Category Archives: Blockchain, Crypto, Digital Assets Regulations

Banks in US Can Now Offer Crypto Custody Services, Regulator Says

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Coindesk | Nikhilesh De | Jul 22, 2020

bank vault - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysIn a letter dated July 22, Senior Deputy Comptroller and Senior Counsel Jonathan Gould wrote that any national bank can hold onto the unique cryptographic keys for a cryptocurrency, clearing the way for national banks to custody digital assets for their clients. At present, only specific crypto custodians, such as Coinbase, can do so, usually with a trust charter issued by a state financial regulator.

The letter, which appears to be addressed to an unidentified bank or similar entity, notes that banks “may offer more secure storage services compared to existing options,” and that both consumers and investment advisors may wish to use regulated custodians to ensure they don’t lose their private keys, and therefore, access to their funds.

See:  Consilium Crypto Saves 10% on Transactions for Institutional Digital Asset Traders

“Providing custody for cryptocurrencies would differ in several respects from other custody activities,” the letter said.

It pointed to the need for digital wallets, adding that because they exist on a blockchain, there is no physical possession for cryptos.

“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers,” the letter said.

Banks can provide both fiduciary and non-fiduciary custodian services, the letter said.

It also specified that banks entering the space “should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies.”

The OCC is currently headed up by Brian Brooks, a former Coinbase exec who joined the regulator earlier this year. He’s filled in as Acting Comptroller since the beginning of the summer, and has already proposed a number of reforms that would benefit crypto companies, including a national payments charter which would let crypto startups bypass the state-by-state approach in terms of acquiring money transmission licenses if they provide payment services.

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Coinsquare to pay $2.2 million in OSC settlement

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Advisor's Edge | James Langton | Jul 21, 2020

Bitcoin - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysIt’s the regulator’s first enforcement case against a crypto trading platform

In a settlement that aims a shot across the bow of the fledgling crypto asset sector and mounts its first defence of whistleblowers, the Ontario Securities Commission (OSC) sanctioned crypto trading platform Coinsquare Ltd. and several executives.

The regulator found the firm faked its trading volume, lied about it, and retaliated against an internal whistleblower. Following a virtual hearing, an OSC hearing panel approved a settlement with Coinsquare and its executives that includes over $2.2 million in sanctions and costs, as well as industry bans.

The sanctions follow admissions that the firm violated securities rules by reporting inflated trading volume, which was generated by an internal algorithm that produced 840,000 wash trades (involving 590,000 Bitcoins), representing 90% of the platform’s reported trading activity.

The OSC also found the firm made misleading statements about the phony volume when concerns were raised by clients on Reddit, and that Coinsquare retaliated against an internal whistleblower who brought concerns about the suspect volume to senior management. The whistleblower was terminated by the company.

See:  Wealthsimple to expand into crypto trading

In settling the case, the firm admitted to engaging in market manipulation by reporting inflated trading volumes, misleading clients about the suspect volume and retaliating against a whistleblower.

CEO Cole Diamond and founder, president and CTO Virgile Rostand admitted to facilitating the firm’s breaches of Ontario securities law, while former chief compliance officer (CCO) Felix Mazer admitted to failing to fulfil his role as CCO.

Under the settlement, Diamond and Rostand both agreed to resign from the firm. Diamond paid a $1 million penalty and Rostand paid $900,000.

Coinsquare, Diamond and Rostand agreed to pay $300,000 in costs.

“Being an innovator in our capital markets is not a free pass to disregard Ontario securities law,” Kehoe said in a statement following today’s hearing.  “All market participants – including those in novel industries – must act honestly and responsibly,” he added.

The two executives are also banned from registration for three years, and they are both banned from participating in the management of Coinsquare for three years.

Additionally, Diamond received a three-year director and officer (D&O) ban, and Rostand agreed to a two-year D&O ban (although there’s a carve-out in the deal that will allow them to be involved with a Coinsquare affiliate that’s not a market participant after one year).

