Partner Banking is: a) Back b) Broken c) Obsolete d) All of the above
Breslow Tells Staff Bolt Has Signed Term Sheets For $150M Investment In The Struggling “Super App”
Hey all, Jason here.
This is officially my last newsletter while still on my semi-sabbatical. I’m heading back to the Netherlands early next week, and I’m looking forward to getting back into the regular swing of things!
In the meantime, you should give this episode of Bank Nerd Podcast I recorded with Professor Dan Awrey and host Kiah Haslett a listen. We had really thoughtful discussion about what we think regulators have gotten wrong about banking-as-a-service and potential policy solutions. You can listen to it here.
Breslow Tells Staff Bolt Has Signed Term Sheets For $150M Investment In The Struggling “Super App”
The cofounder and once-and-again CEO of Bolt, which has struggled to pay vendors, contractors, and even its own staff, Ryan Breslow, told remaining staffers the company had signed term sheets from two investors, according to internal company Slack messages reviewed by Fintech Business Weekly.
Specifically, Breslow wrote: “We set a target of $150M, and we already have one firm committed for $100M and another firm committed for $50M. Both firms have signed our term sheet as of the last 72 hours. This is a huge validation of our technology, market position, and our team. However, the round will take another 30 to 90 days to officially close. More importantly, the investment groups want to see us hit profitability and get back on the path to hyper-growth before the ink dries. The capital is waiting for us at the finish line, but we have to sprint to get there.” (emphasis in the original)
Breslow’s message to staffers described the upcoming 30 to 60 days as likely to be “incredibly challenging” as he laid out how he sees the company’s priorities:
Getting all merchants in Bolt’s pipeline live. Breslow described “go-lives and implementations” as “notoriously the hardest part of Bolt,” saying, “It takes an insane amount of focus to get a merchant across the finish line.”
Prove out “GCommerce,” which Breslow describes as an adtech platform of sorts elsewhere in his message. “Proving out this model is the key to bringing in serious, high-margin adtech revenue,” Breslow wrote.
Dramatically expand the company’s existing margins by cross- and up-selling existing merchant clients.
And ongoing cost reductions, by cutting all vendor and third-party costs “outside of those that are strictly mission-critical,” Breslow’s Slack messages says.
Breslow’s message also outlines what he describes has the company’s long-term vision:
Capture 10%-20% of the digital payments market share (as a point of comparison, depending on how you calculate the numbers, estimates put Stripe at around 20%-30% of global digital payment processing)
Capture 10%-20% of the adtech market
Capture 10%-20% of the consumer fintech market with Bolt’s super app
Bolt Pursued Deals With “High Risk/Prohibited Merchants,” Including OnlyFans, New Lawsuit Alleges
Meanwhile, Bolt faces a new lawsuit from its own former chief compliance officer, Lisa Dawson, seeking unpaid wages/severance and related benefits.
The suit was removed to federal court after initially being filed in Maryland state court. Dawson filed the suit after Bolt failed to pay contractually required arbitration fees in a timely manner, thereby waiving its right to compel arbitration, according to Dawson’s complaint.
In her suit, Dawson states that she “repeatedly raised to Bolt’s CEO, Ryan Breslow, her concerns about irregularities and tasks she was asked to do that she believed were unlawful, unethical, or inappropriate.”
Those concerns included Bolt’s strategy of pursuing payment processing deals with “high risk/prohibited merchants,” according to the complaint (emphasis added):
“On May 14, 2025 at 2:08 pm, Mr. Breslow called Plaintiff Dawson screaming and informed her that the General Counsel, Astine Alaverdyan, had been fired. He continued yelling at Plaintiff Dawson, said that Legal and Compliance could not be blockers to his business plans, and said that Bolt was going to engage in high risk and prohibited businesses. Plaintiff Dawson requested an example of what he meant. Mr. Breslow referred to the high risk/prohibited business initiative that he had launched and had hired a business development consultant, Jorden Sobel, to lead. He said Plaintiff Dawson was ‘scaring the shit out of people’ with her concerns about risk, and he repeated that Bolt was going to engage in this business anyway.”
