FFCON21 Breaking Barriers May 11-13, 2021

Category Archives: Fintech Opinions

How Verifiable Digital Identity Will Protect Your Post-Pandemic Privacy

Be[in]crypto | David Lucatch | March 2, 2021

digital identity a basic human right - How Verifiable Digital Identity Will Protect Your Post-Pandemic Privacy

In Brief

  • COVID-19 has changed the very fabric of our world and how we live our daily lives.
  • The use cases of user-controlled digital credentials are nearly limitless.
  • We must continue to support regulation like GDPR in the EU, CCPA in California, PEPIDA in Canada, and others.

It’s no secret that COVID-19 has changed the very fabric of our world and how we live our daily lives. 

For example, consumer online spending with US retailers increased 44% in 2020, compared to 2019, according to the latest Digital Commerce 360 analysis.

International tourist arrivals declined by 74% (roughly one billion fewer trips) in 2020, compared to the previous year, making it “the worst year in tourism history.” Plus, 29% of polled working professionals said they would quit their jobs if they couldn’t continue working remotely, as the world begins to reopen.

All of these changes will impact the way that business is done moving forward. They will push organizations to closely consider the vulnerabilities of their current online and on-premise privacy and data management policies and procedures.

See:  Digital transformation: 9 emerging roles you need on your team

The internet has always been susceptible to fraudulent activities. Think for a moment back to the iconic New Yorker cartoon, which first appeared in July 1993 when the internet was in its mainstream infancy.

The “On the Internet, nobody knows you’re a dog” pictorial demonstrates that from its initial inception, there have been myriad online opportunists leveraging the internet to misrepresent who they are.

While the pandemic has largely kept the world at home for almost a year now, we have seen online shopping and virtual banking transactions consequently skyrocket making the inherent vulnerability for the digital consumer much more obvious.

The “trusted triangle” concept

While the internet does not provide its own secure trust layer, there are still some solutions available to proactively protect one’s digital identity.

The idea of “identity” is based around the concept of a mutual, trusted relationship between parties through which each person has a basic understanding of who the other person is. One such solution involves using a “trusted triangle” process, similar to the conducting of an e-commerce transaction.

When e-commerce transactions are conducted online (whether for retail, healthcare, travel, education, or entertainment purposes), a trust triangle is formed, with the issuer, the holder, and the verifier serving as the three corners.

See:  PwC Report: Canadian Digital Trust Insights 2021: Cybersecurity comes of age

All parties involved want to be certain that the individuals within the ecosystem have gone through a verification process. In retail transactions, for example, the verifier must confirm the cardholder, the validity of the card being used, and the legitimacy of the issuing organization before the retailer should accept the payment.

However, in these types of transactions, does the verifier or issuer really know that the cardholder is who they purport themselves to be? Or are they just someone with the right information at the time of the transaction?

Proving you are who you say you are

Using verifiable credentials, individuals, or holders, use a digital wallet that can carry multiple types of verifiable identity credentials in a user-managed and controlled device or cloud-based platform.

Individuals are then able to securely store, control, and share their most valuable information through that self-sovereign wallet. This includes access credentials like passwords, proof of educational degrees, certificate completion, membership cards, government credentials, and healthcare credentials.

See:  Privacy laws might prove to be a blessing in disguise for crypto

Within this digital ecosystem, verifiers — employers, schools, airlines, and others —  will be able to request a verifiable, reputable presentation of credentials to determine acceptance. Thus, they will ensure that individuals are who they say they are and possess the necessary credentials to enter or participate.

I believe ownership, management, and control of one’s personal online identity is a basic human right. Just as a person has the right to control the use of their name and who has access to medical information, individuals should have the right to own and be the sole beneficiary of their valuable digital data.

If a digital wallet is controlled by the service provider who issued the wallet, then the user is neither sovereign nor completely private while making transactions.

