Category Archives: Innovation and Resources

Regulating financial innovation – going behind the scenes

FCA | Sep 11, 2019

Christopher Woolard2 - Regulating financial innovation – going behind the scenesSpeech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered at the Cambridge Centre for Alternative Finance annual conference, Judge Business School.

Highlights:

  • The UK has led the rest of the world with developments like the regulatory Sandbox, we are very proud of what has been achieved through it.
  • Early engagement is incredibly valuable for monitoring, supervisory and policy purposes. Working with innovative firms helps us achieve a better bird’s-eye view, enhancing our understanding when the overall landscape is blurry and ­changing quickly.
  • 'Stablecoin' is a term that has been widely adopted by industry, but we do not take it to be a distinct category of cryptoassets. Something labelled as a 'stablecoin' could sit within or outside of our regulatory perimeter.

Note: this is the speech as drafted and may differ from the delivered version.

See:  FCA confirms new rules for P2P platforms


Last month, Facebook announced its plans for Libra, the stablecoin it is planning to launch in conjunction with a number of payment and tech firms.

As has been widely reported, along with other regulators and central banks, we have been discussing their plans with Facebook.

If this comes to fruition, Libra could be very significant indeed.  It will pose questions for us as a regulator. It will pose questions for our colleagues at the Bank of England. It will pose questions for us working with our international partners. Moreover, its size and scale will pose questions for society and government more generally about what is acceptable and desirable in this space.

Historically, this may have been a sector that has lived by the mantra of ‘move fast and break things’, but the issues raised here require deep thought and detail.

In the UK, we’ve tried to manage some of those tensions through initiatives such as our regulatory Sandbox. We believe that has worked well, but we are facing now issues that could have a fundamental effect on the financial services system.

As a result, we need to ensure that innovation works in the interests of consumers. To do that, we need to thoroughly understand the business models firms are suggesting and how they benefit consumers.

We need to consider whether consumers understand and actively consent to the trade-offs inherent in those business models.  And we need to consider the wider impact on market integrity and stability.

So, I thought it would be helpful to peel back the curtain a little on how we look to critically analyse different cryptoassets and why, ultimately, we don’t think labels such as ’stablecoin’ are very helpful.

See:  FCA: Regulating innovation: a global enterprise

Now, I have to stress, what I’m about to say applies to all cryptoassets. I’m not talking specifically about Facebook or any one firm, but the rest of my comments should be taken as illustrative of the kinds of challenges we are facing up to as regulators.

What are ‘stablecoins’?

Market participants use ’stablecoin‘ as a broad term, which encompasses a variety of different types of cryptoassets. In essence, stablecoins hope to be less volatile than other cryptoassets and, so the argument goes, be more appropriate for a variety of use cases.

Back in October 2018, the FCA published a joint report alongside the Bank of England and HM Treasury as part of a domestic Cryptoassets Taskforce. In brief, we categorised cryptoassets into 3 broad types:

  1. Exchange tokens. Often referred to as ’cryptocurrencies‘, cryptoassets, such as Bitcoin, Litecoin and equivalents, utilise a distributed ledger technology (DLT) platform and are not issued or backed by a central bank or other central authority. They do not provide the types of rights or access provided by security or utility tokens, but are used as a means of exchange or for investment purposes.
  2. Security tokens are tokens, which amount to a ‘specified investment’. These may provide rights such as ownership, repayment of a specific sum of money, or entitlement to a share in future profits. They may also be transferable securities or another type of financial instrument under the EU’s Markets in Financial Instruments Directive II (MiFID II).
  3. Utility tokens are tokens, which can be redeemed for access to a specific product or service that is typically provided using a DLT platform. I mention this framework as it is important context. Just as the term ’cryptoasset‘ can mean different types of token, so can the term ’stablecoin‘.

Let’s take an example. ’Stablecoin‘ could refer to a cryptoasset backed by fiat currency. In certain cases, a fiat-collateralised cryptoasset could constitute e-money if it meets the definition provided in the Electronic Money (e-money) Regulations.

a 'stablecoin' could fall within or between any of the regulatory categories I’ve described previously. This makes us question how useful this one term – 'stablecoin' – is when it comes to labelling all these different tokens.

See:  Regular investors are cut out of a major financial market and the SEC chief wants to change that

If a cryptoasset is e-money then the issuer needs to be authorised as an e-money issuer and needs to comply with all relevant requirements under the E-Money and Payment Services Regulations.