Mazer is also banned for one year and agreed to pay $50,000 for his role in the misconduct.

See:  An IOSCO report highlights crypto trading issues, but stops short of setting standards

“Despite several employees raising concerns about inflated trading volumes, Coinsquare not only stuck with the practice, but lied to investors about it and retaliated against a whistleblower,” said Jeff Kehoe, director of enforcement at the OSC, in a statement.

As part of the settlement, Coinsquare and its subsidiary, Coinsquare Capital Markets Ltd., which was seeking registration with the OSC and the Investment Industry Regulatory Organization of Canada (IIROC), are also required to “implement substantial corporate governance improvements” before it can continue to pursue possible registration with the OSC and IIROC.

These improvements include establishing independent boards of directors, appointing new CEOs and CCOs, creating an internal whistleblower program, and implementing policies and procedures to ensure compliance.

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Ontario capital markets task force proposes big changes

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Investment Executive | Rudy Mezzetta | July 9, 2020

Task force - Banks in US Can Now Offer Crypto Custody Services, Regulator Says

Group suggests a transformation of OSC and SRO governance

The Ontario government’s Capital Markets Modernization Taskforce released its consultation paper  Thursday, offering 47 policy proposals that would extensively change the role, mandate and governance of the Ontario Securities Commission.

“What we’ve tried to achieve is supplementing the critical policing function of our capital markets regulator with a public policy imperative of growing the capital markets,” said Walied Soliman, task force chair and Canadian chair of law firm Norton Rose Fulbright in Toronto, in an interview.

In February, the Conservative government established the five-member task force, aided by an advisory panel of experts, with the mandate of undertaking the first full review of Ontario’s securities legislation since the 2003 report issued by the Crawford Committee. The task force will issue its final recommendations for the Ontario Minister of Finance by the end of the year — likely in late November or early December, Soliman said.

See:  The disruption of Canada’s private capital markets

In today’s paper, the task force proposed that the mandate of the Ontario Securities Commission (OSC) be expanded to include fostering capital formation and competition in the markets.

Calling it a fundamental cultural shift, Soliman said the task force’s proposals ask, for example, “how we can assure that we have successful biopharma companies in this country that don’t just leave here when it’s time to do their initial public offering, taking their head office jobs after their incubation in this country to the U.S. and elsewhere.”

The task force also proposed dividing the OSC’s regulatory and adjudicative functions, either by “creating a separate tribunal, comprised of adjudicators and its own staff within the current OSC, or by creating a new capital markets adjudicative tribunal as a separate entity from the OSC.”

Under either scenario, the OSC’s board “would focus on the strategic oversight and corporate governance of the regulator.” Meanwhile, the CEO, “a separate position from the chair,” would manage the OSC’s day-to-day functions. A Chief Adjudicator would oversee the tribunal’s adjudicative responsibilities.

See:  Ontario Has a Plan to Create a More Competitive Business Environment

“People have talked about separating the adjudicative and the prosecutorial/staff function for decades, since I started practising law,” said Soliman, adding that the recommendation has “wide support across the stakeholder spectrum.”

Other proposals include creating a single self-regulatory organization (SRO) that covers all advisory firms, including investment dealers, mutual fund dealers, portfolio managers, exempt market dealers and scholarship plan dealers, and providing the OSC with stronger tools to oversee both the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association — as well as any SRO that may replace the two groups in the future.

“This would allow the OSC to ensure that both SROs fulfill their public interest mandate and that their approach to regulating registered firms is not overly burdensome or costly,” the report says.

The task force proposed that the SROs submit annual business plans to the OSC for approval; that the OSC have a veto on any significant publication, including guidance or rule interpretations; and that the OSC have a veto for key appointments, including the chair, president and CEO.

See:  How regulatory collaboration transformed markets

“IIROC plays a critical function in our capital markets in Ontario, yet there is not a very clear line between our policy makers, the OSC, and that critical body that regulates our dealers,” said Soliman. “In clarifying the mandate and modernizing governance, we wanted to ensure that we didn’t have any slippage within the capital markets and that everybody was rowing in precisely the same direction.”