Continue to the full article --> here


NCFA Jan 2018 resize - How Verifiable Digital Identity Will Protect Your Post-Pandemic Privacy 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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Review: Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking

FCAC | March 2021

FCAC review 2nd around of open banking consultation - Review:  Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking

Overview

The Financial Consumer Agency of Canada (FCAC) is a federal financial sector regulator, which oversees federally regulated financial entities’ compliance with consumer protection measures, promotes financial education, and raises consumers’ awareness of their financial rights and responsibilities. In addition, FCAC is responsible for monitoring and evaluating trends and emerging issues that may have an impact on consumers of financial products and services, as well as providing timely and objective information and tools to help consumers navigate financial products and services.

The Advisory Committee on Open Banking (the Committee) shared consultation materials with interested stakeholders, including the FCAC, in fall of 2020.  FCAC welcomes the opportunity to participate in the development of a uniquely Canadian open banking solution that prioritizes the right of the consumer to control their financial data and puts in place safeguards to ensure they are protected from financial and non-financial harm. This submission has been submitted to the Committee for their consideration in the context of their consultations.

See:  NCFA OpEd: Canada’s Open Banking Consultations: Let’s Get it Done!

FCAC is broadly supportive of a hybrid model for open banking that carves out specific roles for government and industry and sets out the building blocks outlined in the Committee’s consultation  materials.  FCAC supports the Committee’s advocacy of a framework centred on several core consumer outcomes:

  • Consumer data is protected;
  • Consumers are in control of their data;
  • Consumers receive access to a wider range of useful, competitive and consumer friendly financial services;
  • Consumers have reliable, consistent access to services; and
  • Consumers have recourse and redress when issues arise.

We strongly recommend adding a sixth core consumer outcome: Consumers benefit from consistent consumer protection and market conduct standards. Based on experiences in other jurisdictions, consumer confidence is necessary for the success of open banking. A core outcome related to market conduct and consumer protection should be explicitly stated to provide assurance to consumers and as a signal to the industry.

This would include the following base level requirements: clear, simple, and not misleading language; no coercion or tied-selling; express consent; and a robust complaints-handling system which prioritizes a fast and seamless process for the consumer.

See:  Digital IDs Help Open Banking Reach Its Fullest Potential

It is inherent in the Committee’s consultation materials that consumers will have meaningful protection; FCAC recommends that the sixth core consumer outcome be added to reinforce this foundational principle. This central focus on consumer issues is critical to enable adoption of open banking and also needs to be ongoing – consumer protection must be embedded in every stage of accreditation, implementation, and in the governance and maintenance of any open banking system. Consumers should continue to receive at least the same level of protection that they currently enjoy, including in terms of liability protection. For example, today consumers are not held liable for unauthorized transactions on their debit and credit cards, provided that they have taken reasonable care to protect their information. FCAC believes that similar protections should apply in the open banking framework.

FCAC recognizes that the time to act is now and acknowledges the positive role that open banking can play in the future Canadian economy. We agree that the risks of the status quo (i.e., screen scraping) will lead to adverse outcomes for consumers.

FCAC has already warned consumers of these risks through a consumer alert and will continue educating consumers on open banking as implementation moves forward. To that end, FCAC plans to publish additional consumer education web content on open banking and fintechs in early 2021.

Summary of Recommendations

FCAC’s consumer protection mandate is exercised in two principal ways: 1) we oversee regulated entities’ compliance with consumer protection provisions, and 2) we educate consumers to improve their knowledge, skills, and confidence in making financial decisions. As a result, FCAC is well-positioned to contribute to the design and implementation of an open banking framework. The following are the main recommendations and issues that FCAC believes would merit further consideration by the Committee.

FFCON21:  7th Fintech & Funding Conference and Expo: Breaking Barriers | May 11-13, 2021

Consumer protection / market conduct standards and consumer recourse

  1. Incorporate legally binding consumer protection and financial inclusion requirements into the accreditation criteria from the outset (e.g., fair access to financial products and services; the requirement and verifiable ability to provide financial redress; policies and procedures related to effective complaint handling; express consent for data sharing and how consumer data will be used; and, communicating product and system disclosures in a manner that is clear, simple and not misleading). These requirements should trigger enforcement actions when non-compliance occurs.
  2. Invest in a national awareness and education campaign focused on open banking to ensure consistent and unbiased messaging to consumers that does not select winners and losers. This campaign should be jointly funded by the industry and government and be coordinated by a respected authority who will employ evidence-based practices. FCAC has the experience and mandate to contribute to and coordinate such a campaign.
  3. Apply stricter accreditation and implementation programs for firms seeking write access. Write access carries greater risks for consumers than read access and therefore should only be allowed when the framework is established and operating effectively.
  4. Apply a liability framework that ensures a single, seamless consumer experience, which does not put the onus on the consumer to navigate the attribution of liability, and provides fast redress / reimbursement for consumers.
  5. Designate a single external complaints body (ECB) for open banking activities and afford the ECB binding resolution authority.

