Category Archives: Innovation and Resources

Advancing the dialogue on the future of financial services

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Competition Bureau release | Dec 14, 2017

December 14, 2017—OTTAWA, ON—Competition Bureau

The Competition Bureau has published the final report from its market study concerning technology-led innovation in the Canadian financial services sector.

The report outlines barriers to the growth and adoption of financial technology (FinTech) in Canada and provides a number of recommendations to help regulators and policymakers continue to promote FinTech innovation. The Bureau’s proposals are aimed at fostering competition and innovation in how Canadians:

  • pay for goods and services;
  • obtain loans for themselves and their businesses; and
  • receive financial advice.

In its report, the Bureau recommends modernizing laws and regulations to encourage the entry and adoption of new technologies, while maintaining consumer confidence and safety in this rapidly evolving sector.

The report follows 18 months of active engagement with national and international leaders in this sector, federal and provincial government partners, and Canadians. During this time, a number of positive developments that align with the Bureau’s recommendations have occurred. For example:

  • The Canadian Securities Administrators launched a regulatory sandbox that allows businesses to test their FinTech innovations in an environment with fewer regulations, and enables administrators to develop a common regulatory approach.
  • The Department of Finance is looking at ways to modernize legislation and regulation, and is examining new concepts such as open banking. Open banking has the potential to offer Canadians more control over their banking information, the ability to find the financial services that best meet their needs, and greater ease of switching between service providers.
  • Numerous initiatives to modernize regulations have been launched, including the Ontario Securities Commission’s (OSC) LaunchPad, which aims to help FinTech firms navigate securities law requirements and bring new products to market faster. The OSC also partnered with the Australian Securities and Investment Commission to better assist FinTech firms to expand internationally.

The Bureau is proud to have contributed to the dialogue with regulators, industry stakeholders and Canadians. This kind of collaboration is key to ensuring that the future of FinTech in Canada is competitive and innovative.

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Quotes

"FinTech has the potential to transform how Canadians access financial services. The findings and recommendations in our report will help regulators and policymakers create an environment that promotes FinTech innovation and growth in Canada."

John Pecman,
Commissioner of Competition

Download the full report --> here

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit: www.ncfacanada.org

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France to allow blockchain for trading unlisted securities

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Reuters | Staff | December 8, 2017

PARIS (Reuters) - The French government opened the way on Friday for trading unlisted securities using blockchain digital ledgers with the adoption of new rules aimed at improving Paris’ image as a center for financial innovation.

The new rules mean that banks and fintech companies can set up blockchain platforms where unlisted securities can trade instantly, cutting out middlemen like brokers and custodian banks.

Securities listed on financial exchanges will still be required to pass through custodians and clearing houses.

“The use of this new technology will allow fintech firms and other financial actors to develop new ways of trading securities that are faster, cheaper, more transparent and safer,” Finance Minister Bruno Le Maire said in a statement.

See:  OSC approves first ICO in Ontario to TokenFunder

Le Maire added that the new rules would be “another asset for Paris’ attractiveness as a financial center” as the sector seeks to put itself on the fintech map, where London currently looms large.

Eager to attract business from London after Brexit, the French government has already introduced measures to make Paris a more attractive financial center ranging from payroll tax cuts to a labor reform and promises to set up more international schools.

Blockchain, which first emerged as the system underpinning cryptocurrency bitcoin, is a shared ledger of transactions that is maintained by a network of computers on the internet rather than a central authority.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit: www.ncfacanada.org

 

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Australian Securities and Investment Commission Partners with Canadian Securities Regulators on Fintech

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Crowdfundinsider | By: JD Alois | Dec 12, 2017

The Australian Securities and Investment Commission (ASIC) has signed a cooperation agreement with the Canadian Securities Administrators (CSA) to foster Fintech innovation, expand the network of information sharing and support Fintech startups. ASIC previously signed a bilateral cooperation agreement with the Ontario Securities Commission which remains in effect.

See: Ontario Securities Commission and Australian financial regulator sign fintech agreement

CSA is an association that represents the provincial securities regulators including; the Autorité des marchés financiers (Québec), the British Columbia Securities Commission, the Alberta Securities Commission, the Financial and Consumer Affairs Authority of Saskatchewan, the Manitoba Securities Commission, the Financial and Consumer Services Commission (New Brunswick) and the Nova Scotia Securities Commission.

In Canada, each of the 10 provinces and three territories are responsible for securities regulation. Securities regulators from each province joined forces to form the CSA. The CSA strives to harmonize regulation for the Canadian capital markets. CSA reports it is actively looking to foster innovation in Canada’s capital markets and has commenced a number of initiatives. The participating jurisdictions in the CSA engage closely with foreign regulators to both share and learn from experiences with initiatives such as the ASIC Innovation Hub and the Fintech Regulatory Sandbox.

