FFCON21 Breaking Barriers May 11-13, 2021

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Bank of Canada to become new regulator of fintech companies doing payments processing

The Globe and Mail | James Bradshaw and Mark Rendell | May 6, 2021

Bank of Canada update - Bank of Canada to become new regulator of fintech companies doing payments processing

The federal government has introduced a new law to begin regulating technology companies offering payment services, aiming to increase trust in financial technology startups and stoke competition with established banks as digital payments become more popular.

The Retail Payments Activities Act will put the Bank of Canada in charge of regulating payment services providers in Canada that aren’t governed by another regulator, as well as foreign companies facilitating payments for Canadian customers.

It does not apply to domestic or foreign banks, credit unions or insurance companies that are already regulated in other ways. Instead, it is aimed at financial technology startups – often called “fintechs” or “paytechs” – as well as global technology giants such as Google and Apple that have made inroads in digital payments without robust oversight.

See:  Wait and see approach for Fintechs as Payments Canada chooses Interac as Canada’s real-time payments provider

The new law comes at a moment when adoption and use of digital payments by consumers and small businesses has accelerated dramatically amid the coronavirus pandemic. The tighter controls on startups are intended to make payments more secure and reliable for consumers. But they are also supposed to spur innovation and competition in payments by paving the way to bring fintechs into the country’s payment systems.

“Payments in this country are dysfunctional. There are high barriers to entry,” said Alexander Vronces, executive director of Paytechs of Canada, which advocates on behalf of payments providers such as Interac, Koho and Transferwise.

“This legislation is a formal recognition of the blurring lines between traditional providers of payments services and newer technology companies getting more and more involved in the space.”

Under the Act, payment providers will have to register with the central bank, submit annual reports and frameworks for risk management and incident response, notify the central bank about incidents or breaches, and follow rules about how they hold clients’ money. The Bank of Canada would keep a registry of payment-services providers and have the power to impose financial penalties or compliance orders on companies that break the rules.

See:  Faster payments: a corporate treasury breakthrough

The law is the culmination of more than a decade of deliberations about how to govern the increasing volume of retail payments handled by non-bank tech companies, outside the tightly regulated confines of Canada’s traditional financial sector. It is part of the budget bill tabled last week by the federal Liberals, following promises in each of the past two federal budgets to extend oversight of retail payments.

“I would think of it as an expansion of the trust in the system,” said Anne Butler, chief external relations and legal officer at Payments Canada, which counts banks and credit unions among its members. “Payments is a network business, and as you expand trust in the regulatory oversight of the system, you create the opportunity for it to continue to grow and flourish with innovation.”

The new Act is only a first step toward granting broader access to Canada’s payment systems, Ms. Butler said. Allowing fintech companies direct use of the country’s financial plumbing would require amendments to the Canadian Payments Act to broaden membership in Payments Canada, which runs the country’s clearing and settlement system. Payments Canada is preparing to launch a “real-time rail” system in 2022 that will allow for instant settlement of an array of payments.

The system was designed with fintechs and retail payment providers in mind, Ms. Butler said. But until further changes are made to the Canadian Payments Act, it will only be directly accessible to Payments Canada’s 110 existing members – mainly banks and large credit unions – whereas fintechs have to negotiate access through those incumbents.

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NCFA Jan 2018 resize - Bank of Canada to become new regulator of fintech companies doing payments processing 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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Wealthsimple Raises Money at $4 Billion Value; Drake Buys In

Bloomberg | Kevin Orland | May 3, 2021

Drake invests in wealthsimple - Wealthsimple Raises Money at $4 Billion Value; Drake Buys InPower Corp. of Canada’s Wealthsimple online brokerage raised C$750 million ($610 million) in a funding round that valued it about $4 billion, more than triple what it was worth in October.

The round was led by existing investors Meritech Capital Partners and Greylock Partners, the Toronto-based company said Monday. Also participating are Canadian celebrities including rapper Drake, actors Ryan Reynolds and Michael J. Fox and basketball player Kelly Olynyk.

