NCFAs innovation and funding ecosystem

Category Archives: Fundraising, Investing, Partnerships

SEC says GameStop’s wild stock surge was not short covering

Market Insider | Shalini Nagarajan | Oct 19, 2021

gamestop - SEC says GameStop's wild stock surge was not short coveringThe Securities and Exchange Commission published a long-awaited report on Reddit darling GameStop's retail-trading frenzy on Monday, saying the phenomenon was caused by a rapid rise in investor accounts betting on the stock.

"Whether driven by a desire to squeeze short sellers and thus to profit from the resultant rise in price, or by belief in the fundamentals of GameStop, it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock," the regulator said.

In its 44-page report, the SEC debunked the theory that a "short squeeze" may have sent shares of GameStop and other meme stocks soaring. While many short sellers were forced to cover their short positions, the agency said, there is no evidence that this narrative was a major factor.

See: 

GameStop Testimony: When Short Sellers, Social Media, and Retail Investors Collide

How to Revolutionize the Private Capital Markets

GameStop purchases by those covering their short positions were a "small fraction of overall buy volume," and the share price continued to stay high after the direct effects of such covering would have waned, the SEC said.

Here are 5 takeaways from the report:

GameStop's rally was driven by 880,000 new investors trading the stock in January

"By January 27, the number of unique accounts trading GME on a given day increased from less than 10,000 at the beginning of the month to nearly 900,000."

Hedge funds remained largely unscathed

A handful of hedge funds including Gabe Plotkin's Melvin Capital lost billions of dollars over their bearish bets against GameStop. But the SEC said these firms were not badly affected.

"Staff believes that hedge funds broadly were not significantly affected by investments in GME and other meme stocks. Staff did not observe that any advisers to private funds and registered funds experienced liquidity issues or difficulties with counterparties," the regulator said.

Few clues on change to market-structure rules

The agency didn't provide specific policy recommendations. It did say that the events call for a review of the factors that made brokerages restrict trading, digital engagement practices, dark pools and market makers, and short-selling. Chair Gary Gensler has previously pointed to payment for order flow and "gamification" of trading as coming under the SEC's scrutiny.

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NCFA Jan 2018 resize - SEC says GameStop's wild stock surge was not short covering 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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Founder CEO Coaching: ‘It’s the latest sleeveless vest to have a coach’

Sifted | Amy Lewin  | Oct 20, 2021

Founder loneliness - Founder CEO Coaching:  'It's the latest sleeveless vest to have a coach'If you want to know what it really feels like to run a startup, there are a handful of people you need to speak to — and they’re not founders. They’re the founders’ coaches.  They hear it all — cofounder skirmishes, nightmare investors, even founder fetishes — although they rarely name names.  And the reason they get to know so much?

“Founders have literally no-one to talk to”

says Julius Bachmann, a Berlin-based coach who works with dozens of startup founders at any one time.

“They sit in the centre of an organisation they have built themselves, and every stakeholder around them has a specific interest. Their investors, employees and cofounders are all in the same tunnel and have their own problems. Founders’ life partners have their own lives — and want to be listened to as well. And the founders’ families… they gave up trying to understand what they’re actually doing 10 years ago.”

The coaching phenomenon

Coaching has been a thing in Silicon Valley for some time and is now “quite trendy” in Europe too, says Gillian Davis, a UK-based coach who’s worked with startups like WeTransfer, MessageBird, Spotify and Typeform. “It’s the latest sleeveless vest to have a coach.”

See:  Fielding high-performing innovation teams

“When a founder reaches out to a coach, it’s almost always [the same story],” says Dave Bailey, a UK-based coach who’s worked with hundreds of founders. “It’s basically, ‘My life is out of balance, I haven’t been sleeping well, I don’t have friends any more, I don’t do exercise, I’m worried about my health and feeling pretty blue’.”

Absolute shitstorms and near breakdowns aren’t the only things on the agenda in a coaching session, however.

