.
As capital allocators, we should consider the risks Wise is facing with caution, regardless of how bright the long term future looks. I don't feel like this small dip is an opportunity to buy more, but a reality check, even though the very long term opportunity is unchanged. I like your nuanced take on the second order consequences. Having said all of that, the last time that I heard that a stock was dead money it went up 40% and the last time I heard not to sell it crashed 50%. Fortunately I didn't take that advice in either case. What happens in the next 6 months is anyone’s guess. We can manage risks, but not returns.
i'd argue that a big bank can probably run on its own rails for a pretty low cost. this would be systematic strain on future profitability of b2b.
for small/medium banks - a platform they can buy (rather than build) makes sense even if it charges a premium, but only if said platform is reputable and would not put some burden of regulatory compliance on them.
and these bank managers might read that decision as a signal from regular saying "you can offer your customers low international transfers, but try to avoid this specific platform".
estimating what the impact on b2b at this point - is pure guess IMO.
you'd know in 2-3 quarters when you see the trends in b2b volumes.
i think the market is not just pricing delay - it is pricing the real possibility that by the time their reputation clears - the b2b will have moved to to some other stablecoin rails platform.
Do we know at what cost big banks facilitate cross border payments? And if the price is competitive with Wise, how do they do it so cheaply? Not saying you are wrong necessarily. Just want to better understand this if true.
i'm not an expert on the field - but technically to me it sounds like the cost of a stablecoin sandwich * number of permutations.
this sandwich can differ significantly depending on the amount of transactions, size of the transactions, how balanced they are etc.
per chatgpt: a 1B per month USD <-> BRL stablecoin composed of many individual transfers spread throughout might cost ~2M per month with FX & hedging + treasury funding taking about 50% of the costs, and the rest are staff, compliance, stablecoin execution, and technology.
this is around 20 bp.
perhaps big banks with good long time correspondents almost everywhere can reduce some of those costs.
Great article, WISE choosing not to withdraw is odd but I'd emphasize that the OCC decided to make decisions public as of Jun'26. WISE is the first decision to be published since this change, and perhaps their communication to applicants changed as well, maybe as an effort to show the new baseline. The next data point is the large early-2026 cohort of applicants coming up on the ~120 day mark, (especially Payoneer and Revolut's (2nd app)). We should get much more color on the OCC's new standards in the coming weeks
Good additional points to consider 🙏🏻
Assuming the worst case scenario (license delayed 3-5 years, profits affected by increased regulatory requirements, short term impacts in the form of fines, remedial work, reputational impact…) the market reaction might be an underestimate. We might be completely correct about the long term trajectory of the business, but how much those FCFs are being discounted to the present day matter just as much if not more than the intrinsic valuation of the business. What I want to say with this is that if you have a stock whose intrinsic valuation is 5x at a certain discount rate, but the forecast period is 20 years and the implied discount rate is 13%, and another one where the stock is worth 3x but cash flows are being discounted by 20%, the second might be the better option.
As capital allocators, we should consider the risks Wise is facing with caution, regardless of how bright the long term future looks. I don't feel like this small dip is an opportunity to buy more, but a reality check, even though the very long term opportunity is unchanged. I like your nuanced take on the second order consequences. Having said all of that, the last time that I heard that a stock was dead money it went up 40% and the last time I heard not to sell it crashed 50%. Fortunately I didn't take that advice in either case. What happens in the next 6 months is anyone’s guess. We can manage risks, but not returns.
I appreciate the thoughtful long term approach in this article. Well worth writing, well worth reading.
Thanks Barrett 🙏🏻 I appreciate that.
regarding valuation of the b2b:
i'd argue that a big bank can probably run on its own rails for a pretty low cost. this would be systematic strain on future profitability of b2b.
for small/medium banks - a platform they can buy (rather than build) makes sense even if it charges a premium, but only if said platform is reputable and would not put some burden of regulatory compliance on them.
and these bank managers might read that decision as a signal from regular saying "you can offer your customers low international transfers, but try to avoid this specific platform".
estimating what the impact on b2b at this point - is pure guess IMO.
you'd know in 2-3 quarters when you see the trends in b2b volumes.
i think the market is not just pricing delay - it is pricing the real possibility that by the time their reputation clears - the b2b will have moved to to some other stablecoin rails platform.
Do we know at what cost big banks facilitate cross border payments? And if the price is competitive with Wise, how do they do it so cheaply? Not saying you are wrong necessarily. Just want to better understand this if true.
i'm not an expert on the field - but technically to me it sounds like the cost of a stablecoin sandwich * number of permutations.
this sandwich can differ significantly depending on the amount of transactions, size of the transactions, how balanced they are etc.
per chatgpt: a 1B per month USD <-> BRL stablecoin composed of many individual transfers spread throughout might cost ~2M per month with FX & hedging + treasury funding taking about 50% of the costs, and the rest are staff, compliance, stablecoin execution, and technology.
this is around 20 bp.
perhaps big banks with good long time correspondents almost everywhere can reduce some of those costs.
Thorough and well said from top to bottom
Thank you 🙏🏻. Your comment made me smile!