As the financial technology sector continues its meteoric rise, regulators are beginning discussions over how to best approach regulations for the new industry.
Because of the youngness of the sector, and its connection to traditional investment firms, fintech faces some unique challenges that some other new industries don’t necessarily face.
More and more fintech companies are reaching the “unicorn” status level, but some analysts are beginning to question the future of the darling industry.
A perfect example of the uncertainty and anxiousness in the industry is the German fintech favorite Wirecard.
Although Wirecard has yet to reach the unicorn status, it is well on its way, becoming a direct competitor of PayPal and Western Union in Germany and even elsewhere in the world.
But last week, a report from a previously unknown group called Zatarra Research and Investigations released a report denigrating Wirecard, both for its anti-laundering tools and its current share price.
Zatarra is a recently created company out of the British Virgin Isles and has declined to comment.
Although the research was most likely bunk, investors still sent shares of Wirecard down 25 percent. Although Wirecard has performed well over the past several years, even tripling its share price in three-years, investors are still very jittery over the valuation of fintech companies.
When industries like fintech crop up at such a fast pace, it can be the case that investors prop up the industry a bit too much. Although it is unknown and unlikely that fintech will see a crash like the tech sector crash around 2000, it may be the case that some fintech firms are, in fact, overvalued.