Category Archives: Voices

Privacy and Crypto Shaken as Telegram’s CEO Arrested

Crypto and Privacy | Aug 26, 2024

Freepik Telegram

Image: Freepik

Pavel Durov’s arrest raises privacy concerns and crashes Toncoin

Over one of the last summer weekends before kids go back to school, the Founder and CEO of popular texting platform Telegram, Pavel Durov, was arrested by the French police on August 24, 2024 at Le Bourget Airport near Paris. Authorities detained Durov claiming that the Telegram platform is being used for illicit operations, such as money laundering, drug trafficking, and the distribution of illegal content including images of sexual abuse of children.

See:  Meta Agrees to Pay $14B to Texas for Data Privacy Settlement

This high profile arrest has shaken the IT community, especially supporters and those around Durov's Telegram crypto project The Open Network (for everyone) or Toncoin (TON) which sank 20% when the news broke and is still trying to recover currently trading at $5.61.

Implications and Reactions

The Telegram platform strongly defended its moderation practices despite all the accusations and arrest of their founder, claiming that the platform follows the Digital Services Act in the European Union, and expressed confidence in their leaders innocence. They have 'nothing to hide'.

The news quickly reverberated with high profile industry leaders from Vitalik Buterin voicing concerns of software communication platforms in Europe to Elon Musk demanding Durov's release, setting up a future showdown of Western governments who are trying to crack down on illegal activity on digital networks versus encryption, privacy, free speech and decentralized philosophy.

See:  The Battle for Privacy in the Digital Age

Outlook

Platforms like Telegram with almost a billion users globally are essential for communication, especially in areas like Russia and Ukraine. What might happen if government and industry fail to strike a balance between security, privacy, and content management in a global context?  This story and its fallout is developing.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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Trump Family Launches ‘Defiant Ones’ Crypto Platform

Crypto and Politics | Aug 22, 2024

Freepik Bitcoin image

Image: Freepik

Donald Trump Jr. and Family Launch Crypto Platform the Defiant Ones

Today, on Trump's Truth Social platform, it was announced that the Trump family has launched a new crypto platform called the Defiant Ones.  Led by Donald Trump Jr., the initiative reflects the family's increasing interest in crypto by promoting less regulation from the government and more freedom for people and companies.  It seems the primary audience for the Defiant Ones is those seeking financial independence, which aligns with the Trump family's larger populist appeal.

From Crypto Critic to Advocate

Former U.S. president Donald Trump was once a vocal critical of Bitcoin, "it just seems like a scam.  I don't like it because it's another currency competing against the dollar." but has since embraced crypto with his NFT initiatives, and 2024 political campaign around the narrative of loosening financial regulations, and strongly opposing the possibility of a U.S. Central Bank Digital Currency (CBDC) due to privacy and surveillance concerns.  With Defiant Ones, the family is now fully engaged in the crypto space, and many conservative voters believe that the Trump family's influence within the sector will expand as Bitcoin's adoption and importance grows.

Kamala Harris and the Democrat's Approach to Crypto

Democratic Presidential Candidate Kamala Harris has signalled that her approach to crypto will be friendlier than Bidens (who has tightened rules in the sector), as senior advisors have communicated that she will be supportive of policies to nurture crypto industry growth.

See:  Inside Federal Securities Laws and Crypto’s Tightrope

Organizations like Crypto4Harris, a grassroots network of crypto advocates and fundraisers advocating for a strategy that is more welcoming of innovation and receptive of digital assets, especially given her connections in Silicon Valley.  Industry leaders are demanding less enforcement and more clarity in regulations yet it remains to be seen if the Democrats will formally adopt a more moderate stance towards crypto.