Other proposals include streamlining the timing of disclosure (e.g., semi-annual reporting); introducing an alternative offering model for smaller reporting issuers; expanding accredited investor categories; increasing access to the shelf system for independent investment products; improving corporate board diversity; and creating an Ontario Regulatory Sandbox to benefit start-ups, and in the longer term, a “Canadian Super Sandbox.”

The task force is seeking commentary from stakeholders by September 7.

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Download: Ontario's Capital Markets Modernization task Force - Consultation Report

 


NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Wealthsimple to expand into crypto trading

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Betakit | | Jul 14, 2020

Wealthsimple crpyto - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysWealthsimple is set to expand into the cryptocurrency trading space with the launch of Wealthsimple Crypto.

The new product offering will provide commission-free trading of Bitcoin and Ethereum through a mobile trading app. The Toronto-based FinTech startup has launched Wealthsimple Crypto in private beta and will roll out the product to users by invitation over the coming weeks.

“It’s important that [Wealthsimple] started thinking about the role that crypto is playing in the financial services ecosystem.”

Wealthsimple Crypto will be offered by Wealthsimple Digital Assets Inc., a newly-formed, wholly-owned subsidiaries of Wealthsimple Financial Corp. Wealthsimple registered the business earlier this year; one of three, in preparation for the launch of a variety of new services.

See:  Consilium Crypto Saves 10% on Transactions for Institutional Digital Asset Traders

According to Wealthsimple, Digital Assets is a virtual currency dealer money services business authorized by Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). It is also reportedly working with the Ontario Securities Commission (OSC) on a regulatory sandbox framework for offering Wealthsimple Crypto to Canadians.

“Crypto is already super popular and growing in its popularity, and growing in its credibility. And the reality in Canada is that there aren’t that many options to buy and trade cryptocurrencies in a safe and secure platform,” Wealthsimple co-founder and CEO Michael Katchen told BetaKit. “We really see ourselves as building a brand all around helping people invest their money, trade their money in a responsible way, and we think we have an opportunity to extend that into buying and selling cryptocurrencies.”

“There are a lot of barriers to safely buy and sell these assets on a Canadian platform,” Katchen said, noting that Wealthsimple’s goal by moving into the space is to remove those barriers by giving Canadians access to an “affordable, easy, and secure” crypto product.

The move into crypto may prove to be an interesting one. Recently, the Canadian cryptocurrency trading space has faced some controversies, most recently with popular Canadian cryptocurrency exchange Coinsquare being accused of “artificially inflating” how much currency it trades. According to Vice, Coinsquare was “wash trading” – automatically buying and selling currency between accounts it controlled – something that is likely to draw attention from securities regulators.

See:  New York to relax cryptocurrency rules

The lack of clarity on how regulation applies to cryptocurrency has long-affected FinTech startups in Canada. The Canadian Securities Administrators, a non-federal body of securities regulators from Canada’s provinces and territories, has previously suggested the implementation of a “regulatory regime” tailored toward crypto trading platforms.

Recent amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) made by FINTRAC, the national financial intelligence agency of Canada, have had regulatory implications for cryptocurrency business.

Under the amendments, businesses including virtual currency exchanges and brokerages are now required to register with FINTRAC, comply with PCMLTFA, and develop “comprehensive and effective” anti-money laundering compliance programs.

“The reality is that crypto is still a very novel space, regulators are still understanding the role that they’re going to play in this industry,” said Katchen. “[Wealthsimple is] trying to collaborate with the OSC to help figure out that framework going forward.”

“Crypto is still a very novel space, regulators are still understanding the role that they’re going to play.”

“I think the fact that we come from it as a regulated entity across our various other business lines gives us a greater sensitivity and appreciation for what it means to work with regulators, how to help inform their thinking about this, and work collaboratively on a solution that’s right for the industry and right for regulators too,” he added.

