FFCON21 Breaking Barriers May 11-13, 2021

Category Archives: Enterprise

Fintech Evolution – Technology Advancements Changing the Fintech Sector

Guest Post | Apr 22, 2021

Women working on machine - Fintech Evolution – Technology Advancements Changing the Fintech Sector

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Fintech is the faithful combination of finance and technology, a sector used for innovating financial transactions and making processes speedier for businesses and consumers alike. The technologies used for all kinds of financial procedures were introduced to create easier money management and transfers with lesser security breaches and fraudulent activities. Fintech is a brimming industry and will keep being so. However, there are some changes and advancements to keep an eye on if you’re working in the sector or are thinking of starting your own startup.

See:  How AI is impacting customer experience in fintech

With the current high involvement of the world with technology for accessing most of the information and channeling financial processes online, vast innovations in Fintech methods will be seen. People are now more open to digital and virtual transactions than physical ones and try new products for easier and automated handling of financial progressions.

The following are some major changes to be seen in the Fintech sector in terms of technology advancement:

Machine Learning and AI

Artificial technology is not a new term, and the system has been progressing ever since its revelation. Soon it’s going to take over the Fintech sector by storm. With tons of information sitting on the internet and artificial intelligence collecting it to create informed options and processes for the users, things are only going to get more simplified and transparent for money transactions and handling.

This also means that fraudulent methods and loopholes in systems used by Fintech firms are going to get weaker and eradicated as AI gets stronger and more empowered. There is a lot for a Fintech company to gain from this as soon as they make their services more quality instilled and provide top service.

Blockchain Intervention

Blockchain entered the fintech market not too long ago and has now become an important part of the whole façade. Blockchain technology brings many benefits for finance, including transparent, automated, secure, and compliant virtual money solutions. Although it isn’t widely used in the industry yet, some prominent companies are already using it to provide certain and consistent financial programs for customer and B2B satisfaction. The future of blockchain in Fintech will prove security and reliability for users.

Customer Service

One of the most awaited and important advancements in technology is voice recognition or chatbots development. This is going to change everything as to how people search on the internet and interact with different companies to gain information.

The internet searching abilities are already at their peak with quality content and specified search intent placed. You can even find solutions to difficult problems like water spillage on macbook with the high-level bot technology used in search engines and customer service providers. But with chatbots, searches are going to change and search intent completely.

API Platforms

The API platforms utilized in almost every device and system are evolving. These already accommodating products are only going to get better for use in the Fintech sector for combining services and providing customers with communal facilities.

See:  Is Open Finance worth getting excited about, or is it just spin?

Service providers can help consumers or businesses achieve more services using one API platform for financial transactions and record-keeping. This way, services will become more streamlined, and companies will be able to achieve better sales goals by attracting more interested customers.

 


NCFA Jan 2018 resize - Fintech Evolution – Technology Advancements Changing the Fintech Sector 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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FCA Speech: Levelling the playing field – innovation in the service of consumers and the market

FCA | Nikhil Rathi | Apr 20, 2021

Nikhil Rathi CEO FCA - FCA Speech: Levelling the playing field – innovation in the service of consumers and the marketHighlights

  • Success in financial innovation has been enabled by regulatory open-mindedness.
  • Support for innovation has been matched by action to protect consumers and markets.
  • The FCA will be taking forward the Kalifa Review’s recommendation for a Scalebox, including the creation of a regulatory nursery.
  • Online search and social media firms need to take greater responsibility for their role in connecting consumers with these investment offers.
  • We also need to make sure that our internal processes allow for quick action, which is why we are currently reviewing how our Regulatory Decisions Committee functions.

Thanks to many of you participating in this conference, UK fintech has grown successfully in recent years, at the forefront of global innovation.

Its revenue rose to £11bn in 2019 – almost doubling in only four years and accounting for almost 10% of the global total. Already this year, we have seen over $1bn worth of investment into UK fintech.

This revenue growth and investment has been supported by and, in turn encouraged, changes in consumer behaviour.

Seven in ten of us now use the services of at least one fintech company.

More consumers are adopting innovative ways of accessing financial services in the UK than in equivalent markets, for example using finance aggregator services to make it easier to save and manage outgoings.