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

Oversight

  1. Careful consideration must be given to the delineation of the role, scope and authority of both the accreditation body and the implementation entity.
    1. It may be appropriate for the accreditation body to be industry-led and responsible for technical standards, particularly in relation to accreditation criteria. It will be important to ensure that consumer issues are adequately represented within this body.
    2. The implementation entity should be a regulator or be under the oversight of a regulator or other appropriate government body. The implementation entity needs to be set up in a way that is transparent, prioritizes consumer interests and protection, and manages conflicts of interests.
  2. Appropriate government oversight of both bodies will be fundamental to consumer confidence, particularly if the accreditation or implementation entity is afforded the authority to establish and enforce rules.  Close monitoring will be required to ensure that the rules and their application do not advance business interests at the expense of consumer protection.

Data access

  1. Given that open banking-type activities are already present in Canada (e.g., screen-scraping), immediate direction is required during the interim period while a framework is developed. This direction should include expected commitments/roles for government and industry, guidance on interim liability allocation and access to redress, how consumer protection will be incorporated, and a sunset date for screen-scraping.
  2. The open banking framework should include barriers to prevent firms performing similar functions from operating without accreditation and under different rules (i.e., by continuing to use screen-scraping).
  3. Reciprocity should be driven by consumer consent; firms should not require reciprocal data access in order to provide a product or service.

Continue to the full analysis --> here

 


NCFA Jan 2018 resize - Review:  Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking 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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Banking on digital growth with Chris Skinner

The Finanser | Chris Skinner

Chris skinner interview - Banking on digital growth with Chris Skinner

Chris Skinner:

Traditional banks tend to push products through channels to get greater share of wallet and cross sell. Whereas, digital banks start with the customer journey and need, and then build the user experience to be part of a relationship interaction digitally, rather than trying to actually sell them anything.

James Robert Lay:

Greetings and hello. I am James Robert Lay and welcome to the 67th episode of the Banking on Digital Growth podcast. Today’s episode is part of the Exponential Insight series, and I’m excited to welcome Chris Skinner to the show. Chris is an author, speaker, and troublemaker, according to his LinkedIn profile. I like that. And Chris has written 14 books, most recently Doing Digital: Lessons from Leaders. He also writes a daily blog and consults about the future of banking. Hello, Chris, and welcome to the show.

Chris Skinner:

Hi, James. Thanks for inviting me. Great to be here.

James Robert Lay:

Yeah. And I think you mentioned before you do a lot of thinking about the future and when we think about the future, particularly through the lens of financial services, it can be hard to let go of the past. This idea of being built on the cloud natively, it’s operational, it’s mindset. And you share in your book Doing Digital, that banks must create a burning platform to ignite change for transformation, to spark change of transformation. Can you expand on this thinking about creating a burning platform? Is this really about first principles thinking, starting over instead of duct taping something that’s really falling apart, or just trying to hold things together for the old world?

See:  Are you measuring these 5 metrics of digital progress and success?

Chris Skinner:

Well, there’s over 30 lessons in the book that I sort of outlined from the interviews I made over six months with these five big banks. But you start with obviously working out what to do and how to do it and getting a vision around how to digitally transform. And then you have to disturb people and make the organization uncomfortable. This is what Jamie’s doing with this “I’m scared shitless about FinTech.” He’s been doing it for a number of years in fact. I think his first time was about 2014, “Silicon Valley’s coming to eat our lunch.” And there’s been regular mantra from Jamie around effecting change and disturbing people. That’s quite funny, because when you look and track what he’s been saying about Bitcoin, for example, it’s turned around from, “Bitcoin is just a Ponzi scheme for criminals” to, “It’s worth $146,000 by the end of this year and we should invest in it.”

