Rojin Nair, Advisor
June 1st, 2021
At Incyub8 Inc, Rojin is focusing on nurturing and guiding various national and international start-[...]
Category Archives: Fintech International
IMF Seminar (On-demand): Digital Money Revolution
IMF Annual Meetings (2021 Washington DC)| Oct 18, 2021
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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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 | | Oct 15, 2021
Tether 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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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
First American bitcoin ETF (ProShares Trust) looks set to debut Tuesday
MarketWatch | Mark DeCambre | Oct 18, 2021
ProShares looked set to offer the first bitcoin exchange-traded fund, marking a major milestone in the crypto sector as digital assets gain greater mainstream adoption.
The fund provider submitted an amended filing with the Securities and Exchange Commission on Friday for a bitcoin futures ETF that set the table for a launch soon, said Todd Rosenbluth, head of ETF and mutual fund research at CFRA, in a phone interview.
See: Bitcoin ETF option gives investors a safer and liquid way to get exposure
The filing for the Bitcoin Strategy ETF points to a rollout of the fund on Tuesday. The new ETF would end a yearslong push for a approval of a bitcoin ETF that started back in 2013 and has seen scores of applications rejected by the SEC.
Anticipation had been building for a bitcoin futures ETF after SEC Chairman Gary Gensler earlier this year said he supported such a structure, which he argues offers more investor protections than an ETF that is tied directly to physical bitcoin.
Bitcoin has seen its price surge in anticipation of the ETF, with the value of the world’s No. 1 crypto above $61,000 up 7.1%, in anticipation of a bitcoin ETF.
Some bitcoin professionals have made the case that using futures contracts for an ETF, rather than using bitcoin directly, confers additional costs to the end user, which could be mitigated by using the spot market. Futures are derivatives that are designed to allow investors to gain exposure to a commodity without owning it outright. However, futures contracts roll monthly, or expire, and must be repurchased, which can add to costs in administering the fund, which, in turn, are passed on to end users.
See: Cathie Wood’s Ark grants itself power to buy Canadian Bitcoin ETFs
The ticker symbol for the ProShares offering is set to be “BITO” and the fund carries and expense ratio of 0.95%, which means that it will cost $9.50 annually for every $1,000 invested.
On top of the costs, futures don’t always track the underlying asset accurately.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
Bitcoin’s mystery man turns up in the law courts
The Law Society Gazette | | Michael Cross | Oct 14, 2021
Source: iStock
As far as his acolytes are concerned, the ministry on earth of Satoshi Nakamoto lasted just over two years.
During that time, from the end of 2008, ‘he’ - Satoshi is a male given name - published a brilliantly written white paper setting out the principles of a currency that could operate without a central authority. He also released the computer code to turn Bitcoin in to practice (written in the programming language C++) and engaged in web conversations about its debugging and development. The last public comment appeared in December 2010. Email exchanges with developers continued for a few months, but then Satoshi Nakamoto disappeared without trace. 'I’ve moved on to other things,' he wrote in April 2011.
His, or their, identity remains a mystery.
See: Privacy laws might prove to be a blessing in disguise for crypto
At least that is the widely accepted version of history among the mixture of geniuses, visionaries, hard-headed entrepreneurs, gullible punters and outright rogues who make up the global Bitcoin community. However a series of actions in the English courts could rewrite the authorised version. They are being brought by Dr Craig Wright, an Australian academic and Bitcoin entrepreneur resident in England, who says that the identity of Satoshi is no mystery, because it is he. Wright has registered the US copyright of Bitcoin's founding white paper and the original computer code. In June this year the High Court granted default judgment against the bitcoin.org website for infringement of his rights.
Wright is also taking vigorous action for defamation against those who dispute his claim. Judgment in a pre-trial review of one such action, against posts by a podcaster named Peter McCormack, resulted in a 256-paragraph ruling in the Queen's Bench Division earlier this month. Legal action is understood to be under way against another blogger.
Why, you may ask, does this matter? Surely Dr Wright has every right to defend his reputation, which has been subject to unquestionably vicious attacks. To quote Mr Justice Julian Knowles, Wright 'avers by way of innuendo the said words meant and were understood to mean that the claimant had fraudulently claimed to be Satoshi Nakamoto'. Not that there appears to be much innuendo in complained-of phrases such as: 'Craig Wright is a fucking liar, and he's a fraud; and he's a moron'. (McCormack admits publication.)
See: Bitcoin is an Unstoppable Force
The immediate answer is that anyone claiming, or admitting, to being Satoshi Nakamoto must accept responsibilities along with the kudos. A widely believed reason for 'Satoshi's' disappearance was the growing concern by law enforcement agencies in the use of Bitcoin to finance criminal and terrorist activity. These concerns have not gone away. The financial services authorities may also be interested: Satoshi's Bitcoin holding is in theory worth some $60bn. And HMRC is unlikely to ignore the sudden appearance of a multi-multi-billionaire apparently within its jurisdiction.
Wright is already contesting a lawsuit in the US over the ownership of a very large sum in Bitcoin; a trial opens in Miami next month.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
The Real Story of Access to Capital
SEC | Martha Miller | Oct 13, 2021
If you’re taking in news by simply scanning the headlines—particularly those about capital raising activity—you’ve likely missed the story for some splashy titles. Today I’d like to delve into the story and facts behind the headlines about how entrepreneurs are raising capital from investors, deconstructing some of the big numbers we see in large print.
