NCFAs innovation and funding ecosystem

Category Archives: Enterprise

IMF Seminar (On-demand): Digital Money Revolution

IMF Annual Meetings (2021 Washington DC)| Oct 18, 2021

IMF Seminar Digital Money Revolution - IMF Seminar (On-demand):  Digital Money Revolution

Overview of IMF Seminar 'Digital Money Revolution'

Digital finance innovations—central bank digital currencies, private eMoney, stable coins, or cryptoassets—may bring changes in the way we lead our lives. This seminar reviews the implications of this transformation for the international monetary system.

See:  The Impact of Fintech on Central Bank Governance

Moderator: 

  • Martin Wolf is chief economics commentator at the Financial Times, London.

Speakers:

  • Kristalina Georgieva is the Managing Director of the International Monetary Fund (IMF).
  • Benoît Cœuré was appointed Head of the BIS Innovation Hub in 2020.
  • Eswar Prasad is the Tolani Senior Professor of Trade Policy and Professor of Economics at Cornell University.

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NCFA Jan 2018 resize - IMF Seminar (On-demand):  Digital Money Revolution 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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CFTC fines Tether US$41M for misleading claims about currency backing

Bloomberg | Jesse Westbrook | Oct 15, 2021

Tether fined 41M - CFTC fines Tether US$41M for misleading claims about currency backingTether will pay US$41 million to settle allegations it lied in claiming its digital tokens were fully backed by fiat currencies, putting a major compliance headache behind the world’s biggest issuer of stablecoins even as regulatory scrutiny intensifies.

For years, Tether told customers and the broader cryptocurrency market that it had US$1 in reserve to back every token, the Commodity Futures Trading Commission said in a Friday statement. That claim was wildly misleading, according to the agency. For instance, from June to September 2017, there was never more than US$61.5 million backing Tether, even as more 442 million coins were circulating at one point.

Read:  Tether banned on Canada’s first 2 licensed digital currency exchanges

“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said acting CFTC Chairman Rostin Behnam.

Tether is widely used to trade Bitcoin and other tokens, making it pivotal to the crypto market. That’s because the coin allows quick transactions and because it’s designed to be largely immune to volatile price swings -- a function of its one-to-one peg to fiat currencies.

But many traders have long been skeptical that Tether genuinely had the money backing the coins that it claimed. More recently, the Treasury Department and other federal agencies have been alarmed by the stablecoin’s dramatic growth. There are now Tethers worth about US$69 billion in circulation, prompting concerns among that crypto-market disruptions could trigger chaotic investor fire sales that threaten the financial system.

In its enforcement action, the CFTC said Tether failed to disclose that it held unsecured receivables and non-fiat assets as part of its reserves, and falsely told investors it would undergo routine, professional audits to demonstrate that it maintained “100 per cent reserves at all times.”

See:  Is Tether a Black Swan?

In fact, Tether reserves weren’t audited, the agency said. Until at least 2018, Tether manually kept tabs on its reserve levels, a process that wasn’t updated in real time, the CFTC said. Tether didn’t admit or deny the CFTC’s allegations.

“Tether agreed to resolve this matter in order to move forward and focus on the future,” the company said in a statement posted on its website.

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NCFA Jan 2018 resize - CFTC fines Tether US$41M for misleading claims about currency backing 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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MintGreen to make North Vancouver world’s first city heated by bitcoin

Vancouver Tech Journal | William Johnson | Oct 14, 2021

mintgreen leadersrhip team 1 - MintGreen to make North Vancouver world’s first city heated by bitcoin

Bitcoin mining company MintGreen to deliver innovative low-carbon mining waste solution to heat City of North Vancouver.

As part of an effort to reduce its urban carbon footprint, the City of North Vancouver and Lonsdale Energy Corporation (LEC), its district energy utility, will be introducing a novel heat source to their district energy system. MintGreen, a Burnaby-based cleantech cryptocurrency miner, will be working with LEC to provide heat to North Vancouver from bitcoin mining.

How will this work?