It could be illegal to do otherwise.  We have already authorised e-money firms that use DLT, including graduates of the regulatory Sandbox.

But the term ’stablecoin‘ could equally apply to algorithmically controlled tokens. Or those backed by ’real world‘ assets such as securities or, indeed, other cryptoassets.

Such ’stablecoins‘ would need to be evaluated on their characteristics, but could amount to regulated products, including, for example, collective investment schemes.

However, to keep things short and simple, a ’stablecoin‘ could fall within or between any of the regulatory categories I’ve described previously. This makes us question how useful this one term – ’stablecoin‘ – is when it comes to labelling all these different tokens.

’Non-stable non-coins‘?

This issue isn’t specific to stablecoins. We tend to avoid the term ’cryptocurrency‘, as they generally don’t meet(link is external) the core economic criteria of money – as a unit of account, store of value and efficient means of exchange. We prefer to say ’cryptoasset‘, as it is more neutral and captures the broader range of tokens that are not just designed to act as a means of exchange.

So, whilst ’stablecoin‘ is a term that has been widely adopted by industry, we do not take it to be a distinct category of cryptoassets.

See:  Stablecoins: Experience the Stability

Something labelled as a ’stablecoin‘ could sit within or outside of our regulatory perimeter. Depending on its structure it could be many things – for instance, a derivative, a unit in a collective investment scheme, another kind of security or e-money.

We also question whether tokens governed by algorithms or underpinned by other cryptoassets are necessarily ’stable‘.

Volatility and stability are important concepts, but they are relative in nature. Whilst a wobbly tripod is seldom a good thing in the world of wildlife photography, ’volatility‘ in financial services is completely context-dependent.

The FCA does not have criteria, nor a legal basis, for endorsing such claims for cryptoassets.

Asking the right questions

Instead, when faced with novelty, we try to gain a crisper view. We ask:

  • What is this thing, why is there a new term and what problem is it trying to address?
  • Who is it for – wholesale banks or retail consumers? Is it within our regulatory scope or outside?
  • Is this really an innovation or just something old in a new, flashy wrapper?
  • Is this potentially to the benefit of consumers and competitive markets or is it likely causing harm by increasing complexity and other risks?

In short, we seek to consider any cryptoasset, including those labelled ’stablecoin‘, on a case-by-case basis and we encourage both consumers and firms to do likewise.

See:  UK and World Economic Forum to lead regulation revolution to foster industries of the future

This analysis is particularly important when identifying whether a specific cryptoasset sits within our regulatory perimeter or outside of it. Our recent perimeter guidance consultation on cryptoassets provides more detailed clarity for firms – we’ll be publishing a feedback statement on this shortly.

Something labelled as a 'stablecoin' could sit within or outside of our regulatory perimeter. Depending on its structure it could be many things – for instance, a derivative, a unit in a collective investment scheme, another kind of security or e-money.

As we seek answers to those questions, we expect any would-be cryptoasset issuer to be asking a few of their own before launching a product:

  • Is my product a beneficial innovation for consumers and markets? Or does it include hidden bugs and unmitigated risks?
  • Am I prepared to be open and cooperative with domestic and international regulatory agencies? How do I approach issues like anti-money laundering?
  • Will the target market I have in mind for this cryptoasset be able to make an informed and balanced judgement of the risks and benefits of investing in or using such an asset?
  • Finally, and most importantly, have I completed the regulatory, legal and technical due diligence in advance of launching a new product or service?

In financial services it is vital that innovators get it right the first time round.

See:  Canada’s Regulatory System for Fintech is Complex, Costly and Chaotic. It is Stifling Fintech Innovation

When it comes to other people’s money, or safeguarding against terrorist financing, corner cutting is simply not an option.

For those who think the model is to try it in beta for a few million people and see what happens, there may be activities here that are illegal without authorisation in many countries, not just the UK.

The UK has led the rest of the world with developments like the regulatory Sandbox, we are very proud of what has been achieved through it.

One thing that unites those who have been through the Sandbox is the professionalism and preparation shown by the firms involved, who all recognise there is a finite amount of learning through failing fast that can be tolerated when consumers are at risk of harm.