Wealthsimple, which has more than 2 million users, is benefiting from surging valuations for tech companies and an increase in online trading that has fueled rivals like Robinhood Markets Inc. Wealthsimple offers commission-free stock trading as well as automated investing, cryptocurrency trading and tax services.

See:  Wealthsimple CEO Michael Katchen on his not-so-simple mission: to help people — especially youth — build the foundations of financial freedom

The financing announcement confirmed a Bloomberg report on April 30 that the company was in talks to raise money at a valuation of at least C$4.3 billion. Wealthsimple raised C$114 million at a C$1.5 billion post-money valuation in October, giving it unicorn status.

Continue to the full article --> here


NCFA Jan 2018 resize - Wealthsimple Raises Money at $4 Billion Value; Drake Buys In 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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This Slackbot wants to fix fintech’s workplace harassment problem

Sifted | Ryan Weeks | Apr 28, 2021

harassment guidance advice - This Slackbot wants to fix fintech’s workplace harassment problem

There have been hundreds of cases of harassment in the fintech sector. Today, InChorus launched a slack bot to track and collate data on microaggressions.

The fact that InChorus, a reporting platform for workplace harassment, chose fintech as its ground zero is a sobering sign for the sector.

More sobering still is the fact that, this time last year, more than 500 incidents of harassment were reported through InChorus’ system by fintech employees in the UK. Of those, 85% related to gender and 10% involved “unwanted physical contact”.

See:  Why workplace learning matters more than ever

Unsurprisingly, more than 85 companies in the sector have since signed up to the FinTech For All Charter, which aims to tackle these issues with the support of the Financial Conduct Authority, Innovate Finance, Level39 and others.

The next phase in that initiative begins today, with the rollout of a new Slackbot which will track and collate data on microaggressions relating to harassment and diversity issues within the fintech sector.

“We really believe in the ongoing collection of data around this problem in order to ultimately drive accountability,” said Rosie Turner, cofounder and co-CEO of InChorus.

The plan is to aggregate the data to provide freely available insights on the sector as a whole. A handful of companies — including Funding Options and Concirrus — have signed up to use the tool at launch and will be analysing their own data for benchmarking against sector-wide stats.

Turner told Sifted that all 85+ signatories of the FinTech For All Charter will be invited to incorporate the technology shortly after today’s launch.

See:  Culture and Diversity Leadership: Tale of Two Doors

Curve, the digital bank, recently signed up to the charter. The firm’s cofounder and CEO Shachar Bialick told Sifted that the tool could “only be a good thing, as no one should have to come to work and suffer harassment in any shape or form, ever”.

“Despite having 33% women at Curve across all workforce (and 14% across engineering), the lack of gender parity across the industry remains a painful issue, something which Curve itself is trying to address by actively attracting more women to its employee base, particularly in engineering,” Bialick added.

The number of incidents (more than 50) involving unwanted physical contact reported during InChorus’s first data collection effort early last year is particularly painful — and over half of these were not isolated incidents. Surprisingly, the data did not suggest that the majority of people who had experienced this were more junior than the perpetrators.

Continue to the full article --> here


NCFA Jan 2018 resize - This Slackbot wants to fix fintech’s workplace harassment problem 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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DeFi Users Explode as ETH Makes New Highs

The Defiant | | Apr 29, 2021

ethereum continued growth - DeFi Users Explode as ETH Makes New HighsETH is breaking new all-time highs of just under $2,800 on Thursday, and the breathtaking rally from $200 a year ago is coming with a boom in users.

MetaMask said it has surpassed the 5M monthly active users milestone, while a popular Dune Analytics dashboard shows DeFi users just recently climbed above 2M for the first time.

MetaMask Boom

MetaMask’s active user base has grown 400% during the past six months, according to the April 27 blog post.

The DeFi wallet had reached 1M cumulative monthly active users across its browser extension and mobile app for the first time in October 2020. Now in April, MetaMask is reporting over 5M active users over the past month.

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MetaMask attributed the influx of users to a combination of factors including the NFT craze and increased interest in DeFi from people in what the company calls “the Global South.”