“Mode one is calming the system down,” says Bachmann. “I have solo founders that work with me every week, and 45 minutes of that hour is, ‘Everything is flying at me and I don’t know what is important’.”

“Asking open questions and active listening” are signs of a good coach, says Stephenson, while “really good coaches are also willing to challenge you and give you a sense of their own understanding.  You want someone who’s like, ‘Sounds like you want to do this thing, but you’re maybe a bit scared. Just do this thing’,” Stephenson adds.

Read:  Emotionally Intelligent Minds Know How to Bridge the Perspective Gap

People problems

More than anything else though, coaching sessions are for talking about “people problems”.

“Once you’re scaling, all problems come back to some relationship and people issues,” says Bailey: cofounder challenges, leadership issues and management troubles are extremely common.

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NCFA Jan 2018 resize - Founder CEO Coaching:  'It's the latest sleeveless vest to have a coach' 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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As regulators circle above, how should the DeFi industry respond?

Forkast | Adi Ben-Ari | Oct 19, 2021

DeFi at crossroads - As regulators circle above, how should the DeFi industry respond?Recent intervention by regulators in the U.S. and China has made for difficult times for the decentralized finance DeFi sector, but it highlighted again the need to communicate the value that DeFi brings to business and finance, and to allay concerns about the risks.

DeFi is an exciting, rapidly growing corner of the cryptocurrency and blockchain world. It aims to remove human involvement from financial services by using smart contracts that democratize financial services, lower costs and improve access. Its popularity is growing sharply as organizations ranging from startups to traditional banking institutions recognize the value it brings.

Yet, as with all financial services, DeFi is accompanied by risk. The question is: how risky is DeFi and is that risk any greater than elsewhere in the financial services sector?

See:  Decentralized Finance—Risks, Regulation, and the Road Ahead

The regulators evidently see risk. Last month, the U.S. Securities and Exchange Commission (SEC) blocked a new digital asset product from Coinbase called Lend, having determined that it is a security and therefore under its regulatory authority. Later in the month, the People’s Bank of China cracked down on cryptocurrencies and crypto exchanges, declaring that all trading and other activities related to digital coins are illegal.

SEC Chair Gary Gensler commented that “a lot of people are likely to get hurt,” without investor protections of banking, insurance, securities laws and market oversight. His urging of Congress to allow regulators greater oversight of crypto exchanges suggests he wants a much tighter grip.

In China, meanwhile, the government clearly wants greater control as it paves the way for its own central bank digital currency (CBDC), the digital yuan.

Stablecoins support interconnection between DeFi and banking sectors

As Mr. Gensler considers the risks, particularly for small investors, it is incumbent on the DeFi industry to demonstrate that those risks are negligible — and certainly no greater than those elsewhere in the financial services sector.

If stablecoins eliminate the cryptocurrency risk, why all the fuss about them?  First of all, there’s no standardized way for stablecoins to disclose the assets that back them. Second, there are concerns about the providers of stablecoin solutions, private companies such as Tether and Circle, the two largest ones, both of which are under scrutiny over governance.

DeFi link to financial system crucial now, but set to loosen

We see a lot more money going into the tokens than coming out — this is evident in the prices. It looks as though a lot of investors and other organizations wish to stay in the crypto world as longer-term speculation, and to eventually conduct business through it.

See:  Kraken report: Crypto Yields – Deep Dive on DeFi

There are risks in the crossover between DeFi and traditional banking. If you want to cash out of crypto, you have to do so at an exchange — the same as when buying the crypto. The exchange can convert it into dollars or euros, for instance, but that ultimately will be through a traditional bank account. The risk is that the banks can decline their services to crypto exchanges — they have done so before. One reason would be if they don’t know where the money comes from, an important factor as they try to clamp down on money laundering and other nefarious activities.