See: Fintech Sandbox and Ontario Centres of Excellence Announce Partnership

ASIC Commissioner John Price said that ASIC’s relationship with the OSC has been mutually beneficial.

“It makes sense to expand our links to other Canadian provincial regulators where we are seeing similar fintech innovation.”

Louis Morisset, Chair of the CSA, SA and CEO of the Autorité des marchés financiers in Québec added;

“These agreements mark new positive steps for the CSA, which already works with the Sandbox to help innovative businesses seeking to operate across Canada.”

In February 2017, the CSA launched its ‘CSA Regulatory Sandbox’ to support Fintech innovation. The Canadian Sandbox is similar to ASIC’s Regulatory Sandbox relief.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit: www.ncfacanada.org

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U.S. pot industry: High tech, high finance, and high times

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VentureBeat | By: Reuters | Dec 6, 2017

Two years ago, Alan Gertner was head of Google’s Asia-Pacific sales team in Singapore, handling more than $100 million in business.

Now, he begins his day in a small Toronto office, building a cannabis brand that sells fancy smoking accessories such as vaporizers and bongs that cost up to $335 CAD ($261.72 USD).

Gertner is among a growing group of entrepreneurs and investors who are trading in high-paid corporate jobs in the technology and finance sectors to launch start-ups focused on the fast-growing marijuana industry.

Two decades after the first legalization of medical marijuana by a U.S. state, pot-based businesses are professionalizing their operations by luring top talent from other industries and billions of dollars in investments from Wall Street firms. A new commodity index even offers data on the going rates for greenhouse and field-grown weed.

Gertner still gets surprised reactions to his career change, as when his mother asked: “Can’t you just get another job at Google?”

And yet he’s raised $10 million in capital in ten months as the chief executive of Toyko Smoke, despite the continuing taboos and legal risks in the industry.

See: True Leaf: Crowdfunding Legal Cannabis Products Across North America

The legal cannabis market, currently worth about $8 billion, is predicted to triple in size to $22.6 billion in total annual sales by 2021, according to cannabis industry tracker, Arcview Market Research. That could make it bigger than the America’s most profitable sports organization, the National Football League, which saw about $13 billion in revenue last year and aims to reach $25 billion by 2027.

So far in 2017, there have been at least 27 investments by venture capital funds in cannabis companies, compared with just 10 deals in 2016 and 9 deals in 2015, according to venture capital data provider CB Insights.

The influx of capital helps finance the paychecks of 150,000 workers in the legal U.S. pot industry, representing job growth of 20 percent from a year ago, according to an estimate from the cannabis website Leafly, a marketing firm for dispensaries and other cannabis firms.

Eric Eslao, founder of Defonce Chocolatier – which makes artisanal cannabis-infused chocolates costing $20 a bar – was a senior production manager at Apple just over a year ago. He feared the stigma of joining the weed industry, but it didn’t stop him.

“The opportunity was too good not to make the jump,” he said.

Continue to the full article --> here

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit: www.ncfacanada.org

 

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Blockchain isn’t the only option for distributed finance services

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Disruptive Asia | | Dec 7, 2017

Blockchain has been compared to TCP/IP in terms of how it enables new distributed finance solutions in the same way that TCP/IP enabled internet services. It certainly looks like distributed finance solutions will disrupt the whole finance industry, but it is not guaranteed that “Bitcoin type” blockchain will be the primary long-term solution to enable it. It has many fundamental issues, and there are other candidates to create distributed ledgers and distributed finance solutions.

Blockchain is like a religion to some people. They believe in it, even if they don’t understand it. Sometimes there are moments when – and people with whom – I feel it’s forbidden to talk about blockchain problems. When you do, you get comments like, “So, you want to protect centralized solutions.”

No, I want distributed solutions that work, are reliable and can really scale up.

The basic idea of distributed ledgers is to store data (or data blocks) in a distributed network in a reliable way. Those data blocks then can include some information, e.g. how many tokens (e.g. Bitcoins) you have, ownership of a certain asset (token as a certificate e.g. based on smart contracts), or your credit score (e.g. a distributed credit rating systems). The order of the transactions is fundamental for these systems – it means, for example, that you cannot use the same token twice or sell the same asset twice.

Traditionally that order has been easy to maintain because a centralized system authorized the transaction and then updated your information. If you buy a flight ticket with your debit card, your bank (or its processor) has the system to check that you have enough money to pay for the ticket, then it handles the transaction, deducts money from your account and sends information to the airline that they will get their money and they can issue you a ticket. Then their system confirms your place on a flight, issues the ticket and sends it to you.