So it’s interesting how things change. And I think the critical thing is it’s great to have a burning platform and say, “We’re all going to die unless we change,” which actually is another thing I heard from two of the banks. You know, if we don’t transform, we die. But you have to then say, “What are we transforming to?” And I use the quote often of Charles Darwin, which is “It’s not the fittest, the fastest, the most intelligent or the strongest who survive. It’s the ones who are most adaptable to change.”

See:  Economic performance associated with digitalization in Canada over the past two decades

But the thing is, and my challenge to most banks, is are you adapting to change in the right way?

If you’re delegating digital transformation to a CFO or CTO, CIO, CDO, giving them a budget and a project to implement in a line of business that’s fragmented, you’re really not going to survive. Because you have to digitally transform as a company with a leadership team who are passionate about making the whole company change.

And you really have to adapt, not necessarily in a way that’s rigid. In a way that says, “Well, we have to have a vision of the way forward, so this is where we need to try and get.” It’s not a fixed destination. It’s a continuum of change to make this organization fit the 21st century based on the internet and born on the internet. And that’s the huge challenge for any bank leadership team, because most banks are led by bankers who don’t understand technological requirements.

James Robert Lay:

We’re burning the ships. We’re either going to survive or we’re going to die, and we have to keep moving forward.” But what’s holding bank leadership teams back the most, or maybe a better question is about specifically vision, is what’s blinding them to begin with in the first place?

See:  Has fintech made banking better?

Chris Skinner:

Well, I think, and again, going back to Jamie Dimon’s comments. He points at Square, Pay Pal, but also Ant Group and Amazon and says, “You know, these guys are going to be taking all of our business.” And that’s the disturbance, but then you have to then say, “So how are we going to change? And what do we have to change into?” And it’s a metamorphosis. It’s not a reengineering. It’s a complete reinvention, renewal. And I think what blinds them and holds them back is the challenge of doing that is humongous. It’s really not easy.

There’s a couple of great books that I’ve used through my years of talking about this. One is How Do You Make the Elephant Dance? by Lou Gerstner, talking about turning around IBM in the 1990s. But more recently Satya Nadella’s book about Microsoft. When you look at Microsoft and the turn around there, you go,

“That’s amazing that you can take a company that’s stubborn, saturated, sinking, and suddenly make it nimble and quick and turn around.”

How did they do that? It’s really about recognizing the cultural needs. Digital transformation has nothing to do with technology. It’s about people. It’s about making people understand that they have a voice, and they have an ability to enable change. They’re not just being told what to do, but they can tell us what to do.

Continue to the full article --> here


NCFA Jan 2018 resize - Banking on digital growth with Chris Skinner 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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GameStop Testimony: When Short Sellers, Social Media, and Retail Investors Collide

Cato Institute | Jennifer J. Schulp | Feb 18, 2021

retail investors want to participate - GameStop Testimony:  When Short Sellers, Social Media, and Retail Investors Collide

By no means should the GameStop phenomenon result in changes that restrict retail investors’ access to the markets.

Before the Committee on Financial Services, U.S. House of Representatives

Introduction

Chairwoman Waters, Ranking Member McHenry, and distinguished members of the Committee on Financial Services, my name is Jennifer Schulp, and I am the Director of Financial Regulation Studies at the Cato Institute’s Center for Monetary and Financial Alternatives.

See:  Retail investors are becoming more than shareholders

I thank you for the opportunity to take part in today’s hearing entitled, “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.”

Watch the testimony C-span here:

Retail Investing

Before addressing the GameStop phenomenon specifically, I’d like to address the participation of retail, or individual, investors in our public equities markets.

Retail participation has ebbed and flowed over the years, but the recent trend toward increased retail participation accelerated sharply during the pandemic. Approximately one-fifth of market trading volume is now attributable to retail orders, which is a substantial increase over 2019.1

Most commentators point to the increasing availability of zero-commission trading as drawing in more individual investors. In late 2019, many large brokerages began offering zerocommission trading, following the lead of Robinhood Financial, which introduced commissionfree trading in 2015. But several other factors also likely attracted retail investors, including the widespread availability of fractional-share trading,2 the ability to open accounts with low balances, and the ease of app-based trading platforms. Even limited entertainment options during the pandemic probably played a role in increased retail interest in investing.