The cryptocurrency traded on Wealthsimple’s platform will be custodied at Gemini Trust Company, a cryptocurrency exchange and custodian regulated by the New York State Department of Financial Services. Gemini was founded in 2014 by Cameron and Tyler Winklevoss.

See:  Wealthsimple launches its first spending account

Katchen called the partnership with Gemini “a big part” of Wealthsimple Crypto’s model.

“There are few credible players in this space today, which is one of the ways we see an opportunity,” he said. “The reality is, there’s a lot of complexity in delivering crypto securely, and Gemini has become the de facto credible custody platform in North America. They are regulated. They are audited. They are definitely the farthest along with respect to maturity and credibility from controls and regulation.”

While Katchen noted that Wealthsimple built the rest of the technology behind its crypto trading platform, the company decided to use Gemini as a third-party custodian, rather than taking what he said would be years to build out its own such service.

The Wealthsimple CEO hinted at future expansion in the crypto space, beyond trading. Katchen, however, would not expand on what that may mean for Wealthsimple. “All I can say is that I think it’s important that [Wealthsimple] started thinking about the role that crypto is playing in the financial services ecosystem. Adding it as a way to buy and sell cryptocurrencies is a great place to start.”

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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New regime needed to take on tech giants

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Competition Markets Authority | Release | Jul 1, 2020

big tech and competition - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysThe CMA is calling on the government to introduce a new pro-competition regulatory regime to tackle Google and Facebook’s market power.

The dynamic nature of digital advertising markets and the types of concerns identified by the Competition and Markets Authority (CMA) in its market study are such that existing laws are not suitable for effective regulation. It is therefore recommending a new pro-competition regulatory regime to govern the behaviour of major platforms funded by digital advertising, like Google and Facebook.

This recommendation to government is the result of a year-long examination of the markets. The CMA used its statutory information gathering powers to lift the lid on how advertising revenue drives the business model of major platforms.

The CMA’s concerns

UK expenditure on digital advertising was around £14bn in 2019, equivalent to about £500 per household. About 80% of this is earned by just 2 companies: Google and Facebook. Google enjoys a more than 90% share of the £7.3 billion search advertising market in the UK, while Facebook has a share of over 50% of the £5.5 billion display advertising market. Google’s revenue per search has more than doubled since 2011, while Facebook’s average revenue per user has increased from less than £5 in 2011 to over £50 in 2019.

See:  Big Tech takes aim at the low-profit retail-banking industry

The services provided by Facebook and Google are highly valued by consumers and help many small businesses to reach new customers. While both originally grew by offering better services than the main platforms in the market at the time, the CMA is concerned that they have developed such unassailable market positions that rivals can no longer compete on equal terms:

  • Their large user base is a source of market power – it means that Facebook is a “must-have” network for users to remain in contact with each other, and enables Google to train its search algorithms in ways that other search engines cannot.
  • Each has unmatchable access to user data, allowing them to target advertisements to individual consumers and tailor the services they provide.
  • Both use default settings to nudge people into using their services and giving up their data – for example Google paid around £1.2bn in 2019 to be the default search provider on mobile devices and browsers in the UK, while Facebook requires people to accept personalised advertising as a condition for using their service.
  • Their presence across many different markets, partially acquired through many acquisitions over the years, also makes it harder for rivals to compete.

Each of these factors individually presents a potential barrier to new competition, but together they work to reinforce each other and are extremely difficult to overcome.

These issues matter to consumers. Weak competition in search and social media leads to reduced innovation and choice, as well as to consumers giving up more data than they would like. Further, if the £14bn spend in the UK last year on digital advertising is higher than it would be in a more competitive market, this will be felt in the prices for hotels, flights, consumer electronics, books, insurance and many other products that make heavy use of digital advertising. The CMA found that Google’s prices are around 30% to 40% higher than Bing when comparing like-for-like search terms on desktop and mobile.