Bitcoin mining facilities produce significant amounts of heat, which until recently, would have been considered an undesirable output. To combat this, miners have gone so far as to invest in venting and cooling infrastructure to remove this heat. MintGreen, however, has built a proprietary solution to capture this heat and sell it to buyers of heat

See:  El Salvador taps renewable energy from volcanoes to start mining bitcoin

MintGreen calls this tech their “Digital Boilers” and says it can recover more than 96% of the electricity used for bitcoin mining in the form of heat energy that can be used to sustainably heat communities and service industrial processes. Because cryptocurrency miners run at full capacity 365 days a year, this creates a unique opportunity to provide a reliable and clean heating baseload for North Vancouver's district energy system.

“Being partners with MintGreen on this project is very exciting for LEC, in that it's an innovative and cost-competitive project, and it reinforces the journey LEC is on to support the City's ambitious greenhouse gas reduction targets,” said Lonsdale Energy Corporation CEO, Karsten Veng, in a statement.

A partnership two and a half years in the making

The partnership didn't happen overnight. In fact, MintGreen has been working with LEC for nearly three years, according to MintGreen CEO Colin Sullivan, who spoke to Vancouver Tech Journal over the phone. “When we were sort of in our proof of concept phases, we did a bunch of cold calls for district energy companies,” said Sullivan, and LEC picked up.

LEC had certain demands related to temperature thresholds and other hardware considerations — and MintGreen essentially built their product to meet them. “That was kind of the technical challenge that we had to deal with, so you know, flash forward, two years later, and we have an MOU,” Sullivan explained.

See:  How blockchain and cryptocurrencies can help build a greener future

“It’s really exciting,” he added.” I mean, I feel like we have a very exciting opportunity to sort of go against the narrative of ‘excessive consumption of bitcoin.’ In our work, we're contractually obligated to provide 96% of our energy in the form of heat. We think we can do better than that.”

The deal with North Vancouver comes nearly half a year after MintGreen closed its seed round, a USD$2.5 million injection of cash which valued the company at USD$25 million. The round was led by Nelson Investments and CoinShares, as well as a dozen more of MintGreen’s pre-seed investors.

MintGreen has already deployed its tech on a smaller scale, including with Campbell River’s Shelter Point Distillery (which interestingly, has also taken in funding from Nelson Investments). Now the firm gets to operationalize its innovation on a much larger platform.

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NCFA Jan 2018 resize - MintGreen to make North Vancouver world’s first city heated by bitcoin 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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Speech by Jon Cunliffe: ‘Is crypto a financial stability risk’?

Bank of England | Jon Cunliffe, Deputy Governor, Financial Stability | Oct 13, 2021

Sir Jon Cunliffe - Speech by Jon Cunliffe: ‘Is crypto a financial stability risk'?

Sir Jon Cunliffe, Deputy Governor, Financial Stability, BoE

Jon Cunliffe's Speech Overview delivered at Sibos:  Jon Cunliffe looks at the impact of ‘crypto’ on the stability of the UK’s financial system.  He says unbacked crypto-assets (eg Bitcoin) and backed crypto-assets for payments (stablecoins) have begun to connect to the financial system. And he talks about how regulators are responding to their rapid growth.

I want to talk today about whether the world of ‘crypto finance’ poses risks to financial stability.

Cryptoassets have grown by roughly 200% in 2021, from just under $800 billion to $2.3 trillion today. They have grown from just $16 billion 5 years ago. $2.3 trillion of course needs to be seen in the context of the $250 trillion global financial system. But as the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems – sub-prime was valued at around $1.2 trillion in 2008.

See: 

When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice. They have to think very carefully about what could happen and whether they, or other regulatory authorities, need to act.

At the same time, they need to be careful not to over-react – particularly when faced with the unfamiliar. We should not classify new approaches as ‘dangerous’ simply because they are different. Innovation, technology and new players can tackle longstanding frictions and inefficiencies and reduce barriers to entry. Throughout history, they have been key to driving improvement and to increasing resilience in financial services.

I will give you my conclusions at the outset. Crypto technologies offer a prospect of radical improvements in financial services. However, while the financial stability risks are still limited, their current applications are now a financial stability concern for a number of reasons.

Cryptoassets are growing fast and there is rapid development of new applications for the technology. The bulk of these assets have no intrinsic value and are vulnerable to major price corrections. The crypto world is beginning to connect to the traditional financial system and we are seeing the emergence of leveraged players. And, crucially, this is happening in largely unregulated space.

Unbacked cryptoassets

Unbacked cryptoassets make up nearly 95% of the $2.3 trillion.