See:  Stop Calling Them ‘Dumb Money’: Retail Investors Are Revolutionizing the Stock Market

Retail participation in our equities markets is important and beneficial. Retail investors are widely understood as providing liquidity in markets. The fact that retail investors behave differently from institutional ones, and sometimes behave differently from each other—far from being a bad thing—can be particularly valuable in times of market stress. Where institutional liquidity dries up, for example, retail trading can help to lower bid-ask spreads and dampen the price impact of trades.3 In fact, retail investors may have been a market-stabilizing force during the March 2020 coronavirus-induced market crash by staying the course with their investments and buying when stock prices dipped.4

Investing in the stock market also provides an important path to wealth for individual investors.

With average annual returns for the S&P 500 during the past 60 years of approximately 8%,5 long-term investors generally benefit by being invested in the market.

There is already a strong degree of retail participation in the U.S. stock market; when measured in 2018, approximately 38% of total U.S. equities were held directly by households.6 However, only 15% of U.S. households directly hold stock.7 In other words, ownership of equities is concentrated in the hands of the comparatively few and comparatively wealthy.8

Even if you include pooled investment funds, which is how the vast majority of households indirectly hold stocks as a part of their retirement assets, ownership is still skewed towards the wealthy. In 2019, about 53% of all households had stock market investments, but only 31% of families in the bottom half of the income distribution were invested.9

Stock ownership is also highly correlated with race, education, and age.10 For example, in 2019, approximately 19% of white households directly held stock, compared to approximately 7% of Black households and 4% of Hispanic households.11 Those with a college degree are about twice as likely to directly hold stock than those who just had some college education, and more than three times more likely than those with only a high school diploma.12 And the older a person is, the more likely he or she is to own stock.13 These patterns equally apply to ownership of indirectly held stock.

See:  Canadian Regulators Green Light World’s First Bitcoin ETF for Retail Investors

The retail investors making up this new surge, though, are different. Data released by brokerage firms identifies a high number of new clients who are first-time investors and who are younger than the average investor.

This is confirmed by recent research by the FINRA Investor Education Foundation and NORC at the University of Chicago (“FINRA/NORC Study”), which found that investors who opened a taxable investment account for the first time in 2020 were younger, had lower incomes, and were more racially diverse than those who had previously opened such accounts.15 These new investors also held lower account balances, with about a third holding account balances less than $500. Indeed, the ability to invest with a small amount of money was a commonly cited reason for opening an account for the first time in 2020.

This may portend, as one of the researchers noted, “a shift towards more equitable investment participation.”

GameStop Phenomenon

Some things seem clear. Importantly, the temporary volatility in GameStop and others did not present a systemic risk to the functioning of our markets.

As the Treasury Department recognized, following a meeting with officials from the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission, the Federal Reserve, and the Federal Reserve Bank of New York, the market’s “core infrastructure was resilient during high volatility and heavy trading volume.”21

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

This is not surprising. Despite the huge trading volume and rapid increase in value, the GameStop phenomenon affected a very small part of the market. GameStop’s market capitalization, even at its peak, was around $24 billion in an approximately $50 trillion market.22

And short interests, which may have been targeted by some traders, represent a small, and recently shrinking, portion of equity market value.23

Stock prices move in and out of alignment all the time, and markets are no strangers to bubbles.

Continue to the full article --> here


NCFA Jan 2018 resize - GameStop Testimony:  When Short Sellers, Social Media, and Retail Investors Collide 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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BIGG Digital Assets Inc. to Reinvest Free Cash Flows From Operations into Bitcoin

BIGG Digital Assets | Mark Binns | Feb 9, 2021

BIGG digital - BIGG Digital Assets Inc. to Reinvest Free Cash Flows From Operations into BitcoinVANCOUVER, February 9, 2021 – BIGG Digital Assets Inc. (“BIGG” or the “Company”)(CSE: BIGG; OTCQB: BBKCF; WKN: A2PS9W), owner of Netcoins (Netcoins.ca) (“Netcoins”), the online cryptocurrency brokerage that makes it easy for Canadians to buy, sell, and understand cryptocurrency, and owner of Blockchain Intelligence Group (“BIG”), a leading developer of Blockchain technology search, risk-scoring and data analytics solutions, announces its intention to acquire additional Bitcoin with free cash flows from operations.