See:  FFCON20 Week 1: Scaling Fintech Funding, Innovation and Competition – July 9th Agenda Now Posted

Google and Facebook’s market positions also have a profound impact on newspapers and other publishers. The CMA has found that newspapers are reliant on Google and Facebook for almost 40% of all visits to their sites. This dependency potentially squeezes their share of digital advertising revenues, undermining their ability to produce valuable content.

The need for a new regime

The scale and nature of these issues mean that a new pro-competition regulatory regime is needed so that users can continue to benefit from innovative new services; rival businesses can compete on a level playing field and publishers do not find their revenues unduly squeezed. The CMA’s proposals are consistent with those made by Professor Jason Furman in his report for the government.

The CMA has proposed that within the new regime a ‘Digital Markets Unit’ should have the ability to:

  • enforce a code of conduct to ensure that platforms with a position of market power, like Google and Facebook, do not engage in exploitative or exclusionary practices, or practices likely to reduce trust and transparency, and to impose fines if necessary.
  • order Google to open up its click and query data to rival search engines to allow them to improve their algorithms so they can properly compete. This would be designed in a way that does not involve the transfer of personal data to avoid privacy concerns.
  • order Facebook to increase its interoperability with competing social media platforms. Platforms would need to secure consumer consent for the use of any of their data.
  • restrict Google’s ability to secure its place as the default search engine on mobile devices and browsers in order to introduce more choice for users.
  • order Facebook to give consumers a choice over whether to receive personalised advertising.
  • introduce a “fairness-by-design” duty on the platforms to ensure that they are making it as easy as possible for users to make meaningful choices.
  • order the separation of platforms where necessary to ensure healthy competition.

Whilst this recommendation is UK-focused, many of the problems that the CMA has identified are international in nature. It will therefore continue to take a leading role globally in relation to these issues as part of the CMA’s wider digital strategy.

See:  To Support Disruptive Technologies, Take Bigness Seriously

CMA Chief Executive Andrea Coscelli said:

Through our examination of this market, we have discovered how major online platforms like Google and Facebook operate and how they use digital advertising to fuel their business models. What we have found is concerning – if the market power of these firms goes unchecked, people and businesses will lose out. People will carry on handing over more of their personal data than necessary, a lack of competition could mean higher prices for goods and services bought online and we could all miss out on the benefits of the next innovative digital platform.

Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives.

 

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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5 Trends to Watch in Fintech Regulation

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Finance Magnates | Matthew Unger | Jun 20, 2020

regulatory tech fintech trends - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysWhat will have the biggest impact?

During the last decade, financial technology has improved dramatically, moving from mainframe trading computers and COBOL to mobile banking and blockchains. Never before have we been at such a critical inflection point as money, contracts, and regulations are combined into almost infinitely scalable code. Remote operations and contactless procedures are becoming the new normal, those financial services providers who previously resisted digitization now find themselves in a race for survival.

As with any “gold rush”, this frenzy brings new opportunities for exploitation, fraud, theft, etc. One only has to review the Wild West scenarios that played out in the cryptocurrency sector to recognize the potential for fintech to be used to either create or extract value. While some made fortunes in the early crypto days, others lost a lot. Hotter than the cryptocurrency and ICO wave of 2015-2017, fintech platforms are growing faster than ever before.

See: 

Within the realm of fintech exist neo-banks, challenger banks, incumbents, and disruptors, each with unique threats, opportunities, and unit economics. From a technology perspective, fintech today has the capacity to perform nearly all core operations – yet, few financial services providers have been able to fully digitalize the front office experience, much less mid and back office operations. For example, most institutions cannot open a new bank account for a new SPV of an existing client.

While incumbents, tech giants, and startups race towards 100% digital delivery of nearly all financial products and services. New technologies, such as blockchain powered digital assets, have received constant media coverage but still only account for less than 1% of the addressable market. Registered financial services providers need clear regulatory guidance in order to take advantage of the benefits of blockchain technology.