Crypto A Divisive 2024 Election Issue

Kamala Harris and the Democrats are under increasing pressure to make their positions clear as the Trump family grows their support among crypto advocates with the launch of the Defiant Ones.  With crypto emerging as a key debate in the upcoming election, the way in which each side handles their approach will have a big impact on the way bitcoin legislation develops in the United States.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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Innovative Approaches to Smarter Regulation

Smarter Regulation | Aug 14, 2024

Image from Advice to Canada’s Treasury Board, Regulatory excellence

Image: Regulatory Excellence (External Advisory Committee on Regulatory Competitiveness)

Insights on smarter regulation through transparency, adaptability, and innovative governance frameworks in AI, blockchain, and public policy

The collection of links (papers) below emphasizes creative approaches to regulating while highlighting the importance of openness, responsibility, and flexibility. These studies, which look at topics including artificial intelligence (AI), blockchain, antitrust law, and public involvement, provide important insights and food for thought into how regulatory frameworks may be agile and improved for modern times. Summertime Reading!

See:  Regulatory Demands: Fintechs Caught in the Crossfire?

1. AI and Emerging Technologies Regulation

Procurement and AI in the Public Sector (June 2024)
Analyzes how procurement processes might control AI by including principles of transparency and accountability.

  • How can procurement procedures ethically regulate AI?
  • What part does openness play in the governance of AI?
  • How can contracts guarantee the accountability of AI systems?

AI in the Courts: How Worried Should We Be?  (2024)
Discusses the risks and probable biases of AI in the legal system, and proposes legislative frameworks to assure justice.

  • What dangers does AI pose for courts?
  • How can artificial intelligence ensure justice in judicial decisions?
  • What structures are required to stop AI bias in the legal system?

Taking Training Seriously: Human Guidance and Management-Based Regulation of AI (May 2, 2024)
Human monitoring and management-based control of AI are emphasized, as is the need for strong training processes.

  • Why is human oversight critical in AI regulation?
  • How does training contribute to managing AI?
  • How can management-based regulation ensure AI safety?

Blockchain Governance: An Empirical Analysis of User Engagement on DAOs (July 2024)
Examines the significance of user participation in the governance of decentralized autonomous organizations (DAOs).

  • How does user engagement influence DAO governance?
  • What challenges exist in decentralized governance?
  • How can DAOs encourage active user participation?

Blockchain Governance in the Wild (Apr 2024)
Investigates the issues of real-world blockchain governance, highlighting the importance of flexible frameworks.

  • What are the practical challenges in blockchain governance?
  • How can governance frameworks adapt to real-world scenarios?
  • What role does transparency play in effective blockchain governance?

2. General Regulatory Approaches and Legal Considerations

Advice to Canada's Treasury Board (June 2024)

The External Advisory Committee on Regulatory Competitiveness's June 2024 report offers suggestions for updating Canada's federal regulations. The paper concentrates on strengthening regulatory frameworks to increase efficiency, flexibility, and competitiveness. It emphasizes how crucial it is to interact with stakeholders, welcome technology developments, and make sure rules are precise and outcome-based.

  • How can federal regulations be modernized to enhance competitiveness?
  • What role do stakeholders play in shaping effective regulations?
  • How can technology be leveraged to improve regulatory efficiency?

Evaluating Regulatory Performance (May 25, 2024)
Discusses how ongoing performance evaluation can help improve regulatory regimes.

  • How can regulators assess if their policies are working?
  • Which measures better reflect the impact of regulations?
  • How does continued assessment result in improved regulation?

Public Participation and Environmental Regulation (Apr 2023)
Emphasizes the importance of public participation in developing effective and democratically valid environmental policies.

  • In what ways does public involvement enhance environmental regulation?
  • What difficulties does incorporating public input present?
  • How can authorities guarantee significant citizen participation?

Rule Design: Defining the Regulator–Regulatee Relationship (Feb 22, 2024)
Looks at how clear rule designs might increase compliance and mutual understanding among regulators and regulatees.

  • What components are essential to a well-designed rule?
  • How may unambiguous rules enhance adherence?
  • What difficulties do regulator-regululatee relationships present?

Antitrust Law's Place in Regulation (May 25, 2024)
Advocates for modifying antitrust laws to properly address the issues of the digital economy.

  • How should antitrust laws evolve for digital markets?
  • What limitations do current regulations face in the digital age?
  • How can competition be fostered in fast-changing industries?

Dynamic Views of Startup Governance and Failure (May 30, 2024)

Discusses the importance of evolving governance structures in startups to manage risks and prevent failures.