This success in financial innovation has been enabled by regulatory open-mindedness; a trait not always associated with regulators.

So, why has the FCA taken this lead?

First, Parliament has given us a duty to promote competition.

The challenge for us is the balancing act required by the rider within our competition objective – in the interests of consumers.

The choice created by competitive markets is, in itself, not a social or economic good. It only becomes one when it delivers better or cheaper products, an improved or more tailored service, and pushes incumbents to fight harder to attract and keep their customers. Crucially, consumers must be armed with information they can readily understand to help them make the right choice for them.

See:  FCA and City of London’s Digital Sandbox Pilot – Presentations and Use Cases

In supporting innovation to deliver more competitive markets, another of our objectives is held in balance – that of consumer protection.

Innovation comes with risk. New products and new firms fail. They can take consumers’ money with them. As a result, we, as regulator, need to understand new ideas and stay close to innovative firms.

That is why, less than a year after the FCA was founded, we set up Project Innovate. This recognised that the financial services industry has high costs of entry, and so those wishing to join – with genuinely new ideas that support markets and provide choice to consumers – require additional regulatory support.

We have now supported over 500 highly innovative firms, around a third of those that applied.

137 firms have now also passed through the Sandbox, in which new innovative ideas are safely tested before reaching the market. Of those, over half successfully completed their test. And those tests that did not go as planned provided intelligence about what works and what doesn’t, without risk to consumers or markets.

As a result, there are products now on the market offering new ways to pay, insure and access advice. And to support the wider market, we have tested regtech solutions, for example how to manage the compliance in the issuance of digital assets or deal with anti-money laundering requirements.

See:  Culture: Why regulators should care about diversity and inclusion

This support for innovation has been matched by action to protect consumers and markets, where we believe the consumer or market benefits are few or unclear.

For example, while we can see how useful distributed ledger technology can be - indeed a number of products drawing on it have been through the sandbox - we have made clear our concerns about certain investments in cryptoassets, which rely on DLT.

Last year, we banned the sale of crypto derivatives to retail consumers because the majority lost money, despite significant price increases in the underlying assets.

We also warned that direct investment in cryptoassets is high risk, with few regulatory protections.

We have been blunt. If you invest, you should be able to afford to lose it all.

Continued support for innovation

In last month’s letter of recommendations for the FCA from the Chancellor, the FCA was asked to

“secure the right balance between a financial sector that is globally competitive, works for consumers, and is secure over the long-term.”

As part of this careful balancing act, the Chancellor announced the FCA will be taking forward the Kalifa Review’s recommendation for a Scalebox.

Here, we are drawing on lessons from Project Innovate, which has shown that once authorised, firms continue to need higher levels of support from the regulator and, often, enhanced oversight.

See:  FCA: Regulating innovation: a global enterprise

By autumn, we will develop plans to create a regulatory ‘nursery’.

This will create a period of enhanced oversight as those newly authorised firms develop and grow used to their regulatory status.

Currently, firms gain regulatory status and are treated in the same way as a firm with a long track record. The regulatory nursery will keep us in close contact with firms immediately post-authorisation so we can provide support and, where we need to, intervene earlier to steer firms in the right direction.

Continue to the full article --> here


NCFA Jan 2018 resize - FCA Speech: Levelling the playing field – innovation in the service of consumers and the market 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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Robert Asselin: The federal budget has no answers on the question of growth

The Hub | Robert Asselin | Apr 21, 2021

NASAs helicopter landing on mars - Robert Asselin: The federal budget has no answers on the question of growth

To evaluate a budget, I’ve always asked a simple question: which problem(s) is it trying to solve?

A budget that needs 700 pages of (red) ink says a lot about government motivations.

I can only try to answer what to me is the most important question from a public policy angle at this particular moment: where will economic growth come from over the long term?

See:  Canada’s payment system needs more competition

To start, it was clear for some time that the government’s decision to spend more than $100 billion in so-called short-term stimulus was a political solution in search of an economic problem. If you search for an output gap, even in the short term, you’ll find the budget arithmetic doesn’t match the current economic data.

The budget document is clear on that front: “Private sector economists expect real gross domestic product (GDP) to rebound from a contraction of 5.4 per cent in 2020 to growth of 5.8 per cent in 2021 and 4 per cent in 2022, a faster recovery than the growth rates of, respectively, 4.8 per cent and 3.2 per cent projected in the November 2020 Fall Economic Statement (FES 2020).”