Continue to the full article --> here

 

 

 

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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Powering local regeneration through crowdfunded investment

Nesta UK | Rosalyn Old and Johnathan Bone | Sep 4, 2019

taking ownership community empowerment through crowdfunded investment - Regulating financial innovation – going behind the scenesEarlier in May 2019, Nesta commissioned a report called 'Taking Ownership:  Community Empowerment through Crowdfund Investments' that looked at how community-led projects have the power to transform local areas socially, economically and environmentally and how institutions such as local governments, municipal authorities and foundations, can help community-led initiatives by making the most of new investment crowdfunding models (eg community shares and bonds).

Key Findings

  • Investment crowdfunding has been used to fund a broad range of local assets, including but not limited to, saving local shops and pubs from closure, creating new community centres and art spaces, and expanding leisure facilities and infrastructure projects.
  • Potential opportunities in using investment crowdfunding for community-led initiatives include helping to fund projects that would otherwise struggle to access finance elsewhere, increasing the use of and volunteering for community initiatives, and strengthening local resilience and self-determination by bringing communities together to improve their area.
  • The main challenges for community organisations raising money in this way include gaining access to assets to buy or use on a temporary basis, transitioning from grassroots fundraising to implementing a project and avoiding negative impacts on diversity and inclusion.
  • Local government, city authorities and institutional funders have a crucial role to play in supporting community organisations to make the most of opportunities and overcome the challenges mentioned above by offering flexible funding options (including grants, bridging loans and co-investment), helping them access space by easing the asset-transfer process and supporting meanwhile use, developing active communities and their relationship with local and city government, and investing in skills and capacity building.

The study confirmed that these financial tools have the power to enable projects that wouldn’t otherwise be funded, provide longer-term financial sustainability and increase volunteering, the stories of community empowerment, self-determination and resilience are what really set these models apart. Despite the clear benefits of using these fundraising models for community projects, awareness of them and the types of projects they can be used for is relatively low, and case studies which others can be inspired and learn from are few and far between.

See:  Crowdfunding campaign raises $3 million to protect Princess Louisa Inlet property

Building on their report, they recently published 10 case studies from pubs and sport clubs to renewable energy and housing that have used crowdfunding investment models to create change locally.  While there are challenges associated with raising money in this way, communities across the UK are working (often with the support of institutions such as local authorities, trusts and foundations), to overcome these barriers.

Case studies

We hope these examples will encourage those of you involved in community organisations to try it out, learn from your peers and for institutions to take on a greater and more innovative supporting role in this sector.

1. Transformation under the motorway - Projekts MCR Skate Park

  • Location: Manchester, North West England
  • Community investment model(s) used: Community shares
  • Amount raised from community: £132,194
  • Number of community investors: 70


When you arrive at the site under Manchester’s inner ring road, Projekts MCR looks much like any other skatepark, but beyond the ramps, it also acts as a community centre for a whole range of local groups. They recently set out plans to expand the park further under the motorway, increasing ramp area as well as creating a community space and the city’s first skate cafe. They hope that these developments will increase revenue, ensuring the longer-term financial sustainability of the park. The overall project is set to cost £840,000 with £132,194 coming from community shares investors, alongside grant funding from Sport England, Co-operatives UK, The Community Shares Unit’s Booster Programme and The Veolia Environmental Trust.

Projekts community are committed to the success of the project, as they see the social benefits - providing children and adults opportunities to come together, learn, exercise and build confidence. They teach young people ways of working that would benefit any community; as the users physically move around the space they are constantly aware of those around them, learning to give space and work together to maximise everyone’s experience.

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Over the last 14 years, Projekts has worked with over 20,000 people to develop their confidence and contribute to physical and social regeneration of the area through skatepark activities. Its community activities focus on underrepresented groups, such as classes for girls and women, with their participation up from 160 visits in 2012 to 3,755 in 2018.

They’ve also spruced up neighbouring outdoor space with a local group as one investor explains:

“The wasteland outside the park was re-used and planted. Projekts don’t have to do this - they’re not just a business, they go above and beyond what they have to do” - A Projekts MCR investor

Most of their 70 investors are users of the skatepark (or their parents) and alongside plans to offer investors 4 per cent interest each year after year 3, other rewards include branded t-shirts or a ramp named after them. Other investors include a local pizza restaurant which saw links to their brand image (their logo was designed by a skateboard company), and one of their biggest investors was an individual which the local council signposted Projekts to.

One investor shared their experience of feeling listened to as investors as well as customers. With the funding in place, the team are now looking for the best way to engage shareholders in their co-operative governance going forward.