“India and Indonesia are both in the top 5 countries in terms of MetaMask mobile adoption, while Vietnam and Nigeria are in the top 10,” the post says. “Many people in these countries do not trust their governments, and thus eagerly look towards alternatives.”

MetaMask also noted a significant uptick in usage of their in-wallet token swap function, MetaMask Swaps, reporting over $2B in accumulated transaction volume over a six-month period.

The Larger DeFi Boom

MetaMask’s growth is reflective of the larger explosive growth in overall DeFi users during the past few months.

Based on “DeFi Users Over Time” data compiled by 1confirmation’s Richard Chen using Dune Analytics, which tracks unique addresses interacting with major DeFi dapps, there were 586k Defi users at the beginning of October 2020. The DeFi user base has since grown about 240% to over 2M users.

To be sure, a single user can have multiple unique addresses, so the Dune Analytics numbers are somewhat inflated.

growth in defi users - DeFi Users Explode as ETH Makes New Highs

Source: Dune Analytics

Still, these analytics only reflect users interacting with 26 major DeFi apps like Uniswap, Compound, and 1Inch, which doesn’t encompass all DeFi dapps.

As indicated by MetaMask’s 5M monthly active users, there are potentially a large number of people who limit their Web3 activity to holding and swapping within their wallets using features like MetaMask Swap.

Continue to the full article --> here

 


NCFA Jan 2018 resize - DeFi Users Explode as ETH Makes New Highs 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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SEC enforcement chief resigns over role in Indonesian torture case

Politico | Kellie Mejdrich and Zachary Warmbrodt | Apr 28, 2021

Alex Oh - SEC enforcement chief resigns over role in Indonesian torture caseAlex Oh said in a resignation letter that she was leaving because of a "development" in a case on which she worked as a corporate lawyer.

SEC Chair Gary Gensler's pick to serve as the agency's enforcement director resigned unexpectedly on Wednesday amid mounting criticism from progressives over her work as a corporate defense lawyer.

Alex Oh, who was in private practice for two decades before Gensler announced her new role last week, resigned after a federal judge reprimanded her and others defending oil giant ExxonMobil in a class action lawsuit brought by Indonesian villagers. It was a stunning reversal for the SEC less than two weeks into Gensler's tenure at the helm of the agency.

"In light of the time and attention it will take from me, I have reached the conclusion that I cannot address this development without it becoming an unwelcome distraction to the important work of the division," Oh said in a resignation letter.

Oh walked away from the job as Gensler faced growing concern from progressives on Capitol Hill and in the activism community about his decision to hire a long-time corporate lawyer for one of the government's most powerful posts for overseeing the finance industry.

The episode marked a surprising political backlash from progressives who had cheered Biden's nomination of Gensler, after the former Goldman Sachs partner emerged as a tough banking regulator when he chaired the Commodity Futures Trading Commission during the Obama administration.

See:  SEC Commissioner Peirce Pitches Token Safe Harbor Proposal Version 2.0

Before it was announced last week that she would join the SEC, Oh worked for two decades at the law firm Paul, Weiss, Rifkind, Wharton & Garrison, where she represented Fortune 100 companies facing government investigations, with clients including Bank of America and ExxonMobil.

Oh was part of a legal team defending ExxonMobil in a lawsuit seeking to hold the company liable for murder and torture by the Indonesian military during civil unrest between 1999 and 2001. Villagers said ExxonMobil should face liability because it hired soldiers to guard natural gas facilities in the country.

Following complaints about the conduct of ExxonMobil's lawyers, U.S. District Judge Royce Lamberth on Monday admonished Oh and others defending the company. The lawyers for the villagers had told the court that ExxonMobil's defense team had characterized them as "agitated, disrespectful and unhinged."

The SEC did not respond to a request for comment about when they were aware of the issues involving Oh and ExxonMobil. Paul Weiss Chairman Brad Karp defended Oh in a statement: “Alex is a person of the utmost integrity and a consummate professional, with a strong ethical code.”

