Affirm Pulls the Plug on Crypto Program: Bitcoin Buying Ends March 2nd

In a surprising turn for the fintech world, Affirm, the popular ‘buy now, pay later’ service, is sunsetting its foray into cryptocurrency. If you’re one of the users who hopped on the crypto bandwagon with Affirm, or just curious about the shifting landscape of finance and crypto, you need to know about this.

What’s Happening with Affirm Crypto?

Get ready for a change if you’ve been using Affirm to dip your toes into Bitcoin. Here’s the headline:

• Bitcoin Purchases Halted Soon: You’ll no longer be able to buy Bitcoin through the Affirm app after March 2, 2023. Mark your calendars!
• Program Officially Ends March 31st: The “Affirm Crypto Program” will formally close its doors on March 31, 2023. That’s the final curtain call.

This news might sting if you were enjoying the convenience of buying Bitcoin through Affirm. But why is this happening? Let’s dive into the reasons behind Affirm’s decision.

Why is Affirm Shutting Down its Crypto Program?

According to Affirm’s CEO, Max Levchin, the decision to discontinue the “Affirm Crypto Program” boils down to two key factors:

1. Changing Financial Tides: Levchin pointed to “dwindling customer spending and a changing financial situation.” In simpler terms, the economic climate has become less favorable, and consumer behavior is shifting.
2. Strategic Shift to Core Business: In a letter to shareholders on February 8th, coinciding with a 19% reduction in staff, Levchin emphasized a refocus on Affirm’s core strengths. He stated they are “focusing on our core businesses, deferring projects with less assured revenue schedules, and aligning our operating expenditures with revenue.” Essentially, crypto is no longer seen as a core revenue driver in the current economic environment.

Affirm’s Chief Financial Officer, Michael Linford, further clarified that this move is about hitting profitability targets. Cost-cutting measures are in full swing, and sunsetting the crypto program is part of this strategy.

“We’ve made substantial steps to cut costs,” Linford stated. “We think our cost base is now suitably calibrated to fulfill our profitability targets while also supporting our product roadmap and long-term growth objectives.”

A Crypto Venture Launched at the Peak

It’s interesting to note the timing of Affirm’s entry into the crypto space. They launched the “Affirm Crypto Program” in late 2021. Remember 2021? That was pretty much the peak of the crypto market frenzy! Affirm partnered with NYDIG, a Bitcoin payments platform, to facilitate Bitcoin transactions and offer crypto accounts to Affirm users.

The program even allowed users to set up a plan where monthly interest earned from their savings account was automatically converted into BTC. It was a seamless way for users to passively accumulate Bitcoin.

However, the crypto market has seen significant turbulence since then, and it seems Affirm is adjusting its strategy accordingly.

What Happens to Your Bitcoin? Key Dates and Actions

If you’re an Affirm crypto user, here’s a crucial timeline and what you need to know:

According to Affirm’s website, any Bitcoin remaining in your account after March 31st will be automatically sold. The sale will be based on the CME CF Bitcoin Reference Rate (BRR) at 4:00 p.m. London Time. The proceeds from this sale will then be deposited into your Affirm Savings account.

Actionable Insight: If you have Bitcoin in your Affirm Crypto account, decide what you want to do with it before March 31st. You can either withdraw it to another wallet or let Affirm liquidate it and deposit the funds into your savings account.

Broader Cost-Cutting Measures and Layoffs

The crypto program shutdown isn’t happening in isolation. It’s part of a larger cost-cutting initiative at Affirm. CEO Max Levchin acknowledged that the company is also undergoing a significant workforce reduction. The 19% employee cut announced on February 8th is a substantial move, impacting potentially around 500 employees, based on LinkedIn data suggesting approximately 2,593 employees at Affirm.

Levchin took responsibility for the situation, admitting he was slow to react to the Federal Reserve’s actions. He explained in an email to employees that the rapid increase in interest rates by the Fed in 2022 significantly impacted consumer spending and Affirm’s borrowing costs.

“Everything changed in the middle of 2022,” Levchin wrote. “The Fed boosted its benchmark rate at an unprecedented rate over the previous three quarters. This has already depressed consumer spending and drastically increased Affirm’s borrowing costs. The main reason of our current situation is that I moved too slowly as macroeconomic shifts emerged.”

While Cointelegraph reached out to Affirm for details on the specific impact on the crypto program team, no further information was provided. However, Levchin indicated that he expects the current headcount to remain relatively stable in the near future.

Market Reaction: Affirm Stock Takes a Hit

The market reacted swiftly to the news. According to Google Finance, Affirm’s stock price (AFRM) dropped by a significant 19.1% in after-hours trading on the NASDAQ following the announcements.

In Conclusion: A Sign of the Times?

Affirm’s decision to shut down its crypto program is a noteworthy event in the fintech and crypto space. It underscores the challenges companies face in navigating volatile economic conditions and the need to prioritize core business operations during times of uncertainty.

For crypto enthusiasts who were using Affirm, this is a clear signal to reassess their crypto strategies and ensure they are aware of the deadlines for the program’s closure. While Affirm’s crypto experiment may be ending, the broader story of crypto adoption and integration within traditional finance is far from over. It’s a constantly evolving landscape, and Affirm’s retreat from crypto, for now, reflects just one facet of this ongoing evolution.