And then a key sentence: “Real GDP growth is expected to moderate to about 2 percent on average per year over the remaining years of the forecast horizon, reflecting a return to trend long-run growth rates.”

One can try in the 739 pages to find a clear plan to make Canada more productive and competitive. Although some of the objectives and proposed measures — investments in child care, skills, life bio sciences and clean tech — should be applauded, it is hard to find a coherent growth plan.

See:  Monopoly-Friendly Canada ‘Does Not Treat Competition Policy Seriously’

Was there any debate on measures to prioritize? Any trade-offs? Governing is about making choices, but if this budget can be defined as anything it is everything. No one has been left out.

It seems we are often last to find out the world is moving faster than we are.

In which sectors do we think we can be competitive on the global stage?  It is impossible to find in the 270 measures this budget proposes.

Our labour force is aging and our low levels of business investment are reflective of a lack of large firms operating in our economy. We need to encourage more innovation to grow more firms. The government’s response in this budget? Essentially, doubling down on programs that do not address our innovation shortcomings and have yielded few results to date.

The Strategic Innovation Fund, which got a boost of $7.2 billion over the next seven years, is not the best of what industrial policy has to offer: instead of building sectoral capabilities in investing in applied R&D, which is what global leaders like the Germans, Americans and South Koreans do, it provides subsidies and repayable loans to firms. Does it drive more business investments and make our firms more competitive on the global stage? Nobody has ever tried to answer this question seriously in Ottawa.

What about the need to double down on applied research? Or commercialization of our publicly-funded research? IRAP, a well-intended but unambitious program at the National Research Council, is the best we could do apparently. Other countries, including the U.K. in its budget, are acting more boldly by creating mission-driven, DARPA-like institutions that are unconstrained by the pitfalls of Weberian bureaucracy.

See:  Penrose Report: Power to the People: Stronger Consumer Choice and Competition

While the Biden administration recently went big on leveraging public procurement to incentivize business innovation and create demand for new products and services, it’s still business as usual in Canada.

British Columbians will be happy to find out they will now have their own regional development agency, at a price tag of $550 million. Will it do regional development? As Professor Donald Savoie recently asked: “What does the policy not include?”

What does this budget say about our level of ambition, and our resolve for steadfast execution and implementation? How fast will we move to assert ourselves economically in this new geopolitical environment?

Continue to the full article --> here


NCFA Jan 2018 resize - Robert Asselin: The federal budget has no answers on the question of growth 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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IBM Is Turning Patents Into NFTs

Decrypt | Scott Chipolina | Apr 20, 2021

IBM image - IBM Is Turning Patents Into NFTsIBM has announced it is using its blockchain technology to turn corporate patents into non-fungible tokens with the help of patent firm IPwe.

In brief

  • IBM is partnering with blockchain patent firm IPwe to turn patents into NFTs.
  • The tokenized intellectual property will be made "commercially available" in Q4 2021.

IPwe, a platform for the world’s IP ecosystem, today announced that it plans to begin representing corporate patents as non-fungible tokens (NFTs), in collaboration with major computer company IBM.

The tokenization of intellectual property will, per the announcement, help position patents to be easily sold, traded, commercialized or otherwise monetized. In other words, turning patents into NFTs makes it easier to have those patents reach the market.

“The use of NFTs to represent patents will help create completely new ways to interact with intellectual property,” said IPwe CEO Erich Spangenberg.

Non-fungible tokens are cryptographically-unique digital assets that can be associated with digital content such as images or video—but any kind of content can be attached to an NFT, in this case patents.

See:  After you die what happens to your digital assets and NFTs?

Intellectual property has traditionally been difficult to manage, value and transact, and the introduction of NFTs into this space is expected to change that. Spangenberg added,

“This is expected to benefit not only large enterprises that have significant intellectual property, but it will bring new opportunities to small and medium enterprises and even individual intellectual property owners.”

The NFTs will be stored and shared on the IPwe Platform, hosted by IBM Cloud, and powered by IBM’s blockchain.