“With community shares there is a benefit for the community and indirectly for the skatepark. They’re not just in it for the money, it’s about people supporting the project. Others fail - here it’s people that are making the difference” - A Projekts MCR investor

Overall, the community shares route has provided several advantages for Projekts: demonstration of community support, new co-op members and the peace of mind that comes with being financially more sustainable. However, they recognise the resources required to check the feasibility of a project and get the right skills in place to make it happen and would like to see more support to access people’s untapped potential and develop this with each project.

“How do you assess the value of a project to get the resources for it to go ahead? Spending time going to other projects can give a good gauge of what you need, but it shouldn’t just be down to the skills that you happen to have to start with” - John Haines, Managing Director, Projekts MCR

See:  Architecting a New World: Investment Crowdfunding and Digital Assets


2. Community-powered network - Broadband for the Rural North (B4RN)

  • Location: Lancashire, England
  • Financial models used: Community shares, bonds and loans
  • Amount raised from community: over £5 million
  • Number of community investors: over 2,300 shareholders

In 2013 the government committed to extend superfast broadband to 95 per cent of the UK by the end of 2017. But what about the remaining 5 per cent? Even before this commitment, a group of neighbours in rural Lancashire decided that if they wanted a good broadband network, they’d have to do it themselves. This led to the creation of Broadband for the Rural North or ‘B4RN’ who, after establishing that their project didn’t fit grant funding applications or bank finance criteria, decided to raise the money they needed from the communities they will serve. Since they opened their first community shares offer in 2011, they have gone on to raise over £5 million from local comm

Broadband for rural north UK - Regulating financial innovation – going behind the scenes

unities in shares, bonds and loans, allowing them to bring fast broadband to several previously underserved areas across the North West (alongside community investment they also received a business development loan from the Esmee Fairbairn Foundation, but notably B4RN has received no public funding). Alongside helping their community access fast broadband, community shares investors currently receive 5 per cent interest while those investing in the recent bond will receive 4.5 per cent a year (while both depend on the ongoing success of the business, the bond interest rate is set in advance, whereas the shares interest is determined annually by the directors).

B4RN’s model is based on rural communities taking responsibility for funding and building their own network as part of the wider B4RN scheme. The network is built by volunteers harnessing the skills, resources and knowledge within the community, and bringing them together around a shared aim. For example, local farmers and landowners support the project by digging trenches for the cables across their land in return for ‘shares for work’ - £1.50 per metre for the distances they’ve installed.

See:  Cities using Crowdfunding for Community Projects

The farmers know the best place for the cables on their land, and have an inherent interest in the project succeeding, because it gives them a reliable internet connection too. This means that B4RN are able to install fast broadband to areas in which it would not be feasible for private companies, who do not have this access or local knowledge and so would have to dig up roads at great expense. Further support comes from places of worship and village halls are given access to the network for free if they host a connection point (schools are also charged a low rate with the small schools getting free connections too).

“We wonder if the bigger benefits are the community ties we leave behind after it is built, the legacy of people talking to each other.” - Barry Forde, Chief Executive, Broadband for the Rural North Ltd. (B4RN)

The first laying of cables started in 2012 and a few months later B4RN won the The Internet Services Providers' Association’s ‘Internet Hero’ award. By June 2017 they had connected more than 3,270 properties to fast and affordable broadband and are now present in Lancashire, Cumbria, Yorkshire, Norfolk and Suffolk, demonstrating what empowered communities are able to achieve. Currently over 6000 customers are benefitting from one of the fastest connections in the world.

Continue to see more Case Studies --> here

Download the full 96 page PDF report --> here

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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What’s The Current BTC to XRP Rate?

NCFA Guest Post | Sep 9, 2019

digital tokens and coins - Regulating financial innovation – going behind the scenesThe world was shook when online money was first introduced. Some people didn’t like the idea. They’d prefer having something tangible, something that they can actually see and touch to use as currency. Some people were positive about the new experience. They believe that it can certainly make life more convenient. But hey, we’re now in 2019 and online currency is still widely in use. In fact, its uses have expanded way more since it was first introduced (read more).

One of the most popular and controversial of its time was BTC or Bitcoin. Even without studying cryptocurrencies, you’ve probably heard this term once or twice before. You may have come across it in the internet or someone may have encouraged you to try trading it. After all, when cryptocurrency was first brought to light, many people saw its potential in the trading market. And it has been making noise ever since.