One deal the former chief compliance officer specifically had concerns about? OnlyFans: “Dawson also said that she had requested to meet with Bolt President (and former CEO) Justin Grooms and the business team in the Slack channel regarding another high-risk entity before a deal was signed, because that particular firm (OnlyFans) posed public reputational risk associated with human trafficking and child pornography.”
According to her complaint, Dawson “felt she was being asked to engage in willful blindness to Bolt’s activities.” Ultimately, the complaint says, Dawson’s ability to access Bolt’s systems was terminated without notice or warning.
Dawson’s filing says that, after her access was removed, “a majority” of her team contacted her, with “[e]ach communicat[ing] to Plaintiff Dawson that they believed she had either been asked to do something unethical or illegal and that she had either resigned or been fired as a result — and that this was the reason for her account deactivation with no notification.”
Dawson’s complaint argues that Bolt did not terminate her for cause, as the company did not meet the contractual requirements laid out in her offer letter for such a termination.
The complaint alleges violations of state employment law and breach of contract, with Dawson seeking what the terms of her offer letter state, “payment of 6 months of severance pay (based on an annual salary of $450,000.00), as well as the payment of 6 months of health insurance premiums under COBRA, 6 months of matching into Plaintiff’s Section 401(k) plan” plus two-times unpaid wages as damages, interest, costs, and fees.
Ryan Breslow and representatives for Bolt did not respond to requests for comment prior to the time of publication.
Partner Banking is: a) Back b) Broken c) Obsolete d) All of the above
As previously mentioned, I’m including some other-than-usual content while I round out my “sabbatical.” This week, I’m pleased to bring you a guest essay from the CEO of Alloy Labs and someone I consider a personal friend, Jason Henrichs. Regular programming resumes next Sunday. Til then, find Jason Henrichs’ guest post below—
Mikula is on a well deserved sabbatical and asked if I’d cover the newsletter while he works on his Spanish. I lack his journalistic depth but what a week for BaaS that I’m uniquely qualified to rant on. Buckle up…
We are so back! Stablecoins are going to wipe out BaaS (partner banking, issuing relationships, embedded finance, pick your preferred label). Everyone will get a charter.
Depending on who you ask, you’ll get three answers on the state of the industry. Some will tell you it’s back. Regulatory headwinds have shifted, the OCC has a new posture, and banks are cautiously raising their hands again.
Others will tell you it’s still broken. The consent orders haven’t expired, the compliance obligations haven’t changed, and the wreckage from the last cycle isn’t done settling. And a third group will tell you it’s obsolete. If Mercury just got conditional OCC approval for a national bank charter, why would a serious fintech stay dependent on someone else’s infrastructure?
Here’s the thing: all three of them are right. It just depends on where you’re standing.
We are so back baby!
Cornerstone Advisors’ research showed a decrease in the percentage of banks looking to enter BaaS heading into 2024 as regulatory pressure and a better understanding of the cost to standup a BaaS unit in the bank put a damper on new entrants. The post-Synapse, post-Evolve hangover was real. Banks that rushed into partner banking without building the compliance infrastructure to support it got a crash course in what regulators expected.
Then the environment shifted. Comptroller Jonathan Gould arrived at the OCC with an explicit commitment to chartering and innovation. The FDIC followed. Sentiment among bankers moved. Suddenly interest in BaaS and our Alloy Labs BaaS Center of Excellence started popping up as banks started raising their hands again.
But here’s what hasn’t changed: the actual work.
The third-party oversight requirements didn’t get lighter. The FBO account complexity didn’t go away. The need to do thorough due diligence on fintech partners, not just sign an agreement and collect fees, didn’t become optional. KYC, OFAC checks, and fraud management are all still real things. The banks that built the infrastructure during the hard years aren’t suddenly cutting corners because regulators are operating with a lighter touch. Regulatory sentiment is a tailwind. It is not a permission slip.
What the new environment really did was separate the banks that were doing it right from the ones that were doing it for the wrong reasons. For the first group, it is still business as usual. For the second group, there’s likely still a reckoning coming, it’s just been postponed.
When the Rail Becomes the Foundation: BaaS in a Stablecoin World
I’m so over stablecoins. Not because I don’t find them intriguing, but because everyone’s losing their minds over them.
