Ape Now, Pay Later

promise of no interest on those payments. Digital by now pay later options skyrocketed over the last several years, and now b NPL has come for crypto through a decentralized finance lender called Teller. Is this really a good idea? Joining me now? Is Bloomberg reporter Mr Lena A golfer Pulo. This is just another way for people to spend money on How buy now, payleta fits into the crypto economy?

Mr really, welcome back. Thank you for having me. I feel like whenever you come on the show, it's because there's something happening in crypto that I probably should worry about. Oh I'm sorry. I mean, it's not your fault personally, but you know, I was reading your story about by Now pay Lata coming to n f T S, and I was like, hmm, interesting time for this to be happening. Before we jump into the crypto part of this, can you just talk us through a little bit like what

by now pay leta is, particularly in this modern digital context. Yeah. I think the easiest way to describe it is like a modern layaway option where you know, individuals who are trying to purchase something that might be you know, a big price tag on it, UM have the option through these new companies that have come into the market to pay an installment. Sometimes there's intra, sometimes there's not, depending

on what the price tag is. And so say, for example, you want to buy a pair of shoes that costs two ars, you can pick an option to pay with by now pay Later, and so you'd pay you know, fifty dollars now fifty dollars in two weeks, all the way up until you pay UM your your your shoes off.

So what experts have warned recently about by Now Pay Later is that it tends to make people overspend because the money you're spending in that given moment in time may not be enough, but over time you've basically borrowed, You've taken a little loan on on something that you can't necessarily afford, yet you're still purchasing. And there's there's

a you know, pro argument here as well. When you're we're dealing with an inflationary environment like the one now where everything just costs more, it's giving people away to spend money um that they otherwise wouldn't be able to. So it's sort of like a double edged sword, as

are so many things in finance. One of the criticisisms that I've read about this is that you might have a BNPL account at and after Pay, and another one at Clarina, and another one like three or credit card company, and there's no single dashboard that you can sort of look at and see how much how much you owe? Is that is that a kind of a common thing that's happening. People are like, oh wow, I forgot that I bought shoes over here and this furniture over here. Yeah.

I mean if you're using one or more of these apps. So so you're using a firm Clarina and after Pay, you have different open loans on on all of them, and you have to check, you know, what you owe for each one of them individually, similarly to if you have like multiple credit cards. So this is just another way for people to spend money, um to to take on debt. In some ways that doesn't feel like a credit card um because oftentimes, again you don't have to

to pay interest. But you know, in the traditional banking world, this is something that affects your credit score. So oftentimes if you you know, keep purchasing through buy now, pay later programs, you'll see your credit score take a hit. It's not a massive hit, the same way you would say if you had thousands of dollars in credit card debt, but it does start to sort of, you know, bite into your score. Everyone has taken out debt. It makes

sense rates are very very low. So my concern is that when inflation comes back, and I think a misconception globally in the markets that inflation as an economic phenomenon is dead and buried. When it does come back, we're

gonna see some pain. Now we've talked about this in kind of the context of your buying shoes, you're buying furniture BNP L for n f T S. Yeah, I mean, I can't stress how awful the timing was for this announcement, and we can, I guess, just even start by the fact that this is something that's happening in the n f T market, which was extremely hot last year. You know, Board eight, yacht Club, Crypto Punks, all of those popular n f T collections that came into the market and

really had people excited. That is not what you know, it's not the vibe. I mean, we you know, we've calculated that the floor price for some of these n f T s has fallen since May, so numbers are down. The interest is just isn't there. And that's you know, just a byproduct of the so called crypto winter that we're going through right now. Even so, this company's teller announced that they are launching a buying out, pay later option for n f T s that they very aptly

coined ape now pay later. Very catchy, very catchy um. And you know, it's meant to function the same way it does in traditional finance in some ways, where if you want to buy an n f T you have to put um of the total price down up front, and then after that you can choose to pay in installments. Now, for the companies we talked about before, the affirms, the climates, etcetera. When I'm using them, I'm entering into a loan agreement with a comp any. Am I entering into a loan

agreement with Teller? If I do this? Round? Is like, how does this work? No? So that is I think the main difference here is that what Teller is doing is it's offering a marketplace where people who want to lend money can enter and people who want to borrow money money can enter. And so how this would work is you would want to purchase an n f T in installments, and there would have to be another person on the other side that would be willing to become

the lender for you for that project. So it's an individual to individual kind of transaction. It's one on one UM And you know, I think that's what causes a lot of maybe the red flags here because if um, someone isn't able to pay back their loan, that falls on a specific individual versus a company, and that protections

