Category Archives: Legal Issues and Regulation

Global Governance Insights on Emerging Risks

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Bleu Azur Consulting | June 17, 2018

A HEIGHTENED FOCUS ON RESPONSE AND RECOVERY

Over a third of directors of US public companies now discuss cybersecurity at every board meeting. Cyber risks are being driven onto the agenda by

  • high-profile data breaches,
  • distributed denial of services (DDoS) attacks,
  • and rising ransomware and cyber extortion attacks.

The concern about cyber risks is justified. The annual economic cost of cyber-crime is estimated at US$1.5 trillion and only about 15% of that loss is currently covered by insurance.

MMC Global Risk Center conducted research and interviews with directors from WCD to understand the scope and depth of cyber risk management discussions in the boardroom. The risk of cyberattack is a constantly evolving threat and the interviews highlighted the rising focus on resilience and recovery in boardroom cyber discussions. Approaches to cyber risks are maturing as organizations recognize them as an enterprise business risk, not just an information technology (IT) problem.

However, board focus varies significantly across industries, geographies, organization size and regulatory context. For example, business executives ranked cyberattacks among the top five risks of doing business in the Asia Pacific region but Asian organizations take 1.7 times longer than the global median to discover a breach and spend on average 47% less on information security than North American firms.

REGULATION ON THE RISE

Tightening regulatory requirements for cybersecurity and breach notification across the globe such as

  • the EU GDPR,
  • China’s new Cyber Security Law,
  • and Australia’s Privacy Amendment,

are also propelling cyber onto the board agenda. Most recently, in February 2018, the USA’s Securities and Exchange Commission (SEC) provided interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.

Regulations relating to transparency and notifications around cyber breaches drive greater discussion and awareness of cyber risks. Industries such as

  • financial services,
  • telecommunications
  • and utilities,

are subject to a large number of cyberattacks on a daily basis and have stringent regulatory requirements for cybersecurity.

See:  Bithumb $31 Million Crypto Exchange Hack: What We Know (And Don’t)

Kris Manos, Director, KeyCorp, Columbia Forest Products, and Dexter Apache Holdings, observed, “The manufacturing sector is less advanced in addressing cyber threats; the NotPetya and WannaCry attacks flagged that sector’s vulnerability and has led to a greater focus in the boardroom.” For example, the virus forced a transportation company to shut down all of its communications with customers and also within the company. It took several weeks before business was back to normal, and the loss of business was estimated to have been as high as US$300 million. Overall, it is estimated that as a result of supply chain disruptions, consumer goods manufacturers, transport and logistics companies, pharmaceutical firms and utilities reportedly suffered, in aggregate, over US$1 billion in economic losses from the NotPetya attacks. Also, as Cristina Finocchi Mahne, Director, Inwit, Italiaonline, Banco Desio, Natuzzi and Trevi Group, noted, “The focus on cyber can vary across industries depending also on their perception of their own clients’ concerns regarding privacy and data breaches.”

LESSONS LEARNED: UPDATE RESPONSE PLANS AND EVALUATE THIRD-PARTY RISK

The high-profile cyberattacks in 2017, along with new and evolving ransomware onslaughts, were learning events for many organizations. Lessons included the need to establish relationships with organizations that can assist in the event of a cyberattack, such as l

  • aw enforcement,
  • regulatory agencies and recovery service providers
  • including forensic accountants and crisis management firms.

Many boards need to increase their focus on their organization’s cyber incident response plans. A recent global survey found that only 30% of companies have a cyber response plan and a survey by the National Association of Corporate Directors (NACD) suggests that only 60% of boards have reviewed their breach response plan over the past 12 months. Kris Manos noted, “[If an attack occurs,] it’s important to be able to quickly access a response plan. This also helps demonstrate that the organization was prepared to respond effectively.”

Experienced directors emphasized the need for effective response plans alongside robust cyber risk mitigation programs to ensure resilience, as well as operational and reputation recovery. As Jan Babiak, Director, Walgreens Boots Alliance, Euromoney Institutional Investor, and Bank of Montreal, stressed, “The importance of the ’respond and recover’ phase cannot be overstated, and this focus needs to rapidly improve.”

Directors need to review how the organization will communicate and report breaches. Response plans should include preliminary drafts of communications to all stakeholders including customers, suppliers, regulators, employees, the board, shareholders, and even the general public. The plan should also consider legal requirements around timelines to report breaches so the organization is not hit with financial penalties that can add to an already expensive and reputationally damaging situation. Finally, the response plan also needs to consider that normal methods of communication (websites, email, etc.) may be casualties of the breach. A cyber response plan housed only on the corporate network may be of little use in a ransomware attack.

Other lessons included the need to focus on cyber risks posed by third-party suppliers, vendors and other impacts throughout the supply chain. Shirley Daniel, Director, American Savings Bank, and Pacific Asian Management Institute, noted, “Such events highlight vulnerability beyond your organization’s control and are raising the focus on IT security throughout the supply chain.” Survey data suggests that about a third of organizations do not assess the cyber risk of vendors and suppliers. This is a critical area of focus as third-party service providers (e.g., software providers, cloud services providers, etc.) are increasingly embedded in value chains.