They are essentially non-replicable strings of computer code that can be owned and transferred without intermediaries. Bitcoin, of course, is the most prominent example, but there are now nearly eight thousand unbacked cryptoassets in existence. These have no intrinsic value – that is to say there are no assets or commodities behind them: the value of the cryptoasset is determined solely by the price a buyer is prepared to pay at any given moment.  As a result, their value is highly volatile.

See:  World Economic Forum (WEF) Warns of Cyberattack that will Collapse Existing Financial System

And while retail investment predominates in this market, there are signs of growing institutional investor interest, with these investors now thinking about whether to have crypto in their portfolio. More complex investment strategies are beginning to emerge, including crypto futures and other derivatives.

At the same time, core wholesale finance and financial market infrastructure firms are putting their toes in the water. Several global banks are offering, or are planning to offer, digital asset custody services. Some international banks have started to, or are looking at, trading cryptoasset futures and non-deliverable forwards; and offering wealth management clients cryptoasset investments, following client demand. Others have developed exchange platforms facilitating matched trades, or offer customers access to other crypto exchanges through their apps. Leading payment firms are also exploring ways of allowing people and businesses to use certain stablecoins for payments and for the settlement of transactions within their networks.

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NCFA Jan 2018 resize - Speech by Jon Cunliffe: ‘Is crypto a financial stability risk'? 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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Amidst Regulatory Controversy Binance Launches $1 Billion Crypto Fund

Decrypt | Scott Chipolina | Oct 12, 2021

Binance background - Amidst Regulatory Controversy Binance Launches $1 Billion Crypto FundCrypto exchange Binance has launched a $1 billion growth fund to spur on the adoption of blockchain technology, as well as to support the Binance Smart Chain blockchain itself.

“With the $1 billion initiative, our focus will be widened to building cross-chain and multi-chain infrastructures integrated with different types of blockchains”

Gwendolyn Regina, investment director of the Binance Smart Chain Accelerator Fund reportedly said in a statement.

Approximately half of the funds will go to blockchain services, as well as other, more niche areas of the crypto world such as gaming and virtual reality.

See:  Binance: The low-down on the drama-ridden crypto exchange

In addition, about $300 million will reportedly go to a builder program, and another $100 million will go to talent development and liquidity incentives. Liquidity incentives in this context suggest the fund will provide additional bonuses to crypto platforms. Increased yields for a limited time on decentralized finance (DeFi) platforms has been one example of this.

News of the fund comes amid a long and drawn-out period of regulatory controversy for Binance.

It’s been a difficult few months for Binance, as the exchange has raised the ire of financial services regulators around the world.

Regulators in the UK, Italy, Malaysia, the Cayman Islands, Singapore, Holland, South Africa, and Japan have all addressed the exchange’s apparent regulatory shortcomings.

In Holland and Japan, the Dutch Central Bank and the Financial Services Agency issued consumer warnings about Binance. In Italy and the Cayman Islands, regulators said Binance is not licensed to do business in their respective countries.

Read:  Binance Under the Microscope: Former FBI Agent Discusses Possible Investigation of World’s Largest Crypto Exchange

“We have come to realize that we need a centralized entity to work well with regulators,” Zhao said last month.

The Malaysia Securities Commission went as far as to take enforcement action against Binance for allegedly operating illegally in the country.

Singapore—where CZ lives—said Binance is not currently licensed, but recently told Decrypt an application was ongoing. Last month, the Monetary Authority of Singapore placed Binance on an Investor Alert List.

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NCFA Jan 2018 resize - Amidst Regulatory Controversy Binance Launches $1 Billion Crypto Fund 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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Miami mayor says the city is moving toward paying public employees in bitcoin

ComplianceX | Jack J. Kelly | Oct 13, 2021

Miami - Miami mayor says the city is moving toward paying public employees in bitcoin

Miami will advance a plan to pay city workers in bitcoin, Mayor Francis Suarez told Bloomberg on Tuesday, expanding on his push to make the Florida city a major hub for digital assets.

“We’re going for a request for proposal in October to allow our employees to get paid in bitcoin, to allow our residents to pay for fees in bitcoin and even taxes potentially in bitcoin if the county allows it,” Suarez said in an interview with the business channel.