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At first, Bitcoin was surrounded with a lot of controversy – and of course, a lot of doubt. People were scared of exchanging real world money for something that you can hardly even see and give value to. The volatility of the currency did not help ease people’s fears as well. Its value would skyrocket and plummet at drastic rates that people found it hard to put their trust in it. But as soon as the hype went down, BTC rates calmed as well. It became your regular internet money that is still of great value. To the people who speculated that it was just a bubble waiting to pop, well here’s news for you: It seems that nothing will be popping anytime soon.

After Bitcoin, many other types of cryptocurrency followed. One such currency that rose into popularity was Ripple or XRP. But aside from being a type of internet money, it is important to note that Ripple is a settlement system as well. This means that it’s not just a currency but a platform as well. Ripple became so popular that it was soon adopted by banks and other financial institutions to help with financial settlements. After all, moving money in real-time requires tremendous amount of work. Whereas, Ripple can settle payments in less than 5 seconds and handle more or less 1,500 transactions every second. It’s definitely an efficient way to settle transactions faster. Check it out on Rubix.

Can You Convert One Cryptocurrency To Another?

Convert digital coins - Regulating financial innovation – going behind the scenes

Much like every other type of real world currency you know, online money may be converted from one kind to another as well. Just like how you would exchange USD to EUR or SGD to GBP, cryptocurrency may be converted according to their current exchange rates as well. As I said before, crypto money is just like real world money. The only difference is that it has no tangible form. Everything is done digitally. No paper bills or whatsoever. Thinking about it now, that’s kind of a good thing right?

What Is The Current BTC to XRP Exchange Rate? 

If you’ve been wondering how things are looking with Ripple, we might just be able to help you out. True enough, diversifying your trades can be a pretty good way of ensuring trading success. This is why we understand your interest in learning not just the Bitcoin platform but the XRP platform as well. However, if you’re used to trading Bitcoin, you probably don’t have any other type of cryptocurrency in your wallet. Not to worry, though. Now, you can now convert BTC to XRP easily.

Question is, how much is the going rate for BTC to XRP these days?

The current rate is 1 XRP = 0.000033 Bitcoin (BTC). This is the most recent record for the past 24 hours. As you can see, Bitcoin is still more valued than the Ripple currency. But this should not dissuade you from trading Ripple. Check out: https://www.bestchange.com/bitcoin-to-ripple.html.

You see, it’s a given fact that Bitcoin is, by far, the most popular cryptocurrency. It should come to no one’s surprise that the perceived value of it is high. However, this also means that when you trade Bitcoin, you’re dealing with large trades. In other words, the risks are higher as well. Participating in doable trades such as Ripple should even out your chances in the market.

See:  Is This Behind The Latest $25 Billion Bitcoin And Crypto Price Rally?

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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[Sept 2019 Roadshow]: Holt Accelerator’s Hot New Cohort is Coming to Vancouver, Waterloo, Toronto, Montreal!

Holt Accelerator | Samah El Falah | Sep 11, 2019

Holt deal days 2019 - Regulating financial innovation – going behind the scenes

Holt Deal Day event series are seeking senior representatives of financial institutions, or fintech investors and experts to attend Holt’s Deal Day, taking place at Vancouver (Sept. 20th), Toronto (Sept. 23rd), Waterloo (Sept. 27th), Montreal (October, 2nd).

Don’t miss out on the opportunity to interact with eight up & coming Fintech stars who will surely make a difference in Canada and beyond. As an investor, corporate or expert interested in Fintech, our Deal Days offer you an insider’s view of the upcoming trends and current challenges the industry is facing.

 

What do the Deal Days consist of?


Coffee / Registration (30 minutes)

Canada Fintech Presentation by Holt (15 minutes) 

  • Presentation on the current Fintech Ecosystem. The challenges & insights we gathered about 3 core fintech areas: Cybersecurity/Data Protection, Wealth Management (including Digital Assets), & Lending.

10 table mini-breakout session (30 minutes)

  • Detailed roundtable discussions surrounding one of the topics covered during the Holt presentation.

Speed-Dating (2 hours and 30 minutes)

  • You will have the opportunity to see the 2019 cohort pitch after being part of the Accelerator program for a month. Just like our Selection Days, each pitch will end with a Q&A and time for feedback.