“This changes everything.” “The dollar on rails.” “Banking will never be the same.”
Sure. And fintech was going to kill banks (this was me in 2010). Then banks were going to crush fintech. Then BaaS was the future. Then BaaS blew up. Then embedded finance was going to rewire the flow of funds with self-driving money and the like.
The music plays. The music stops. The chairs get rearranged. We do it again.
Dan McGonegle, Senior Manager at Crowe and formerly in Novel Supervision at the Federal Reserve, and I have spent an extensive amount of time dissecting the impact of stablecoins on banking. It’s our definitive opinion that the impact is “to be determined,” in the short term at least. Dan and I wrote up our full framework in a whitepaper for Crowe; you can read the complete analysis here. What follows is the argument we think the industry is missing in the gap between reality and what people are trying to sell.
Right now, stablecoins are doing real, useful things. Cross-border payments. Treasury management for global operations. Specific corridors where traditional rails are slow, expensive, and friction-laden. That’s not hype, that’s real value.
But there’s a second question. A slower, harder, more important question that almost nobody is asking (yet).
What happens when stablecoins stop moving value and start holding it?
ACH didn’t replace wires. Real-time payments didn’t replace ACH. New rails find their use cases and layer in alongside existing systems. That’s (probably) the stablecoin story for the next several years. As Dan put it: “Stablecoins can undoubtedly move money faster. The big question is whether they start to reshape where money lives between transactions.”
The part that matters for partner banking: if stablecoins remain a payment rail, banks can incorporate them as another capability. Support settlement, provide on- and off-ramps, extend existing services. That’s additive. If, however, stablecoins increasingly become the place where value sits through wallets functioning like accounts, on-chain settlement embedded directly into platform software, the role of the bank in that stack starts to look different.
It might not happen on any useful timeline. Regulatory environment, consumer behavior, and institutional adoption will shape this more than the technology will.
But for banks deeply embedded in platform ecosystem, the question is worth asking now, before the answer is obvious. We give a framework for banks to assess the threat in our paper.
When the cry goes out “this changes everything,” whether it be factories, rail roads or the internet, the real change was quieter, slower, and arrived from a direction nobody was watching.
Getting a Charter vs. Becoming a Bank
Mercury just received conditional OCC approval to establish Mercury Bank, N.A. It’s a significant moment. But the more interesting question isn’t whether this is the start of a trend. It’s what Mercury actually wants the charter for.
Mercury CEO Immad Akhund was direct about it. Customers wanted Zelle. They wanted expanded lending. They wanted payment infrastructure Mercury actually controlled. Mercury claimed they couldn’t give them those things without a bank charter (disclosure: Choice Bank, one of Mercury’s partner banks, is a member of Alloy Labs, but this commentary doesn’t include any information from Choice).
Mercury’s argument isn’t that “we want to be a bank” in the business model sense. They’re saying “we need the regulatory status to close specific product gaps for existing customers.”
I explored this distinction with Jeff Taft from Mayer Brown on the Breaking Banks podcast. A charter is a regulatory status. Being a bank is an economic role. That Venn diagram used to be a nearly perfect circle. But, those two things are drifting apart. And the divergence matters enormously for how you think about the partner banking model.
Chime’s calculus is different than Mercury’s. Chime reported $2.2b in annualized revenue for 2025 and serves a mass-market consumer segment at enormous scale; Chime still finds that renting regulatory infrastructure makes economic sense. The BaaS model isn’t obsolete for Chime. It’s a feature of their business model, not a bug.
This is really a build-vs-rent question for regulatory infrastructure. Mercury is building it. Chime is renting it. Both can be right depending on your customer base, your product gaps, and your capital position.
What it means for partner banks is this: the fintechs most likely to pursue charters are the ones with specific product needs that only a charter can unlock and the financial wherewithal to support it. That’s a pretty narrow set. The vast middle of the fintech ecosystem is made up of programs that need solid compliance infrastructure, deposit access, and a good banking partner. They still need partner banks. The charter wave doesn’t empty that market. It just changes who’s in it.