A formal solicitation would come after the city commissioners in February backed his resolution to direct the city manager to procure a vendor to offer employees the ability to receive a percentage of their salary in bitcoin.

See:  Miami’s mayor says MiamiCoin generated over $5 million USD for the city in the last 30 days

At the time, bitcoin traded close to $48,000, then hit an all-time high of $64,804.72 in April, fell below $30,000 in July, and recently reclaimed the $55,000 mark.

Despite the price volatility, Suarez also wants the state of Florida to allow Miami to hold bitcoin on its balance sheet. Statutes at the state and federal levels currently don’t allow cryptocurrencies to be owned by municipalities.

“It’s a major priority for me because I want us to differentiate ourselves as the crypto capital of the United States or of the world,” Suarez told Bloomberg Tuesday.

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NCFA Jan 2018 resize - Miami mayor says the city is moving toward paying public employees in bitcoin 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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Solution to Consumer-Centric Payments Innovation in America

Morning Consult | Nick Catino , Jonah Crane & Daniel Gorfine | Oct 13, 2021

Regulating payment remitters in the US - Solution to Consumer-Centric Payments Innovation in AmericaIn recent years, there have been several debates over how best to regulate and facilitate financial technology innovation in the United States. These debates frequently pit federal regulations against state-based regulation, and banks against nonbanks, in unfortunate zero-sum contests, resulting in legal challenges and increasingly tense congressional hearings that risk losing the forest for the trees in terms of what’s best for the country. At the same time, the Federal Reserve is considering whether certain kinds of banks — but only banks — can directly access federal payment systems. 

When it comes to consumer-centric payments innovation, there is a way to preserve state-based regulation of payments companies and allow them to participate directly in our national payments systems, without requiring that they have full banking powers. 

Our idea for a hybrid federal/state payments oversight model is rooted in the “unbundling” of financial services brought about by financial technology companies competing in discrete markets. These entities do not resemble the full-service, brick-and-mortar banks of decades past. Some payments innovators, for example, are focused on using modern technology to provide faster, lower-cost, transparent and more convenient payments for their customers — not on taking deposits or making loans.  

Read:  2021 McKinsey Global Payments Report

In recognition of this changing industry landscape, many other high-income countries have recently implemented modern regulatory frameworks that account for the new business models. Companies focused narrowly on payments can access critical payments infrastructure and are subject to tailored regulation focused on their unique risks. 

That hasn’t happened in the United States, where licensing regimes are decades — and, in some cases, centuries — old, and largely limit access to payment rails to “banks” as traditionally understood. Bank regulation, however, is designed for banks that collect deposits and lend them out — not for payments companies. Payment providers are regulated by each of the 50 states under money transmission frameworks and cannot directly access payment systems. 

As a result, some companies have increasingly sought out regulatory regimes that would enable them to operate nationwide and to access central bank services. These applications prompted the Federal Reserve Board to propose guidelines for deciding which banks can obtain Federal Reserve accounts and thereby access Federal Reserve payments systems. 

These applications will likely increase in the months and years ahead. Why? There’s still a cohort of payments companies that are not able to compete on a level playing field, because they must use banks as middlemen to access critical financial infrastructure such as Federal Reserve payments systems. Unlike in many other countries, only banks — as traditionally defined — can originate and settle payments directly on behalf of their customers.  

It is important to ensure that companies permitted to directly access critical payment systems are well-regulated, but it makes little sense to require a payments company to become a full-service bank, or to be regulated like one. They have entirely different business models and present different risks. Traditional banks raise deposits and lend them out, engaging in maturity transformation and taking on interest rate and credit risk, as well as operational and liquidity risk. Payments companies, on the other hand, move money between end users and pose principally liquidity and operational risk. 

See:  Fintech regulation: how to achieve a level playing field

There’s a gaping square peg/round hole problem. 

They have entirely different business models and present different risks.

A solution may be found in a hybrid of the U.S. state-based regulatory regime for “money transmitters” and the regulatory frameworks implemented or in the works in the United Kingdom, Canada, European Union, and Singapore. Congress could create a national “payments passport” by allowing money transmitters with at least 40 state licenses to obtain limited access to the payments system, provided they are subject to Federal Reserve regulatory standards and supervision tailored to payments services. 

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NCFA Jan 2018 resize - Solution to Consumer-Centric Payments Innovation in America 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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