 

Holt Deal Day Road-Show Event Dates

Vancouver (Sept. 20th) - REGISTER NOW  |  More info

Toronto (Sept. 23rd) - email

Waterloo (Sept. 27th) - email

Montreal (October, 2nd) - email

 

To register or if you have questions, please email samah@holtaccelerator.ai.

Note to Senior fintech execs and investors: 

email Samah for special invite

 

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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Unlocking the Potential of Frontier Finance

Global Impact Investing Network | Rachel Bass | Sep 10, 2019

GIIN unlocking the potential of frontier finance - Regulating financial innovation – going behind the scenesUnlocking the Potential of Frontier Finance assesses key features of frontier finance impact investments and finds significant opportunity for making an impact in this sector.

Based on analysis of 40 frontier finance transactions, 10 interviews, and a workshop discussion with 39 investors and other ecosystem players, this report uncovers significant financial and impact motivations for entering the space and identifies recommendations to scale the market to achieve global development goals.

The report was produced with the support of the DOEN Foundation, the John D. and Catherine T. MacArthur Foundation, and the Omidyar Network.

 

Executive Summary

Impact investors have a long history of practicing frontier finance, or investing to improve the lives of low to lower-middle income people in emerging and frontier markets. They’re motivated by the significant potential of frontier finance investments to create deep, lasting impact while tapping into markets with strong growth potential and an emerging consumer class. Ultimately, many frontier finance investors are driven by an intention to effect broader systemic change on the financial systems in frontier markets.

See:  Blockchain Technology and the UN: The Sustainable Development Goals

Yet capital flows fall far short of demand for investment in these markets – and far short of the estimated capital gaps required to achieve the Sustainable Development Goals (SDGs). For impact investment in frontier finance to reach its full potential, investors require more clarity around the common features and performance of such transactions and strategies to address the challenges they face in the market. This research seeks to answer these questions by analyzing a database of 40 frontier finance transactions, 10 interviews, and a workshop discussion with 39 investors and other ecosystem players.

Through the transaction database, the Research Team found that frontier finance investments play myriad roles in the market and have diverse features. Common features include:

  • Relatively small ticket sizes, with an average ticket size of USD 1.1 million and a median of USD 385,000;
  • Use of both developed market and emerging market currencies (60% and 40%, respectively);
  • Primarily market-rate return targets (74%), with a majority of investments meeting or exceeding financial performance expectations (87%); and
  • Primarily social impact objectives, with commonly targeted SDGs including decent work and economic growth (SDG 8; 50%) and no poverty (SDG 1; 48%).

See:  How Data-driven Strategies Can Improve Impact Investing Outcomes

This research found constraints to frontier finance activities from difficulties raising (in the case of asset managers) and deploying (in the case of asset owners) capital; educational gaps across the capital supply chain; and high transaction and operating costs. Five primary strategies can begin to address these challenges, namely to:

  • Unlock grant capital to act as a de-risking mechanism to individual investments and support the broader impact investing ecosystem;• test and refine financial instruments and structures to strengthen the appropriateness of investment products;
  • Expand and strengthen partnerships among investors and with other ecosystem players;
  • Strengthen forums for investors and entrepreneurs to exchange ideas and share lessons learned; and
  • Elevate and celebrate success stories.Collaborative and coordinated efforts among investors and field-builders are required to advance these strategies and, ultimately, to unlock capital flows, improve the efficiency of frontier finance transactions and operations, and champion high-impact solutions in frontier and emerging markets around the world.

Download this 46 page PDF report --> Now

Continue to the full article --> here

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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[Deal Day Vancouver, Sep 20-2019]: Holt x VSW: Cohort Speed-Panel

Holt Accelerator | Jan Arp | Sep 9, 2019

Holt Deal Day Sep 20 Vancouver Startup week - Regulating financial innovation – going behind the scenes

EVENT OVERVIEW:

VSW & Holt cordially invite you to enjoy three insightful speed-panels surrounding upcoming Fintech trends & challenges Canada is facing, including Data Protection, Wealth Management (including Digital Assets), & Lending.

The panel will be followed by a networking session where you will have the opportunity to chat with Holt Advisors, as well as, eight up & coming Fintech startups who will surely make a difference in Canada and beyond!