More:  The growing cost of cybersecurity

FRUSTRATIONS WITH OVERSIGHT

Most directors expressed frustrations and challenges with cyber risk oversight even though the topic is frequently on meeting agendas. Part of the challenge is that director-level cyber experts are thin on the ground; most boards have only one individual serving as the “tech” or “cyber” person. A Spencer Stuart survey found that 41% of respondents said their board had at least one director with cyber expertise, with an additional 7% who are in the process of recruiting one. Boards would benefit from the addition of experienced individuals who can identify the connections between cybersecurity and overall company strategy.

A crucial additional challenge is obtaining clarity on the organization’s overall cyber risk management framework. (See Exhibit 1: Boards Need More Information on Cyber Investments.) Olga Botero, Director, Evertec, Inc., and Founding Partner, C&S Customers and Strategy, observed, “There are still many questions unanswered for boards, including:

  • How good is our security program?
  • How do we compare to peers?

There is a big lack of benchmarking on practices.” Anastassia Lauterbach, Director, Dun & Bradstreet, and member of Evolution Partners Advisory Board, summarized it well, “Boards need a set of KPIs for cybersecurity highlighting their company’s

  • unique business model,
  • legacy IT,
  • supplier and partner relationships,
  • and geographical scope.”

Nearly a quarter of boards are dissatisfied with the quality of management-provided information related to cybersecurity because of insufficient transparency, inability to benchmark and difficulty of interpretation.

EFFECTIVE OVERSIGHT IS BUILT ON A COMPREHENSIVE CYBER RISK MANAGEMENT FRAMEWORK

Organizations are maturing from a “harden the shell” approach to a protocol based on understanding and protecting core assets and optimizing resources. This includes the application of risk disciplines to assess and manage risk, including quantification and analytics. (See Exhibit 2: Focus Areas of a Comprehensive Cyber Risk Management Framework.) Quantification shifts the conversation from a technical discussion about threat vectors and system vulnerabilities to one focused on maximizing the return on an organization’s cyber spending and lowering its total cost of risk.

See:  FSB warns of third-party FinTech risk

Directors also emphasized the need to embed the process in an overall cyber risk management framework and culture. “The culture must emphasize openness and learning from mistakes. Culture and cyber risk oversight go hand in hand,” said Anastassia Lauterbach. Employees should be encouraged to flag and highlight potential cyber incidents, such as phishing attacks, as every employee plays a vital role in cyber risk management. Jan Babiak noted, “If every person in the organization doesn’t view themselves as a human firewall, you have a soft underbelly.” Mary Beth Vitale, Director, GEHA and CoBiz Financial, Inc., also noted, “Much of cyber risk mitigation is related to good housekeeping such as timely patching of servers and ongoing employee training and alertness.”

Boards also need to be alert. “Our board undertakes the same cybersecurity training as employees,” noted Wendy Webb, Director, ABM Industries. Other boards are putting cyber updates and visits to security centers on board “offsite” agendas.

Continue to the full article --> here

 