Continue to the full article --> here


NCFA Jan 2018 resize - IBM Is Turning Patents Into NFTs 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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Clearbanc rebrands, raising $100 million Series C as Canada’s newest Unicorn

Techcrunch | Natasha Mascarenhas | Apr 20, 2021

Clearco founders - Clearbanc rebrands, raising $100 million Series C as Canada's newest Unicorn

The fintech company raises a $100 million Series C

After five years of providing non-dilutive financing for founders, Clearbanc is tired of being only a bank. So, it’s rebranding, and has just raised a $100 million Series C at a $2 billion valuation off of its broader ambitions. The new valuation is five times larger than it was when Clearbanc closed its Series B in 2019.

Clearbanc has renamed itself Clearco, a move that is more in line with the company’s long-term vision of providing data-driven solutions for founders, say co-founders Michele Romanow and Andrew D’Souza.

“We’re moving from just being a capital provider and [having] sort of a transactional relationship with our customers to really using data, our network, guidance [and] capital to be a long-term partner,” D’Souza said. In other words, Clearco wants founders to think of the company as more than a check-writing machine.

See:  New head of Communitech leading incubator says ‘no reason why Canada couldn’t be the global hub of innovation’

Today’s news is a step away from what Clearco framed itself around just two years ago: the 20-minute term sheet. The product, perhaps its most well-known in tech, allowed e-commerce companies to raise non-dilutive marketing growth capital between $10,000 to $10 million based on its revenue and ad spend. The founders then flexed rapid capital deployment based on data — and, to date, Clearco has put more than $2 billion in over 4,600 companies.

“We can provide you the capital really efficiently, but then we can also help you figure out what to do with that capital to grow your business, and increase the value, and that was a big part of the motivation around the rebrand,” D’Souza said.

Clearco has been on a tear of new product launches in the past year. In April 2020, Clearco launched ClearRunway to help SaaS founders secure non-dilutive capital repaid through revenue-share agreements. A few months later, in July, it launched a way for founders to figure out how to value their companies based on benchmarking data and internal metrics. In October, Clearco launched a tool that would purchase a company’s inventory upfront directly from suppliers, and is then paid back as products sell. And in February, the company announced that it had created Clearangel, a product similar to its 20-minute term sheet, but focused on founders who bring in less revenue.

See:  World’s biggest ecommerce investor enters UK with an alternative VC model

The company, still unprofitable, declined to disclose ARR, but instead pointed to another proxy: With all of its capital products, Clearco makes 6% in fees when it is repaid. Last year, Clearco spent $1 billion on its companies. This means that Clearco brought in around $60 million in sales last year.

“We were very naïve when we started the business around the complexity around how fast you could lose a lot of money if you don’t get things right,” he said. Romanow added that in the beginning, Clearco had “very, very high loss rates” and it has gotten better with more data over time. The company is doubling down on different channels to get and shape and convey that data thus feels like a logical next step.

Continue to the full article --> here


NCFA Jan 2018 resize - Clearbanc rebrands, raising $100 million Series C as Canada's newest Unicorn 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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Snapshot: the regulatory framework for financial services compliance in Canada

Gowling WLG | Michael Garellek | Mar 19, 2021

Financial services regulation in Canada - Snapshot: the regulatory framework for financial services compliance in Canada

Regulatory framework

What national authorities regulate the provision of financial products and services?

Financial institutions

The Department of Finance is the government body responsible for federally regulated financial institutions (FRFIs), including banks, trust and loan companies, insurance companies and credit unions. The Department of Finance is principally responsible for proposing changes to legislation and adopting new regulation governing FRFIs.

The Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC) are two key regulatory authorities supervising FRFIs. Generally, OSFI is responsible for prudential regulation and establishing guidelines for capital, reporting and business practices, and FCAC is responsible for consumer protection.

See:  Big Changes In Financial Regulation: Dialogue With The OSC 2020

In addition to OSFI and FCAC, each province has regulatory authorities that oversee financial institutions outside of the exclusive jurisdiction of the federal government. These include, among others, the Financial Services Commission of Ontario, the Autorité des marchés financiers (AMF) in Quebec, and the British Columbia Financial Institutions Commission. Recently, amendments to the Bank Act were enacted allowing a credit union incorporated provincially to assume federal jurisdiction provided it amalgamates with an existing federal credit union or with another provincial credit union being continued under the Bank Act.