Beyond blockchain technology, we are at the forefront of major shifts in regulation on virtual assets, data governance, privacy, custody, exchange, payments, KYC, and AML. The “new normal” has captured the attention of regulators, law societies, and governments globally. Digital delivery is contactless delivery.

As new technology such as e-signatures, blockchain, artificial intelligence, and cloud computing are only now being accepted by regulators, law societies, and governments we are going to revolutionize what is possible for digital finance. On a global scale, regulations change constantly – however, these five trends are likely to have the biggest impact.

3. Virtual Assets Service Providers Join the FATF

Last year, the FATF published new guidance that included definitions of both virtual assets and virtual asset service providers (VASPs). Around the world, financial intelligence units (FIUs) – such as FinCEN in the USA – have local

updates of their interpretation of the FATF definitions with most coming into effect as of June 2020.

See:  FATF Travel Rule interview with iComply: Cryptocurrency is Meant to be Trustless, Not Anonymous

Combined with the “Travel Rule”, as well updates to payments and custodial regulations, VASPs that implement compliance by design into their platforms stand to earn billions. A recent analysis of Facebook’s Whatsapp payment service in Brazil estimated first year revenues of $8.7B, and $17B by year two.

No doubt, VASP regulation is a tool that Facebook will leverage to bring Libra to market. Currently operational VASPs, such as Binance now earn billions per quarter. With virtual asset regulation now in effect, more traditional financial service providers will be able to explore the use of virtual assets in their businesses.

2. Digital Reporting

Many new fintechs underestimate the cost of the regulatory burden in their business model. Whether it is filing securities registration or exemption forms, documenting and reporting suspicious activities, managing know your customer, or maintaining cybersecurity compliance – regulatory reporting has traditionally been an onerous and manual process.

Many regulators, such as FinTRAC in Canada, have recently rolled out enhanced digital reporting systems that support REST APIs and batch reporting. Government agencies and law societies are recognizing that physical documents and face to face meetings now present health risks, liability, and business continuity threats.

3. Increasing Pressure on Compliance in Communications

As regulators themselves upgrade their toolkits they are also better able to supervise their markets digitally. Regulators such as MAS in Singapore or BCSC in British Columbia are actively targeting businesses that offer their services digitally, without maintaining local licensing or reporting requirements.

See:  Singapore Poised to Allow Crypto Derivatives on Approved Venues

As more regulators enhance their capabilities beyond digital reporting, they are becoming more efficient and better able to focus their efforts. This not only reduces regulatory burden for financial services providers, it makes life a whole lot easier for their clients.

Technologies such as natural language processing, big data, machine learning, etc are able to go well beyond analyzing inbound data feeds and with greater digital adoption can monitor the market at scale. While it is still early for the “Suptech” sector, regulators are starting to be equipped with the tools that enable them to separate signals from the noise.

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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New York to relax cryptocurrency rules

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Finextra | Jun 15, 2020

New York City - Banks in US Can Now Offer Crypto Custody Services, Regulator SaysNew York's financial regulator is preparing to remove a number of regulatory hurdles impeding the development of cryptocurrency businesses in the US state.

Virtual currency firms wanting to conduct business in New York currently have to apply for a BitLicence, which can take years to process.

Under the new regime, firms will be able to apply under a new 'conditional licensing framework' that makes it easier for start-ups to enter the New York market by piggy-backing on the licences already authorised by DFS.

Superintendent Linda Lacewell, says: “The DFS actions announced today in consultation with numerous industry participants and the public will boost responsible innovation and help get New York’s economy back on its feet. DFS is proud to foster accessibility and will continue to blaze a trail in the virtual currency marketplace.”

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As part of the initiative, the financial regulator has signed an MoU with State University of New York (Suny) to launch a new Suny-related virtual currency program, under which participating startups will also be able to apply for a conditional licence. Once licensed by DFS, Suny Block will be able to support nascent virtual currency entities from local communities, including those started or run by students or alumni.

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NCFA Jan 2018 resize - Banks in US Can Now Offer Crypto Custody Services, Regulator Says The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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