 

AGENDA:  FRIDAY, SEPT 20

12:45 PM - 1:00 PM - Doors open & registration

1:00 PM - 2:30 PM - Speed-panels

2:30 PM - 3:00 PM - Networking

LOCATION:  SPACES LOWER LEVEL

151 West Hastings Street, Vancouver, BC V6B 1H4 View Map

register now - Regulating financial innovation – going behind the scenes

Innovators, Speakers and Panelists include:

  • Panel Moderator - Michael King, Finance Professor at Gustavson School of Business
  • Holt Accelerator - Jan Christopher Arp, co-Founder & Managing Partner
  • Conatix David Lehrer, Founder & CEO – a cybersecurity firm preventing fraud and data theft from the inside. Conatix helps banks detect suspicious employee activity, improper behavior, policy violations and other threats on IT networks with thousands of employees, in real time.
  • ConfirmU Yatir Zaluski - helping individuals with little or no credit history gain access to financial products by combining financial data and psycholinguistics into an alternative credit scoring system.
  • HodlBot Calvin Leyon, co-Founder & CEO, Lucas Simpson, Programmer, Anthony Ng - a Canadian based customizable cryptocurrency trading bot that enables users to index the market, create and automatically rebalance their cryptocurrency portfolios.
  • LexAlign Trevor Lain, CEO - LexAlign PBC automates the "missing piece" for fraud and AML risk management: the ongoing monitoring, gap analysis and support of customer processes at scale, including for remote deposit capture (RDC), ACH and wires.
  • Maat.ai Alexei Stanislawski, CEO & Brian Minutti, Chairman - modernizing finance by creating new and compliant digital document management solutions. Their digital ID and wallet make secure interactions easy. This Mexican Fintech is enabling people and organizations to exchange digital documents safely, easily and efficiently, improving the experience for all parties.
  • Manzil Mohamad Sawwaf, co-Founder & CEO - many of the world's 1 billion Muslims cannot pay or receive interest on financial transactions, hindering their ability to purchase a home. Manzil offers them a murabaha mortgage, balancing modern business practices and religious obligations.
  • MarketsFlow Tom Nash, CEO - tackling the performance gap in do-it-yourself digital wealth management, MarketsFlow offers a portfolio optimization platform delivering high returns for online investors. This British firm consistently outperforms other robo-advisors available today.
  • WealthBlock.AI Trilliam Jeong, CEO - US based WealthBlock.AI invites investors to view financial documents via a secure link and tracks the interaction between these investors and the entrepreneurs, to gauge interest and streamline follow ups.

*This event is part of the Vancouver Startup Week

Fintech Fridays Podcast:  Accelerating Fintech Growth with Holt Accelerator Managing Parter, Brendan Holt Dunn

 

Register for this Event --> Now

More info on Holt's Cross Canada Deal Day Roadshow

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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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NCFA Fintech Confidential Issue 2 FINAL COVER - Regulating financial innovation – going behind the scenes

 

Agents of Change: Making innovation agencies as innovative as those they support

Nesta UK | Alex Glennie | Aug 23, 2019

NESTA agencies of change - Regulating financial innovation – going behind the scenesMaking innovation agencies as innovative as those they support

This paper considers how government innovation agencies can become more inclusive, collaborative and future-facing in the way they support innovation.

National innovation agencies – defined broadly as government-funded or managed bodies that work to stimulate innovation-based entrepreneurship and growth – are often described as catalysts. It is a useful metaphor, but fails to acknowledge the profound changes that these agencies go through themselves in response to political, societal and economic shifts, as well as the changing needs of those they support.

See:

The paper concludes by suggesting some key principles to guide innovation agencies that aspire to be active ‘agents of change’. They should be:

Inclusive: representative of the populations they aim to serve, and actively engaged in understanding the needs of all kinds of innovators – not just those who are already best placed to succeed.

Collaborative: focused on learning from and sharing with others, and engaged in cross-national as well as international partnerships to design more joined-up policies and programmes

Future-facing: prepared for a range of possible futures, and equipped to proactively help innovators spot opportunities to solve the biggest problems we will face in the years ahead.

Download the 16pg DF PDF report --> Now

 


NCFA Jan 2018 resize - Regulating financial innovation – going behind the scenes 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

Latest news - Regulating financial innovation – going behind the scenesFF Logo 400 v3 - Regulating financial innovation – going behind the scenescommunity social impact - Regulating financial innovation – going behind the scenes
NCFA Fintech Confidential Issue 2 FINAL COVER - Regulating financial innovation – going behind the scenes