What the Coastal-Evolve Deal Tells You About Risk
This week, Coastal Community Bank (also an Alloy Labs member but I’m not party to any inside information) signed a non-binding term sheet with Evolve Bank & Trust to potentially acquire assets and deposits from a range of Evolve’s BaaS programs. Hat tip to Chris Rigoni that I saw publishing this first. The deal is subject to due diligence, definitive agreements, and regulatory approvals so treat the following as a hypothesis, conjecture and framework, not a concluded fact.
That being said, the framework is important.
I think about this the way a distressed debt buyer thinks about acquiring a credit portfolio. Some loans are performing well. Some are impaired. Some are going to zero. The buyer knows this going in. The discount on the portfolio reflects the blended risk and the cost of working the portfolio. The economics work because the buyer has the infrastructure and scale to run the good assets efficiently and work out, or write off, the problem ones.
This is a question I’ve long pondered even before the Synapse/Evolve debacle: what happens when a bank wants, or is forced, to exit the partner bank space? A diversified portfolio of programs, acquired at a price that reflects the mixed quality, leveraged against the operational scale to run them seems like a good deal. Except. And this is a very big except: the regulatory risk from actions before the portfolio transfer can’t be written off and how they are handled is untested.
This is the dimension the credit analogy doesn’t fully capture, and it’s the one that should keep fintech program managers up at night.
In a credit portfolio, the quality of a loan is largely intrinsic to the borrower. In a BaaS program acquisition, the program’s reputational standing is partly extrinsic. It’s partly a function of what else is in the bank’s history.
If you are a program that got swept up in the Evolve debacle, not because you did anything wrong, but because your sponsor bank did, you now carry that association (and a whole bunch of questions) into every subsequent conversation. Future partners know where you came from. You didn’t cause the problem, but it’s on your permanent record.
This creates a dynamic that should cause any program relying on a single bank relationship to wake up in a cold sweat. The programs with the strongest compliance posture and the cleanest operations are the ones most likely to weather the storm. Often those that pushed boundaries and cut corners are the ones with the least margin for error.
Should every BaaS program have a backup plan? Yes. Unambiguously. And the reason isn’t just that your bank might fail (that’s the obvious risk). The real risk is that your bank gets distracted. Gets a consent order. Decides partner banking no longer fits their strategy and gives you 90 days. None of those outcomes are within your control. A backup bank relationship is insurance against your sponsor’s strategic drift, not just their insolvency. The time to think about what to do is before it is an issue. The best BaaS banks engage in these conversations proactively.
Who Knows What Time It Is?
The conversations happening simultaneously in partner banking, sentiment recovery, stablecoin infrastructure, chartering, and program risk management, look like separate stories. They’re not. They’re all expressions of the same underlying question: who holds the value, who holds the charter, and who holds the risk in a financial system that’s being redefined in real time.
The answer is different depending on where you’re standing and what time it is. So many voices are certain they are definitely correct. Only time will tell.
Things To Know & Other Good Reads
Stablecoins in 2025: Developments and Financial Stability Implications (FEDS Notes)
Banks in the Age of Stablecoins: Lessons from Their Historical Responses to Financial Innovations (FEDS Notes)
Monitoring AI Adoption in the US Economy (FEDS Notes)
Artificial Intelligence in the Financial System (Fed Vice Chair for Supervision Michelle Bowman)
CFPB Finalizes Revised Section 1071 Rule: A Narrower Framework with a 2028 Compliance Date (Husch Blackwell)
A Primer on OCC Preemption Determinations (Husch Blackwell)
Money for Nothing: The Golden Age of Arbitrage? (Net Interest)
Branches? In This Economy? (Fintech Takes Banking)
Listen: How Warsh Could Shape Fed Policy (Exchanges at Goldman Sachs)
Listen: What Regulators Got Wrong with Banking as a Service (Bank Nerd Corner)
About Fintech Business Weekly
Looking to work with me in any of the following areas? Email me.
Now available: buy my best-selling book, Banking as a Service: Opportunities, Challenges and Risks of New Banking Business Models, here
Vendor, partner & investment opportunity advice and due diligence
Fintech advising & consulting
Sponsoring this newsletter
News tip or story suggestion — reach me on Signal at mikulaja.01