With distributed ledgers, we must imagine solutions where there is no single centralized party to check your bank account, confirm the payment, or keep track of available seats on a flight. Basically, everyone has a wallet where he or she can hold money (or monetary tokens) and flight seats (tokens with the right for a seat). And there is no central party or upper hierarchical party that would approve transactions and keep track of them. This means we need algorithms to guarantee transactions are recorded and maintained in the right order.

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For example, when I buy a flight ticket from a flight dealer, the system must guarantee that I don’t use money elsewhere until my ticket is paid, and that the dealer doesn’t sell the seat to someone else until I have got my ticket. When we tokenize money and assets this way, it then creates many other opportunities to make use and trading of them easier and more flexible than with traditional ownership documents.

Know your distributed finance systems

There are several models to guarantee or at least estimate this in a distributed system:

  1. Proof-of-work (POW): This is the model that blockchain uses. Basically the way to guarantee the order is to slow down the system and make it hard to add a new block, i.e. it takes time and computing capacity (that means it takes a lot of electricity too). If two blocks are added simultaneously, then it is basically a competition to see who can perform the calculation tasks faster and add more to the chain, because the longer fork wins. The reward for adding a block is to receive some tokens (e.g. Bitcoins).
  2. Leader-based system: The requires someone (or several people, either in a hierarchy or taking turns) is the leader and all transactions are sent to them for their approval. One could say this is not really a distributed model (de-centralized, perhaps), and its one technical weakness is that the leader is the weak link in an attack situation such as DDoS.
  3. Proof-of-stake (POS): We can say it is a kind of gambling system. Each party basically votes with their own money (tokens) which would be the consensus of the transaction. If you are on the winner’s side you win money, otherwise you lose. In this way the system motivates everyone to follow the consensus chain.
  4. Voting-based system: There are several ways to create voting models – for example, you could have equal voting rights or allow a leader to have more votes. Many of these solutions have fundamental problems with potential attacks and how things like botnets could influence the voting results. Proof-of-stake and voting solutions also overlap (voting with money), and there are hybrid solutions, too.
  5. Hashgraph: This is quite a new solution – it’s a modified voting model, but the voting is based on information stored in the network. In this system, each node must know all transactions. When I create a transaction, my node sends it to some randomly selected nodes that again send it randomly to some others (a gossip model), so the number of nodes that receive it grows exponentially. This doesn’t yet guarantee a consensus about the order of the transactions. But each message also includes the ID in a coded format (hash) of the last message the node sent and received, so it is possible to build a graph where all transactions are in the right order. Hashgraph can handle hundreds of thousands of transactions a second. Hashgraph looks very promising for many high capacity needs, but it is not yet proven in practice.

The descriptions above are simplified summaries to present the main ideas of different models, and there are probably other ways to categorize them. We could also separate categories for consensus methods and data models. But they give a rough idea of the kinds of different models out there that are based on very different processes and algorithms, and have different pros and cons.

Continue to the full article --> here

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit:  www.ncfacanada.org

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Eric Ries set to launch new Long-Term Stock Exchange

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Management Today UK | by Kate Bassett | Dec 1, 2017

Our current stock markets encourage short-term thinking and stymie growth. So Eric Ries, author of The Lean Startup and The Startup Way, is building a new one.

‘It was the one idea that would keep me awake at night. It was so radioactive that no-one wanted to go near it. But it wouldn’t leave me alone.’

American author and entrepreneur Eric Ries is talking about his latest ‘startup’ - the Long-Term Stock Exchange (LTSE), a revolutionary new stock exchange that aims to remove the short-term pressures that plague today’s public markets and, instead, reward long-term thinking.

Ries’s lightbulb moment came seven years ago while he was working on the book that would become his best-selling entrepreneurship manifesto, The Lean Startup. ‘In that book, I recommended that people should try to emulate Toyota by building companies that will last generations. But how can they do that with the way our current stock markets are structured?’ Short-term pressure, he says, acts as ‘a malignant gravitational force, warping and distorting the management system of an organisation’ and thwarting innovation.

 ‘We’ve seen a roughly 50% decline in the number of public companies from 1996 to 2016, a triple digit increase in CEO compensation from 1978 to 2014, and a spike in activist investor campaigns. Businesses suffer - and so does our economy.’

Ries’s ‘wild idea’ was to create an entirely new US stock exchange designed to stop destructive short-term thinking and overhaul the way firms publicly list their shares. ‘No-one else would touch the idea so I started to do my own homework. It’s hugely complex. It’s taken me years to figure out how to build a stock exchange, assemble the right expertise and understand the legal and technical issues. I realised that the reason no-one else is doing this is because it’s incredibly hard. Frankly, that isn’t a good enough reason not to try.’