  • Which governance techniques aid in risk management for startups?
  • How can frameworks for governance change to avoid failures?
  • Which typical mistakes are made in startup governance?

Strategic Disclosures and Hedge Funds (Aug 2, 2024)

Highlights the need of addressing anomalies in hedge fund filings in order to protect investors and maintain market integrity.

  • What are the risks of inconsistent hedge fund disclosures?
  • How can regulators address these inconsistencies?
  • What impact do strategic disclosures have on market integrity?

Conclusion

Intelligent and flexible regulation is becoming more and more important as technology and market complexity continue to grow.

See:  5 Fintech Failures and Lessons to Learn From

The various research reports and studies in this post offers regulators and legislators a road map for successfully adapting to these changes while promoting accountability, competitiveness, regulatory agility, justice, and public trust.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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Tax-Free Bitcoin Zone Proposed by the USABTC

Crypto | Aug 8, 2024

USABTC

Image from USABTC website (USABTC.org)

Policy Group Advocates for a Bitcoin Tax-Free Digital Economic Zone (DEZ) in the United States

An advocacy policy group called the USABTC, is proposing that the U.S setup a Bitcoin tax-free Digital Economic Zone (DEZ) to protect the dollar's global dominance (during a time it's being challenged by BRICS) and promote economic growth.  So, they are advocating for no capital gains taxes on bitcoin transactions but there would be an 'exit tax' applied whenever Bitcoin is converted back into fiat, creating a revenue stream for the government's coffers in the absence of capital gains tax revenues.

The DEZ would also be open to international participants and includes measures to protect the right to self-custody of digital assets, addressing concerns within the cryptocurrency community.

See:  Record 2023 US Crypto Lobbying Expenditure

The DEZ would be implemented over several phases and in principle work like this:

  1. The President would issue a special order to launch the USABTC project. This directive would enable the government to purchase and trade Bitcoin through a designated fund called the "Exchange Stabilization Fund", which was established as part of the Gold Reserve Act in 1934.
  2. The IRS would help setup the rules of the DEZ, and then new laws would need to be passed that apply special tax treatments to Bitcoin transactions.
  3. The DEZ would operate on a layer 2 blockchain infrastructure with smart contracts handling all on/off ramps, transactions and conversions, thus ensuring tax compliance and asset security.
  4. A regulated DEZ would protect investors' money, build public trust, and maintain a stable system going forward.

Some Examples of Global Crypto Tax-Free Zones

1. El Salvador

In 2021, El Salvador took the world by storm and became the first country to recognize Bitcoin as legal money. In an effort to draw in foreign investment and smoothly incorporate Bitcoin into its economy, the country exempts foreign investors from paying taxes on Bitcoin held in its exchanges.

2. Puerto Rico

Puerto Rico is considered a US territory with independent tax laws.  Crypto investors who acquire digital assets while residing in Puerto Rico are exempt from capital gains taxes, making it an attractive destination for U.S. crypto investors looking for tax breaks.

3. United Arab Emirates

For businesses dealing in digital and virtual assets, the United Arab Emirates (UAE) provides a tax-free environment, especially through free zones like the Ras Al Khaimah (RAK) free zone. The UAE is a growing hotspot for blockchain and cryptocurrency companies because of these special zones, which allow 100% foreign ownership, no corporate or personal income taxes, and no customs fees.​

4. Switzerland

In Switzerland, known as 'Crypto Valley", private or individual crypto investors are exempt from crypto capital gains (not professional or self-employed traders, or businesses).  The country is still at the forefront of a favourable digital asset regulatory framework, and attracts several blockchain projects.

5. Germany

If a cryptocurrency is held for more than a year, Germany exempts it from capital gains tax. As a result, Germany is becoming a more desirable location for digital asset investors thanks to this policy, which promotes long-term investment perspective.

6. Malta

Known as "Blockchain Island," Malta does not tax bitcoin capital gains for non-professional traders. Despite the possibility of income tax on trades, businesses and investors in digital assets continue to benefit greatly from the general tax system.

Conclusion

Countries like El Salvador, Puerto Rico, the UAE, Switzerland, Germany, and Malta have established themselves as crypto tax havens.