just wouldn't be there for that individual. And while the company says that that individual can sort of do whatever they need to do in order to determine the credit worthiness of whatever person wants to buy an n f T with um I'll pay later. It's hard to know. It's hard to know. I mean, one way you could potentially determine someone's credit worthiness in the crypto world is just to look at their wallets and be able to see how many assets they have in it. But that's

pretty much it. And again we're talking about an industry that's based primarily on anonymity. No one really knows so anyone is, and no one really knows what they actually own or don't own. So it's a really tricky kind of arrangement. Um. But again something that came to us, you know, in this so called crypto winter, and we'll just have to see how it goes. We'll be right back with more from Bloomberg report to Mr Lena a gulf of Polo on how buy Now pay Lata is

shaping the present of crypto. I also have a question about, like where does the n f T come into this. So it sounds to me like this is a marketplace for money to buy n f T s, But in the meantime, is there is teller also facilitating a relationship with the seller of that n f T. Does the n f T become transferred to you after the first payment if you don't make the second payment, like, does it go back to someone? Like what is that mechanic?

Do we know? Maya understanding is you purchase the n f T put down and that is your n f T afterwards, UM, if you're unable to make payments. That is not something that was clearly laid out in their press release announcement about how it would work, and I assume it would have to be you know, a case

by case scenario. But they did team up with a couple of different n f T collections that they say they have UM you know, build a sort of arrangement with one of them being um UGA Labs and all of the different collections that are under you know that company, so board it, y'all club me bits, so be it UM and so again. I think, as with so many things in crypto, the details here of what happens when this goes wrong, because it will UM are just not clear and so the risk is is a big part

of this conversation. I remember there is an an entrepreneur named Webb Smith who many moons ago at this point, you know me, the incredibly insightful observation that one of the big attractions of n f t s, particularly the Ugal abs n f t S, is feeling like you're joining an exclusive and rarefied club. And I'm fascinated by introducing this dynamic of even if you are not wealthy enough to join that club on the first try, you

can still get in. And I do wonder, just as like a social experiment, if there's going to be this hierarchy in the thing, if people who like bought their eight apes out right sort of looking down at the people who are like, I'm sorry you hear in law, like you know, there's like a classism elements discussion. Yeah, I mean, that's a great question, and I think that I think really touches upon this fomo culture that you feel with n f he's I mean, it's the club

that you want to be a part of. And especially projects like Board eight Yacht Club have just so much social commentary and like social media culture presence um and so it's hard to ignore them. It's hard not to

want to be a part of them. And this definitely gives um anyone who wants to, even if they can't afford it, to be part of this really exclusive club, and the whole thing was like, well, you're supposed to be rubbing shoulders with Snoop Dogg or virtual snoop Dogg is the case maybe, And now it's like, can anyone

just rub shoulders with snoop dogs? Shocking? I mean, I think that the way this company is pitching the buy now, pay later option is back to this idea of democratization, decentralization, a place where everyone can come be a part of

and really nothing else matters. And I think that that was sort of a message that got lost in the wave of you know, everybody's making a ton of money exactly, and and when you know boarded yacht club owners became crypto millionaires and billionaires, I think that conversation really shifted. But the idea here is like anyone who can jump into crypto should be able to no questions asked, and this is just another way for them to do so, I'll be it quite risky. Well, this is certainly something

I will be keeping an eye on. So maybe come back in a few months and let us know how this is all going. Yeah, let's check in and see who actually used this and and how it's going. Um, I think It's going to be very interesting. Thank you, Mr Lena. You can find more of Mr Lena's reposing on the Bloomberg terminal on Bloomberg dot com or follow

her on Twitter. She's an original member of the First Name Club and her Twitter is at m I S Y R l E n E. On the next episode of Bloomberg Crypto, with every additional bankruptcy filing or accusation of insider trading, regulators seemed to turn up the heat ever so slightly when it comes to their attention on the digital set industry. But who is doing the regulating and what does that even look like? And what does it mean that the regulators themselves don't seem to entirely

agree on these questions. Bringing us up to speed on what's happening here in the US with crypto regulation will be Bloomberg Reports Allison vers Brill and Alex Newn. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net or

find us on Twitter. We're at crypto. The supervising producer of Bloomberg Crypto is Vicky very Galina. Our senior producer is Janet Babin. Our producer is Mohammed Perup. Our producer is Sharon burriro Desta wonder At is our engineer. Original music by Leo Sidran. I'm Stacy Maria Shmal. We'll be back tomorrow.