Deposit-taking institutions are members of the Canada Deposit Insurance Corporation (CDIC) and Payments Canada (formally known as the Canadian Payments Association). CDIC is a statutory corporation that provides deposit insurance for certain types of small deposits to member institutions. Payments Canada operates Canada’s payment clearing and settlement systems. Membership in Payments Canada and CDIC is mandatory for Canadian banks as well as for certain trust and loan companies that accept deposits.

The Canadian Payments Association, known by its business name Payments Canada, is a not-for-profit association responsible for the clearing and settlement infrastructure, processes and rules for Canada’s non-credit card related national payments systems, which are the Large Value System (LVSS) and the Retail System (ACSS). The participant members of Payments Canada are largely regulated financial institutions (ie, banks, authorised foreign banks, trust and loan companies, credit unions and financial cooperative credit associations and caisses). The Minister of Finance must approve all by-laws (other than those that relate to administration of Payments Canada) and can direct that the rules be amended or repealed or that new rules be adopted. The governor of the Bank of Canada also has oversight responsibilities because both the LVSS and ACSS are designated clearing and settlement systems under the Payment Clearing and Settlement Act.

Securities registrants

Securities registrants include securities dealers and advisers, derivatives dealers and advisers, investment fund managers, exchanges and other alternative trading systems, designated ratings organisations and clearing agencies, commodities futures dealers and advisers. It also includes, in certain circumstances, those persons benefiting from an exemption from registration in any of those aforementioned categories.

See:  Global Risk Institute Report: Discussing Open Banking Regulation for Canada

Canada does not currently have a federal securities regulator. The securities market is regulated by the provincial and territorial securities commissions (securities regulators). Despite the lack of a federal regulator, the provincial and territorial regulators coordinate the development of national rules and standards through the Canadian Securities Administrators (CSA), which administers a passport system for extra-provincial registration. The most active securities regulators in Canada are the Ontario Securities Commission (OSC), the AMF, the Alberta Securities Commission (ASC), and the British Columbia Securities Commission (BCSC). Investment dealers are regulated by a national self-regulatory organisation, the Investment Industry Regulatory Organization of Canada or IIROC.

Previous attempts to create a national securities regulator in Canada were deemed to improperly fetter the jurisdiction of the provincial legislatures and therefore considered to be unconstitutional (see Reference re Securities Act, 2011 SCC 66, [2011] 3 SCR 837). In August 2014, the provincial governments of British Columbia, Ontario, Saskatchewan, and New Brunswick entered into a memorandum of agreement (MOA) with the government of Canada with respect to the creation of a cooperative capital markets regulatory system. The MOA proposes uniform provincial capital markets acts, complementary federal legislation, and the creation of a federal capital markets regulator. On 9 November 2018, the Supreme Court of Canada ruled that the proposed cooperative regulatory system is constitutional (see Reference re Pan-Canadian Securities Legislation, 2018 SCC 48). Consequently, while the proposed system is not yet in effect, there may be significant changes to the structure of regulation of capital markets in Canada in the near future.

What activities does each national financial services authority regulate?

Financial institutions

OSFI and FCAC both regulate many financial services industries, including the business of banking, acceptance of deposits, the provision of insurance, trust services and mortgage lending by FRFIs. Also, OSFI regulates the administration of pension plans, and FCAC regulates the operation of payment card networks through voluntary codes of conduct. Provincial and territorial financial service regulators regulate financial institutions including provincial trust and loan corporations, credit unions, insurers and the distribution and sale of financial products offered by these financial institutions.

See:  Review: Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking

Securities registrants

The securities regulators regulate securities markets, including the activities of trading, advising and dealing in securities, capital raising and the administration of investment funds and marketplaces. They also regulate the creation and trading of derivatives, including over-the-counter (OTC) derivative contracts and commodities futures contracts.

What products does each national financial services authority regulate?

Financial institutions

OSFI or FCAC, or both, regulate the following financial products:

  • deposits including term deposits and retail deposit accounts;
  • registered investment products and principal protected notes;
  • offering of credit;
  • contracts of insurance, including life insurance, property and casualty insurance, and mortgage insurance;
  • pension plans; and
  • payment cards.