See:  Canadian Fintech Katipult Becomes Public Company, Trades on TSXV under Ticker FUND

The LTSE weights corporate governance power to long-term investors who have more of a say than short-term investors; ties executive pay to long-term business performance; and has additional disclosure requirements that allow companies to focus on ‘the fundamentals’ instead of managing to the quarter.

‘People in Silicon Valley treat the financial system like a given but we’re building a new ecosystem that encourages people to be thinking about their businesses in years and decades, not months and weeks.’

Ries has assembled a team of 15 full-time employees, including veterans of the NYSE and US Treasury Department. The LTSE is backed by the likes of LinkedIn co-founder Reid Hoffman, America Online co-founder Steve Case and PayPal founder Peter Thiel. Ries is working to get approval from the Securities and Exchange Commission and says LTSE is on track to open as a new public markets option in 2018.

Ries studied computer science at Yale and co-founded Catalyst Recruiting in his spare time. When the company folded, he moved to There.com as a senior software engineer before starting IMVU, which he describes as ‘the most intense and most rewarding experience of my professional life’. He’s worked as an advisor or board member for more than a dozen startups and penned The Lean Startup in 2011. It was Ries who made the term ‘pivot’ part of the business vernacular.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit:  www.ncfacanada.org

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A Startup Sportsbook’s Big Bet On Creation Of Its Own Cryptocurrency

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Forbes | | Dec 2, 2017

As the future of sports betting has become the most pressing issue in the gaming industry, at least in the United States, one company is focused on creating a more equitable and fair pricing model for bettors, with enhanced prospects of attaining long-term profitability, by reducing operator margins from as high as 5% to a flat 1% margin on all bets.

The company, FansUnite, says that it is able to provide this decrease in margins to bettors and maintain comfort in profitability due to the creation of its own digital currency as well as through building its own risk management platform around cutting-edge machine learning calculations currently only utilized by the most advanced betting syndicates.

As of now, Vancouver-based FansUnite is a social sports betting network whereon members are able to track their results and follow other bettors to exchange strategies. Top bettors on the site maintain thousands of followers.

FansUnite.com currently offers a free virtual currency, allowing users to place fantasy wagers with no monetary risk. However, in the near future, the company seeks to harness the power of the Ethereum blockchain. The concept is that users will be able to actually bet on sports as they would in traditional sportsbooks, but with FanUnite's own digital currency. A typical bettor who wins 52% of the time at a sportsbook may end up losing money based on a sportsbook's margins. FansUnite is seeking to change the game with their lower margins provided based on lower operating costs, allowing users an enhanced ability to actually profit from their bets.

Use of its own currency and blockchain technology is also supposed to increase transparency and security for FansUnite bettors by storing all pertinent bet information on the blockchain — leaving an immutable and auditable record of each bet. The assumption is that use of the blockchain reduces the risk of bets being reneged or canceled post-match as well. Also, the use of a single, new currency is projected to accelerate the process of depositing and withdrawing funds and to remove the need for inefficient wires or money transfers.

See:  Canada’s Blockchain Stocks Roar into Q4

"Smart contracts are a natural fit for sports gambling, ensuring contracts are honored exactly as entered — no reneging or canceling of bets," explains FansUnite in a "love letter to bettors" it published in October.

While FansUnite promises to provide compliance with gambling regulatory bodies, it also wants to increase anonymity relative to traditional sportsbooks by only identifying users by their unique blockchain address. It claims to be the first token-based operator to have built a relationship with regulatory bodies and licensing authorities, which serves to stabilize its token better than any competitors in the space.

“Our years of experience operating our free-to-play virtual sportsbook and listening to our members have provided us with a clear picture of issues with the existing sports betting landscape,” said FansUnite CEO Darius Eghdami. “With blockchain we simply saw an opportunity to address these issues and potentially help improve conditions for sports bettors globally by providing a cheaper, more transparent and secure system for bettors.”

FansUnite previously raised roughly $400,000 in seed capital before being acquired by Victory Square Technologies (CSE:VST)(OTC:VSQTF)(FWB:6F6) for $2 million in August 2016. It launched a partnership with SecurePlay, a BTL Group subsidiary, in September 2016 to begin development of its blockchain technology. In June 2017, it announced its intention to create a blockchain-enabled sportsbook and incorporated FansUnite Limited in gaming-friendly Gibraltar in September.

The company has made it clear that its Token Generation Event is not intended for nor applicable to Canadian or U.S. citizens.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  For more information, please visit:  www.ncfacanada.org

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