See:  New US Crypto Tax Reporting Rules Starting 2025

The proposal for a U.S. Bitcoin tax-free zone called the DEZ, if implemented, might very well catapult America to forefront of the regulated crypto revolution (while maintaining the dollar's global dominance at the same time).


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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XRP Pumps 20% After SEC vs Ripple Case Finally Ends

Enforcement | Aug 8, 2024

Freepik kjpargeter, Water Ripples

Image: Freepik/kjpargeter

Ripple's Legal Battle with the SEC Concludes with $125 Million Fine

On Aug 7, 2024, the case between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has finally come to an end, with Judge Analisa Torres issuing an injunction against Ripple for any potential future violations of securities laws and a $125 million civil fine.

Originally, the SEC was after a massive $1 billion disgorgement penalty and $900 million civil penalty but in the end Ripple is being required to pay a significantly reduced fee of $125 million.  The difference is being attributed to the SECs regulatory approach or missteps.

See:  Court Rules XRP Sales Not Investment Contracts: How the SEC Case Could Reshape Crypto Landscape

Interestingly, the court determined that Ripple violated Section 5 of the Securities Act by selling XRP to institutional investors (without registering the transaction(s) as a securities offering), however in the case of its programmatic XRP sales to retail investors the court concluded that it did not violet federal securities law.

Overview of the Ruling

  • Ripple is required to pay $125 million for violating the Securities Act for the unregistered sale of XRP to institutional investors.
  • The court issued a permanent injunction to prevent XRP from ever violating the Securities Act in the future.  Ripple must register all future offers and sales of securities with the SEC.

See:  Inside Federal Securities Laws and Crypto’s Tightrope

  • Due to insufficient evidence of investor harm, the SEC's request for disgorgement was declined, so Ripple is not forced to repay any gains from the unregistered sales.

Outlook

Industry and legal experts see the verdict as a major win for industry that will impact future regulatory actions and provides a clearer regulatory framework for digital assets within U.S. securities laws, with the price of XRP pumping 20%.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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Two Artists Sue SEC for NFT legal Showdown

NFTs | Jul 30, 2024

Image shared on X, Johnathan Mann Suing the SEC

Image from content shared on X, Johnathan Mann

Two artists, Johnathan Mann and Brian Frye, are suing the U.S. Securities and Exchange Commission (SEC) over the classification of NFTs as securities

Who are the plaintiffs are why are they suing the SEC?

The plaintiffs, Jonathan Mann and Brian L. Frye, are well-known names in the digital art and legal fields, respectively. In a 45 page PDF complaint to the SEC, the lawsuit challenges the current regulatory approach to NFTs, arguing the lack of clear guidelines, and that the current approach stifles artistic innovation and creates legal risks of creators.

  • Jonathan Mann:  Known as "Song A Day Mann," is a musician and digital artist who has been writing and releasing new music every day since January 1, 2009. This bizarre feat earned him the Guinness World Record for "Most Consecutive Days Writing a Song." His writing frequently includes political commentary, personal musings, and satirical perspectives on current events. Mann's usage of NFTs for music distribution and monetization has risen his profile in the digital art arena.
  • Brian L. Frye: A conceptual artist who also teaches law at the University of Kentucky's J. David Rosenberg College of Law. He is noted for his work that combines legal study and conceptual art, frequently examining themes of intellectual property and legal philosophy. Frye's creations frequently feature the creative usage of NFTs, which he sells as digital versions of his work. He is a legal expert on digital art and NFTs, and is calling for clearer legislation to protect both artists and customers.  Frye argues the current situation is unsustainable and stifles artistic expression.

The lawsuit specifically challenges recent SEC actions against NFT projects, such as Impact Theory and Stoner Cats, where the SEC determined that these NFTs are unregistered securities.​  Further, Mann and Frye argue that by applying the Howey test to NFTs, which are unique digital representations of art, is overreach by the SEC, and creates legal uncertainty for artists.