Continue to the full article --> here


NCFA Jan 2018 resize - SEC enforcement chief resigns over role in Indonesian torture case 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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Tesla Sold Some Bitcoins

Bloomberg Opinion | Matt Levine | Apr 28, 2021

elon and bitcoin - Tesla Sold Some Bitcoins

Tesla Bitcoin

I wrote back in February:

A funny thing for Elon Musk to do would be:

  1. Tesla Inc. buys some Bitcoin.
    2. Tesla announces that Bitcoin is good now and that it bought some.
    3. The price of Bitcoin goes up, because institutional adoption of Bitcoin is good for its price, but also because, by the Elon Markets Hypothesis, anything that Musk buys goes up.
    4. Tesla sells some Bitcoin, making a profit.
    5. Musk tweets that the price of Bitcoin is too high.
    6. Bitcoin prices go down due to the Elon Markets Hypothesis.
    7. Go to Step 1.

Well, on Monday Tesla announced earnings, and guess what guess what guess what:

Tesla pulled a new lever to juice earnings in the quarter, generating $101 million in income from selling about 10% of its Bitcoin holdings.

Profit from the cryptocurrency and the sale of regulatory credits and tax benefits contributed about 25 cents to Tesla’s adjusted earnings of 93 cents a share, allowing the carmaker to beat Wall Street’s 80-cent average estimate, Dan Levy, an analyst with Credit Suisse, wrote in a note Monday.

See:  Elon Musk says people can now buy a Tesla with bitcoin

That’s wonderful, my sincere congratulations to them. People want to be mad about this? There is a vague sense out there that it is somehow fraud to buy a thing, say you like it, and then sell some of it. For instance Dave Portnoy, who I guess is an investment celebrity now, used the words “pumps” and “dumps” to describe Tesla’s actions on Twitter, prompting Musk to reply that “Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.” (Tesla’s “Master of Coin,” Chief Financial Officer Zachary Kirkhorn, also talked a lot about liquidity on the earnings call; Tesla decided to put a chunk of its corporate cash into Bitcoin and I guess needed to make sure that its money wasn’t trapped. A reasonable concern! “We've been quite pleased with how much liquidity there is in the Bitcoin market,” said Kirkhorn.)

For myself, I want to be absolutely clear that:

  1. I don’t think there’s anything illegal about Tesla buying Bitcoin, saying that it bought Bitcoin, and then selling Bitcoin when the price goes up. There’s no indication that Tesla, or Musk, were lying about any of this. (Not legal advice!)
  2. I think that's cool and fun, I’m glad they did it, and I hope they’ll do it again.
  3. I think that, if you can reliably do that — if you are Elon Musk and you can make Bitcoin go up by tweeting about it — you almost have an obligation to do it? Perhaps a fiduciary obligation to your shareholders, but at least a sort of aesthetic obligation to comedy. If Bitcoin wants Musk to manipulate it, Musk really ought to manipulate it.

As I wrote in February, when Tesla bought the Bitcoins:

Musk is in the nice position of being able to spend billions of dollars buying assets in liquid anonymous markets, and then make those assets go up just by tweeting about them. If you can do that, you should! If you can buy a thing secretly, announce “I own the thing,” reliably cause the thing’s price to go up a lot, and then — if you want — sell the thing secretly, then that’s a great business right there. Talk about clean energy; that’s a perpetual motion machine.

See:  Elon Musk Had a Private Meeting With Volkswagen’s CEO. It’s a Brilliant Lesson in Emotional Intelligence

Or people have a sense that these earnings are somehow fake, less real than earnings from making and selling cars? The New York Times says that the Bitcoin sales “led to a $101 million accounting boost,” which makes it sound like it’s not an economic boost. But it is! That’s an extra $101 million of real U.S. dollars that came in the door from selling Bitcoin for a profit.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Tesla Sold Some Bitcoins 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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SPAC transactions come to a halt amid SEC crackdown, cooling retail investor interest

CNBC | Yun Li | Apr 21, 2021

Number of SPACs per month - SPAC transactions come to a halt amid SEC crackdown, cooling retail investor interest

Key Points

  • After a record of 109 new SPAC deals in March alone, issuance has now come to almost a standstill with just 10 SPACs in April, according to data from SPAC Research.
  • The SEC issued accounting guidance that would classify SPAC warrants as liabilities instead of equity instruments.
  • Bank of America’s client flows showed that retail SPAC buying slowed down significantly.
  • The proprietary CNBC SPAC Post Deal Index has wiped out 2021 gains and fallen more than 20% year-to-date.