“Entrepreneurs Should Quit Their Day Jobs; Paychecks are Irrelevant”
Many assume that unless an entrepreneur is focused on their startup 100%, they’re not truly dedicated. The reality for most entrepreneurs is that sticking with their day job before their side hustle has been de-risked is not only a smart financial decision, but often a necessary one. Our Office regularly hears from minority and women entrepreneurs who talk about building their companies while maintaining a stable income stream to support their families, pay off student debt, and avoid taking on too much dilutive capital too early. Their decision is a smart one. Entrepreneurs who keep their day jobs while building their businesses are 1/3 less likely to fail than those who quit and go all in from the beginning. Wharton Professor and author Adam Grant attributes this phenomenon to building a balanced risk portfolio, with the stability of the full-time job affording entrepreneurs the freedom to be more creative in their side hustle.
See: Culture and Diversity Leadership: Tale of Two Doors
“Who Needs Diversity? The Market Will Intuit Solutions for All”
It is also easy to buy into the narrative that if there is an unmet need among customers, the “market” will recognize that gap and deliver a solution. The reality is that problem-solvers only set out to solve the problems that they personally understand. Put another way: I can appreciate the challenges that you face, but I cannot fully understand or know them—much less solve them—unless I live them.
This is often the story with underrepresented entrepreneurs who see a need that majority entrepreneurs and investors have not experienced. For fans of Guy Raz’s How I Built This, you may be familiar with the story of Tristan Walker’s company Bevel. As a black man, Tristan battled embarrassing razor bumps from shaving. After surveying the market, he discovered that many men of color with coarse or curly hair shared the same struggle, which could be solved with a single-blade razor system. He began pitching a direct-to-consumer solution to investors, only to be repeatedly dismissed with “if this were really a problem, the incumbent players would have addressed it.” After a disheartening number of rejections, he finally secured funding, ultimately building a wildly successful brand that subsequently sold to Proctor & Gamble, making Tristan the first black CEO of a P&G subsidiary. His story demonstrates the importance of people who live the problem developing the solution.
While many sophisticated investors recognize the perils of pattern-matching, it is critical that we empower diverse investment decision-makers who can support solutions to problems that they too face.
“If You’re Not First, You’re Last”
See: Why Older Entrepreneurs Have the Edge
If I were to poll the audience on who has the best competitive advantage: first movers into a new product category, or follow-on market entrants, most of you would probably assume the early bird gets the worm, corners the market, and dominates. The headlines you see likely have skewed this perception. However, when measuring across hundreds of product categories, a classic study found that first movers are 6x more likely to fail—a 47% failure rate—than second movers—an only 8% failure rate.
For those scratching your heads and wondering “yes, but I bet the first movers who do survive capture greater market share,” wrong again. Even for the first movers who survive, they capture on average only 10% of the market share for their category. The second movers capture 28%, almost 3x as much.
We need first movers, and plenty of second movers, to drive innovation forward.
To build successful companies, startups need savvy investors who bring industry experience, customer connections, and strategic guidance for the companies to scale and thrive. However, the accessibility of professional angels and venture capitalists are outside of many entrepreneurs’ personal and geographic networks, which can dramatically impact survival versus failure prospects.
Read: Penrose Report: Power to the People: Stronger Consumer Choice and Competition
Investing in the startup ecosystem likewise demands a big picture mindset.
Competition among startups breeds success. That competition among companies pushing each other to develop a better solution is the cornerstone of our capital markets.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
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, 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:
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Moody’s says Crypto regulation a plus for banks, fintechs
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Task Force on Financial Stability: Report release
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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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
‘Evolved Apes’ NFT creator Evil Ape disappears with $2.7M
PC Gamer | | Oct 14, 2021
Image credit: Evolved apes
Buyers got their NFTs, but a promise of a fighting game built around them went up in smoke.
Evolved Apes is a collection of 10,000 unique NFTs available for purchase on the NFT marketplace OpenSea. Each of them was also meant to be a character in an Evolved Apes fighting game, in which NFT owners would pit their apes against one another in battles for Ethereum cryptocurrency rewards (just as ancient hominoids did thousands of years ago, as I understand).
See: Kraken Report: Non-Fungible Tokens (NFTs): Redefining Digital Scarcity
But it's all gone disastrously off the rails:
According to a Vice report, one week after Evolved Apes went live, the head of the project vanished, taking 798 Ether—worth roughly $2.7 million—with them.
The money was raised through the sale of NFTs, and was expected to be used to support the development and marketing of the game. But the situation started to look sticky in September, according to the report, as project leaders began to fall off the radar and communications grew erratic. It also came to light that the artist on the project hadn't been fully paid, and winners of a social media contest hadn't been given their NFT prizes.
Backers eventually asked Mike_Cryptobull, a member of the community who spent a little over $10,000 on 20 Evolved Ape NFTs, to investigate the situation and compile a report on what exactly had happened. In it, he said that Evil Ape, the aptly-named administrator of the project's blockchain wallet (whose real identity isn't publicly known), had disappeared, taking the money with him. The official Evolved Apes Twitter account and website are also gone.
There is no mention about the pursuit of criminal charges in either Mike_Cryptobull's report or the Vice story, in part because it's not completely clear that a crime has been committed. According to Jdmjem, an administrator of the Fight Back Apes Discord, police reports were filed in the UK, where the Evolved Apes crew is based, but while there is "definitely an aspect of a scam," there may not technically have been one.
See: Ways NFTs Can Reinvent Your Small Business
"The thing is that everyone did get what they paid for, an NFT," they said in an email sent to PC Gamer. "At the end of the day any promises of a game or other development fall out of the scope of your purchase."
"People are trying to file police reports but [the] problem is this is unknown turf and while unethical not technically illegal. We all got what we paid for."
There are still questions about the unpaid artist and contest winners, but the matter is further complicated by jurisdictional issues—the NFT market is international, and Evolved Apes purchases come from all around the world—and the fact that individual reports are for much smaller amounts than the sum total, and thus aren't likely to garner much attention or traction from police agencies.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