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NCFA Jan 2018 resize - As regulators circle above, how should the DeFi industry respond? 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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Canadian securities regulators seek comment on climate-related disclosure requirements

CSA | Release | Oct 18, 2021

climage change disclosures - Canadian securities regulators seek comment on climate-related disclosure requirementsCalgary and Toronto – The Canadian Securities Administrators (CSA) today published for comment proposed climate-related disclosure requirements. The proposed requirements address the need for more consistent and comparable information to help inform investment decisions. They also demonstrate the CSA’s commitment in favour of the growing international movement toward mandatory climate-related disclosure standards.

The requirements contemplate disclosure largely consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. They will improve the comparability of the information issuers disclose and help investors make more informed investment decisions by enhancing climate-related disclosure. The requirements are also intended to address costs associated with reporting across multiple disclosure frameworks, improve access to global markets and facilitate an equal playing field for issuers.

See:  The evolution of ESG: Corporate sustainability leaders in the financial services sector are taking on new responsibilities

“We recognize some issuers already share certain climate-related information,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Our proposed requirements will bring those disclosures into a harmonized framework benefitting investors and issuers alike and aligning Canadian capital markets with the global movement towards consistent and comparable standards.”

The proposed requirements contemplate disclosure by issuers related to the four core elements of the TCFD recommendations:

  • Governance – an issuer’s board’s oversight of and management’s role in assessing and managing climate-related risks and opportunities.
  • Strategy – the short-, medium- and long-term climate-related risks and opportunities the issuer has identified and the impact on its business, strategy and financial planning, where such information is material. As a modification from the TCFD recommendations, the proposed disclosure would not include the requirement to disclose “scenario analysis”, which is an issuer’s description of the resilience of its strategy within different climate-related scenarios, including a 2°C or lower scenario.
  • Risk management – how an issuer identifies, assesses and manages climate-related risks and how these processes are integrated into its overall risk management.
  • Metrics and targets – the metrics and targets used by an issuer to assess and manage climate-related risks and opportunities where the information is material.

See:  Regulators target “greenwashed” products susceptible to marketing hype

Issuers would be required to disclose their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks, or their reasons for not doing so. The CSA is also consulting on an alternative approach that would require issuers to disclose Scope 1 GHG emissions. Under this alternative, disclosure of Scope 2 and Scope 3 GHG emissions would not be mandatory.

“With global momentum building on sustainability-related disclosures in both the public and private sectors, these proposals reflect our vision and expectations for reporting issuers as we move towards a global baseline for such disclosures,” said Morisset.

The disclosure requirements would be phased in, as outlined in the notice, to give companies sufficient time to plan for implementation.

The proposed disclosure requirements draw on extensive engagement with stakeholders, follow environmental and climate-related reporting guidance issued by the CSA in 2010 and build on CSA Staff Notice 51-358 Reporting of Climate Change-related Risks published in August 2019.

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NCFA Jan 2018 resize - Canadian securities regulators seek comment on climate-related disclosure requirements 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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First American bitcoin ETF (ProShares Trust) looks set to debut Tuesday

MarketWatch | Mark DeCambre | Oct 18, 2021

ProShares bitcoin ETF approved in US - First American bitcoin ETF (ProShares Trust) looks set to debut TuesdayProShares 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.

Continue to the full article --> here


NCFA Jan 2018 resize - First American bitcoin ETF (ProShares Trust) looks set to debut Tuesday The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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MintGreen to make North Vancouver world’s first city heated by bitcoin

Vancouver Tech Journal | William Johnson | Oct 14, 2021

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

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

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

How will this work?

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

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

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

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

A partnership two and a half years in the making

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

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

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

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

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

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

Continue to the full article --> here


NCFA Jan 2018 resize - MintGreen to make North Vancouver world’s first city heated by bitcoin The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The Real Story of Access to Capital

SEC | Martha Miller | Oct 13, 2021

Martha Miller - The Real Story of Access to CapitalIf 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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NCFA Jan 2018 resize - The Real Story of Access to Capital 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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