Securities registrants

Securities regulators regulate any product that is a ‘security’, which is an open-ended category involving a fact-specific analysis, but which includes bonds, shares, stocks, investment contracts, subscriptions, profit-sharing agreements, income or annuity contracts not issued by an insurance company, options, OTC derivatives and commodities futures contracts. More recently, digital assets, including crypto currencies, have received the attention of securities regulators in Canada. Depending on how these digital assets are offered to the public, many have been characterised by regulators as investment contracts or derivatives, including contracts for difference.

See:  Final Report: Ontario Capital Markets Modernization Committee Recommendations

The concept of an ‘investment contract’ is not defined within the Act but has been the subject of substantial consideration by Canadian courts and securities regulators across Canada. The courts in Canada have applied the tests from Pacific Coast Coin Exchange of Canada Ltd v Ontario Securities Commission (1978) 2 SCR 112 to determine whether an instrument is an investment contract in a four-part analysis as to whether the scheme involves:

  • an investment of money;
  • with an intention or expectation of profit;
  • in a common enterprise, in which the fortunes of the investor are interwoven with and dependent upon the efforts and success of those seeking the investment of third parties; and
  • where the efforts made by those other than the investor are significant, and those managerial efforts affect the failure or success of the enterprise.

Continue to the full article --> here


NCFA Jan 2018 resize - Snapshot: the regulatory framework for financial services compliance in Canada 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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Expert Slams FinCEN Proposed Rules on Virtual Currency and Other Digital Assets as a Mistake and Lose-Lose

CrowdfundInsider | JD Alois | Apr 19, 2021

Wrong way sign - Expert Slams FinCEN Proposed Rules on Virtual Currency and Other Digital Assets as a Mistake and Lose-Lose

Several months ago, FinCEN submitted for publication in the Federal Register its Notice of Proposed Rulemaking (NPRM) regarding certain transactions that involve virtual currency or digital assets. FinCEN or the Financial Crimes Enforcement Network is a bureau of the US Department of the Treasury that seeks to combat domestic and international money laundering, terrorist financing, and other illicit activity.

The proposal in question has received criticism from the digital asset industry due to the extensive reporting requirements in the potential rule. FinCEN came under criticism when it appeared to rush through the NPRM in the midst of the holidays and during the transition to the Biden administration and subsequently, an extension was added for the comment period regarding “digital assets with legal tender status” (LTDA) or involving “convertible virtual currency” (CVC).

David R. Burton, Senior Fellow in Economic Policy at The Heritage Foundation – and expert on legislation and securities law, submitted a comment letter addressing the proposed rules slamming the NPRM.

Burton, in his comment letter, said that combatting the financing of terrorism and other illicit activity is a very important goal. But the proposal by FinCEN fails in its objective as that “rules and reporting that do not actually further the objective of countering terrorism or other illicit finance and merely add substantial costs to the operations of law-abiding businesses are dumb regulations. Then there are rules that may actually impede law enforcement objectives. This proposed rule, in its current form, falls in [one] of the two latter categories.”

See: 

In the letter addressed to Kenneth Blanco, Director of FinCEN, Burton claims that FinCEN’s proposal addressing crypto would do “almost nothing to combat terrorism and illicit finance.” Burton states that FinCEN’s proposal is “likely to have a devastating economic impact on the responsible actors in the virtual currency, alternative currency or digital asset field and drive virtual currency users to engage in peer-to-peer transactions via unhosted wallets that cannot be effectively supervised by regulators” while undermining FinCEN’s stated mission.

To quote the letter:

“Stated a little differently, you can interpret this rushed rulemaking in one of two ways. Perhaps FinCEN actually wants to combat terrorism financing and other illicit finance in the virtual currency space and the agency just made a mistake in how to go about it. Or perhaps what FinCEN really cares about is either creating the appearance of action by generating some press or protecting legacy financial institutions from disruptive competition. After all, few, if any, journalists will take the time a few years hence to see if the rule actually worked. If it is the former, then, as explained below, FinCEN should withdraw this rule and start over. If it proceeds with this ill-advised rule, then it will be clear that it is either appearances, a desire to protect existing financial institutions from competition or a simple lack of understanding and sophistication that govern FinCEN’s actions.”

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