Internal SEC Debate and Precedents in the Making

There has been significant disagreement inside the SEC on how NFTs should be handled. Commissioners Hester Peirce and Mark Uyeda have opposed the broad application of securities laws to NFTs, stating that such proceedings may stifle artistic and technological innovation. Global Law Hub suggests a more sophisticated approach to NFTs, taking into account their particular qualities and importance in the digital economy.

See:  ‘Mugshot Edition’ Trump NFTs Blending Politics, Memorabilia and Digital Assets

Recent regulatory cases, including Impact Theory, Stoner Cats, and Dapper Labs' NBA Top Shot, demonstrate the SEC's position who believes certain NFTs might be considered securities, especially when sold with profit expectations.  These cases highlight the complexities involved with the current regulatory approach for the NFT market, while emphasizing the need for clearer guidelines to distinguish between collectible art and investment security products.

Outlook

A decision in favour of the artists could lead to more nuanced and supportive regulatory frameworks, encouraging NFT innovation in the digital art sector. Conversely, a decision that confirms NFTs' status as securities would cause a raft of issues for digital artists and producers.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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Key Takeaways from Bitcoin 2024 Conference

Bitcoin | Jul 29, 2024

Freepik diana.grytsku, bitcoin

Image: Freepik/diana.grytsku

Highlights from the Bitcoin 2024 conference, including major policy proposals and insights

The Bitcoin 2024 Conference, which was held in Nashville on July 25–27, was a mix of creativity and energy with the enthusiasm of almost 20,000 people coalescing, including tech aficionados, business titans, and newbies filling the venue. Passionate conversations permeated the air against the backdrop of the newest blockchain tech and companies on display and neon lights.

See:  FINTRAC Guidance on Bitcoin ATMs and Money Laundering

This year was infused with anticipation as prominent speakers like Senator Cynthia Lummis and Donald Trump espoused their version of a crypto future.  It was an event honouring the digital revolution, where innovative concepts collided with the enthusiasm of a society poised to revolutionize the world of finance.

Top 5 Takeaways

1. Trump's Bitcoin Endorsement

Drawing parallels to China's advances in digital assets, former President Donald Trump suggested establishing a "strategic national bitcoin reserve" in the United States. He said, "If Bitcoin is going to the Moon, I want America to send it there." This represented a substantial departure from his earlier pessimism and was consistent with his larger goal of establishing the United States as a global leader in crypto.

2. Senator Lummis's Legislative Proposal

Senator Cynthia Lummis announced plans to introduce legislation for the U.S. Treasury to purchase 1 million bitcoins, equivalent to 5% of the world's supply, over five years. The goal is to establish a strategic Bitcoin reserve to counter inflation and protect against dollar depreciation. Lummis emphasized the need to hold these assets for at least 20 years.

See:  Inside Federal Securities Laws and Crypto’s Tightrope

3. Political and Regulatory Jockeying

Trump warned of possible harsh restrictions and attacked Vice President Kamala Harris and the Democratic position on cryptocurrencies. On the other hand, more than a dozen Democratic lawmakers—among them Ro Khanna and Ritchie Torres—called for a more crypto-friendly stance, pushing the DNC to incorporate financial inclusion and innovation into their agenda.

4. Institutional Demand

The conference brought attention to the increasing interest in Bitcoin ETFs, which are being led by large institutions like BlackRock. Strong institutional demand is seen in BlackRock's iShares Bitcoin Trust (IBIT), which has made a 20-25% of the company's revenue flow this year. This pattern suggests that Bitcoin is becoming a more widely accepted financial asset.

5. Energy and Mining Outlook

Integrating renewable energy sources and sustainability were the main topics of discussion when it came to Bitcoin mining. Marathon Digital Holdings declared that it has purchased and will full HODL more than 20,000 Bitcoin, worth $1.3 billion.

See:  Rising AI Energy Use: A Call for Sustainable Innovation

This action fits in with the industry's broader trend toward strategic asset management and sustainability.

Closing Outlook

With strong political and institutional support, the future of Bitcoin and digital assets looks promising. However, regulatory developments will be crucial in shaping the industry's trajectory.  Bitcoin magazine is hosting the talks on it's youtube channel here.


NCFA Jan 2018 resizeThe 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, artificial intelligence, 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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