BIGG’s operating businesses, Netcoins and Blockchain Intelligence Group, have experienced significant increases in product demand over the past several months.  As a result, BIGG has now achieved positive cash flow from its monthly operations.

BIGG has adopted the strategic initiative of utilizing its free cash flows to acquire additional Bitcoin to supplement its current coin holdings. Commencing this month, at management’s discretion and as operations permit, BIGG will seek to reinvest its free cash flows to acquire Bitcoin at the prevailing market rate. This initiative is a clear indication of our continued strong belief in the future of Bitcoin, its store of value capability and its future valuation potential.

See:

BIGG plans to continue aggressive investment into both of its businesses. The Company has a robust treasury, having raised over $20 million via equity issuances since November 2020.

BIGG CEO, Mark Binns, remarks “BIGG is a compliance-first crypto company that believes Bitcoin offers the best store of value for its free cash flows. This has led us to adopt an initiative of reinvestment into the underlying asset of our industry. Of late, we are seeing a surge in the number of corporations buying Bitcoin to hold as a treasury reserve asset.

We have held Bitcoin on our balance sheet since 2017, and foresee the next evolution being the investment of fiat profits into crypto. BIGG aims to be at the forefront of this movement. Profits from Netcoins’ trading and Blockchain Intelligence Group’s software sales earned in fiat will be converted into and held in Bitcoin, until such time as required by operational demands. The decision to roll forward our profits into Bitcoin, where we anticipate returns to outpace fiat values, is easy and highly strategic.

View the original release --> here

 


NCFA Jan 2018 resize - BIGG Digital Assets Inc. to Reinvest Free Cash Flows From Operations into 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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Don’t Backtrack on Loosening Accredited Investor Rules

Cato Institute | Jennifer J. Schulp | Jan 29, 2021

expanding accredited investor definition - Don't Backtrack on Loosening Accredited Investor Rules

Last month, the exclusive “accredited investor” club cracked open its doors to the public. But don’t celebrate yet. Chances are you still didn’t receive an invitation to join. Members in this exclusive club can legally invest in certain private offerings, like hedge funds and start‐​up companies. Until the SEC’s recent revision, entry was limited to people who earn at least $200,000 a year ($300,000 with a spouse) or have a net worth of at least $1 million. About 13% of U.S. households qualified under those rules.

See:  Statement on Modernization of the Accredited Investor Definition

The new SEC rule lowers that high threshold a bit, but only for people who hold certain securities licenses or work at private funds. So unless you are comparatively well‐​to‐​do or part of this group of financial industry insiders, most private securities offerings are still off limits to you.

Even this modest loosening of the restrictions has come under fire.  House Financial Services Chairwoman Maxine Waters urges the Biden administration to rescind the revised definition.

SEC commissioners Allison Herren Lee and Caroline Crenshaw suggest the wealth thresholds be indexed to inflation to ensure that the club remains limited.

The Biden administration should not heed these calls. Narrowing the accredited investor definition may be good news for the wealthy few because it concentrates investment opportunities in the hands of those who are already advantaged. Breaking down society’s wealth divides requires removing such barriers to opportunities for investors and entrepreneurs to make financial gains.

Broadening access to private offerings, rather than further restricting it, is a better solution.

In 2019, for example, registered offerings raised $1.2 trillion, while Regulation D offerings raised $1.5 trillion (of the $2.7 trillion total raised by exempt offerings).

The SEC reasons that less well‐​to‐​do investors are protected by limiting riskier investments to the financially sophisticated and those who can absorb losses.

See:  Retail investors are becoming more than shareholders

But being wealthy is no proxy for financial sophistication. The wealth test clearly misses the mark.

This line drawing lumps the elderly with substantial retirement savings and lottery winners with windfall profits in with people whose earnings depend on some financial know‐​how. It also excludes those who don’t have a substantial nest egg but have a great deal of general investment knowledge or have experience with the industry in which they seek to invest.