SPAC mania has come to a screeching halt.

Just last month, special purpose acquisition companies celebrated a head-turning milestone by breaking their 2020 issuance record in just three-month’s time. After more than 100 new deals in March alone, issuance is nearly at a standstill with just 10 SPACs in April, according to data from SPAC Research.

FFCON21 May 11-13:  The Rise of Retail Investors, Stakeholder Capitalism and IPO Innovations

The drastic slowdown came after the Securities and Exchange Commission issued accounting guidance that would classify SPAC warrants as liabilities instead of equity instruments. If it becomes law, deals in the pipeline as well as existing SPACs would have to go back and recalculate their financials in 10-Ks and 10-Qs for the value of warrants each quarter.

“SPAC transactions have essentially come to a halt,” said Anthony DeCandido, partner at RSM LLP. “This is going to cost these companies a lot of money to evaluate and value those warrants each quarter rather than just at the start of the SPAC. Many of these groups lack the sophistication internally to do this themselves.”

SPACs raise capital in an initial public offering and use the cash to merge with a private company and take it public, usually within two years. Warrants are a deal sweetener that offers early investors more compensation for their cash.

Continue to the full article --> here


NCFA Jan 2018 resize - SPAC transactions come to a halt amid SEC crackdown, cooling retail investor interest 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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Recent Appointments

7th Annual Fintech & Financing Conference and Expo (FFCON21): Breaking Barriers May 11-13 (Digital)
David Durand, Advisor, Innovation and Advocacy

David Durand, Advisor, Innovation and Advocacy

David Durand, LL.L., B.Sc. chem., – Founder and Managing Partner of Durand Lawyers – Lawyer (Québec)[...]
Michelle Beyo, Advisor, Payments and Financial Inclusivity

Michelle Beyo, Advisor, Payments and Financial Inclusivity

Michelle Beyo is Founder & CEO of Finavator INC, Money2020 RiseUp Alumni, Women in Payments Glob[...]
Paul Schulte, Advisor, Banking and Financial Services

Paul Schulte, Advisor, Banking and Financial Services

Paul Schulte is the Founder and Managing Editor of Shulte Research based in Singapore.  Paul's roles[...]
Sue Britton, Advisor, Corporate Innovation & Partnerships

Sue Britton, Advisor, Corporate Innovation & Partnerships

Sue Britton is CEO & Founder of FGS (FinTech Growth Syndicate) – Canada’s leading FinTech innova[...]
Charlene Cieslik, Advisor, AML and Compliance

Charlene Cieslik, Advisor, AML and Compliance

Charlene Cieslik is the Principle of Complifact AML Inc., and currently spends her time assisting th[...]
Michael R. King, PhD CFA, Advisor, Fintech Research and Education

Michael R. King, PhD CFA, Advisor, Fintech Research and Education

Michael R. King, PhD CFA Lansdowne Chair in Finance Gustavson School of Business, University of Vi[...]
Alan Wunsche, Advisor, Blockchain

Alan Wunsche, Advisor, Blockchain

Alan Wunsche, MBA, CPA, CA, CBP – Founder, TokenFunder and Co-founder/Chair, Blockchain Canada Al[...]
David Lucatch, Advisor

David Lucatch, Advisor

David Lucatch Chair, KABN David has spent more almost 35 years in the international marketing ar[...]
Sherwood Neiss, Advisor, Global Crowdfunding Markets

Sherwood Neiss, Advisor, Global Crowdfunding Markets

Mr. Sherwood Neiss co-authored the “Crowdfunding Exemption Framework” which became the basis of Titl[...]