SEC Commissioner Hester Peirce has observed that the this limitation on investors “offends the principles of personal liberty, which allow people both to earn and spend money as they see fit.”

For investors, the accredited investor definition makes it harder to get rich unless you already are rich. It takes about 11 years for a company to go public today, meaning that it is likely past its high growth phase by the time most people can invest in it. There are also fewer public companies today than there were 20 years ago. So people have fewer choices in the public markets and those choices may offer lower potential returns.

Private offerings also provide different opportunities than those in the public markets, including diversification options and the ability to support a compelling idea or local entrepreneur.  And for investors and entrepreneurs alike, the accredited investor definition deprives many communities of capital needed to grow.

See: 

Accredited investors aren’t representative of the U.S. population: white families, on the whole, are considerably wealthier than others, and wealth is concentrated on the U.S. coasts. Would‐​be entrepreneurs in less‐​wealthy communities are thus limited in their ability to turn to those they know best in building their businesses.

Instead, 74% of aspiring entrepreneurs cite networks and connections as barriers to accessing capital, and too few can rely on angel investors, who tend to invest in nearby businesses. That’s why the SEC recognized that minority‐​owned businesses, in particular, may benefit from increased access to accredited investors. Where proportionally more minority‐​owned businesses have closed in 2020 due to the pandemic, expanded access to capital is even more crucial.

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NCFA Jan 2018 resize - Don't Backtrack on Loosening Accredited Investor Rules 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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Stop hunting unicorns and start aiming at Zebras

Sifted | Johannes Lenhard | Feb 4, 2021

Zebras not unicorns - Stop hunting unicorns and start aiming at Zebras

VCs, LPs and governments need to change their ways if they want to create and fund businesses that will make the world a better place. Here’s how they can do that.

When a Pulitzer Prize-winning journalist turns their attention to you in the New Yorker, you must have done something terribly right — or wrong. Back in November, a bunch of VCs found themselves in this situation. The writer, Charles Duhigg, chastised them for not only neglecting their oversight responsibilities on startup boards, but also for chasing the wrong kind of company: the mythical unicorn.

See:  Detour: An altered path to profit for European fintechs

From WeWork to Uber, it turns out that quite a few of these $1bn-plus businesses are in fact full of hot air.

Investors should stop hunting these mythical creatures and search for another one instead: enter the “green zebra”.

How the zebra got its green stripes

The zebra model — a term coined by the now-international collective Zebras Unite in 2017 — is thought to be a more solid, more founder-driven alternative to building a unicorn.

These are companies that, instead of seeking to blitz-scale their way to market dominance, fuelled by multiple venture capital fundraising rounds, prioritise profitability. Zebras also tend to be focused on equitable ownership and building sustainable businesses, and they seek to create a positive social impact, for example by providing solutions for underserved markets or prioritising employee happiness.

I believe the next generation of companies following this model will not only operate on zebra principles, but environmental, social and corporate governance (ESG) ones. They will be green zebras, and green in the widest sense of the word: more inclusive, ethical, thoughtful and sustainable. They will raise capital by showing that commercial opportunity goes hand in hand with sustainability and impact — and the current cleantech boom is only the tip of the iceberg here.

See: 

Some of European wunder-companies, from electric air-taxi company Lilium to Berlin’s vertical farming champions InFarm, have been able to demonstrate this opportunity to investors.

But what if we wanted to see a whole generation of these green zebra companies, which work on responsible and sustainable solutions to big problems? What in the structure of venture financing would have to change?

How VC can nurture more green zebras 

Here are three suggestions:

1. VCs need to embrace ESG principles themselves

How are you going to properly support a portfolio company that is driven by ESG principles if you’re not putting them into practice yourself? At the moment, the number of funds that explicitly apply these criteria is extremely small. But there is increasing pressure from founders (of zebras and beyond), employees and consumers to do so. The forerunners — such as Antler, 500 Startups and Balderton, which have come out with explicit ESG initiatives already — will also be the ones that green zebras gravitate towards, and stick with. These initiatives are a good start in signalling that a firm is about more than just quickly maximising returns for stakeholders.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Stop hunting unicorns and start aiming at Zebras 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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