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Cointelegraph | Stephen O'Neal | June 23, 2018 On June 18, Carlos Torres, CEO of Spanish bank BBVA, declared that blockchain is “not mature” and faces major challenges. During the past month, blockchain’s effectiveness and maturity were also questioned by players as big as the Bank of Canada (BoC), the Russian Central Bank, and DNB, the Central Bank of the Netherlands. While blockchain can indeed improve the effectiveness of cross-border payments and cut the costs by eliminating the middleman, it hasn’t yet proven itself as a tool ready for industrial-scale use. What’s more important is that some of the banks might not be happy to give up those juicy margin fees. Ripple’s attempts to modify the system Ripple, a California-based payment network and protocol company, was established in 2012.  Essentially, it focuses on facilitating transfers between major financial corporations. See:  University of Waterloo joins Ripple’s $64 million CAD blockchain research initiative Ripple is not quite your average cryptocurrency — some argue it’s not a cryptocurrency at all. First of all, it doesn’t champion the dreams of overthrowing the government along with the banking system. Oppositely, it chose to work with mainstream financial players from the very start. As Brad Garlinghouse, ...
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The TD Ready Challenge The TD Ready Challenge is an annual North American initiative that has up to ten $1 million (CAD) grants available to catalyze innovative solutions for a changing world. Recipients will be organizations that have scalable solutions that will help open doors for a more inclusive and sustainable tomorrow. This new signature initiative, created and funded by TD, is a key component to delivering on the bank’s new corporate citizenship platform, The Ready Commitment. Each year, the TD Ready Challenge will invite eligible organizations to submit applications that offer solutions for a problem statement that is connected to one of the four drivers of change of the Ready Commitment: Financial Security, Vibrant Planet, Connected Communities and Better Health. The 2018 TD Ready Challenge Problem Statement focuses on Financial Security. See:  Most small business owners can’t pass a basic financial test The 2018 Problem Statement: Financial Security Technological acceleration is both an opportunity and a threat to financial security. The digital age has transformed the nature of work as employers continue to invest in technology and automation. In addition, part-time contracts and the gig economy have increasingly made income volatility a reality for many. These shifts create an ...
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Bleu Azur Consulting | June 17, 2018 A HEIGHTENED FOCUS ON RESPONSE AND RECOVERY Over a third of directors of US public companies now discuss cybersecurity at every board meeting. Cyber risks are being driven onto the agenda by high-profile data breaches, distributed denial of services (DDoS) attacks, and rising ransomware and cyber extortion attacks. The concern about cyber risks is justified. The annual economic cost of cyber-crime is estimated at US$1.5 trillion and only about 15% of that loss is currently covered by insurance. MMC Global Risk Center conducted research and interviews with directors from WCD to understand the scope and depth of cyber risk management discussions in the boardroom. The risk of cyberattack is a constantly evolving threat and the interviews highlighted the rising focus on resilience and recovery in boardroom cyber discussions. Approaches to cyber risks are maturing as organizations recognize them as an enterprise business risk, not just an information technology (IT) problem. However, board focus varies significantly across industries, geographies, organization size and regulatory context. For example, business executives ranked cyberattacks among the top five risks of doing business in the Asia Pacific region but Asian organizations take 1.7 times longer than the global median ...
Read More
Global Governance Insights on Emerging Risks
The Globe and Mail | Barbara Balfour | June 22, 2018 In today’s new model of real estate investment, a prospective investor can search for projects of interest on a laptop and, several mouse clicks later, send funds along. With no middlemen and no banks to decide which projects are worthy of financing, investment opportunities are no longer restricted to the very wealthy or the tried-and-true. “This is investing democratized, and this is how capital will be formed going forward,” said Eve Picker, a Pittsburgh-based architect, city planner and founder of a real estate equity crowdfunding platform called Small Change. Ms. Picker was a keynote speaker at the recent Building a Better City forum at the Westin Hotel in Ottawa, co-hosted by The Globe and Mail and Dream REIT. She was among a diverse group of panellists who discussed the challenges of progressive development as urban populations continue to grow around the world. According to Statistics Canada, more than 80 per cent of Canadians live in cities, which is one of the highest rates of urbanization in the G7. And as municipalities across the country tackle challenges that range from protecting heritage to improving road safety, finding capital to create ...
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Read More
How to Draw People Into Your Crowdfunding Campaign
Coindesk | Wolfie Zhao | June 20, 2018 On Wednesday, roughly 35 billion Korean won (around $31 million) in cryptocurrency was stolen by hackers from the South Korea-based exchange Bithumb. Although the breach may not be as severe as the $530 million hack of the Coincheck exchange earlier this year, the fact that Bithumb now ranks as the sixth biggest trading venue in the world still marks it as a notable, and worrying, incident. While more details about the heist have surfaced in the hours following the event's confirmation, providing a glimpse into Bithumb's internal operations, some important questions about the hack still remain unanswered. Here's what we know about the hack so far, and some details we still don't. What we know XRP compromised While Bithumb has not yet disclosed full details of the stolen coins, news emerged following the hack that XRP, the native token of the XRP ledger and the world's third-largest cryptocurrency, has been targeted, according to a report from CoinDesk Korea. Based on data from CoinMarketCap, Bithumb accounted for 10 percent of the global trading volume of XRP over the last 24 hours, with a total of $32 million-worth changing hands. Bithumb has so far ...
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Bithumb $31 Million Crypto Exchange Hack: What We Know (And Don't)
NCFA Canada | Craig Asano | June 18, 2018 Summer Kickoff Networking - PATIO TIME! Join the National Crowdfunding & Fintech Association of Canada,  Pegasus Fintech Inc.,  Fintech Growth Syndicate,  Nikola Tesla Unite Ltd.,    Token Funder,  Gowling WLG, partners, affiliates and the Fintech & Funding community in the heart of upscale Yorkville (neighborhood) on the InterContinental's PATIO and Proof Bar for a night of revelry and prime networking mixer.  Interested in disrupting the finance industry, raising capital or participating in Canada’s growing alternative finance and fintech sectors? Here's a perfect opportunity to connect with emerging fintech startups (stealth mode) and experts, strategize with partners, pitch investors and mingle with Toronto’s burgeoning fintech ecosystem. EVENT DETAILS: Wednesday, Jul 11, 2018 ~5:30 PM - 9:00PM+ InterContinental Yorkville (PATIO & Proof Bar) 220 Bloor Street West, Toronto, M5S 1T8 (map) LIMITED TICKETS - GET'M BEFORE THEY'RE GONE! $25 Early / $35 Standard / $50 Late All include entrance to private event, a complimentary drink, hors d'oeuvres, prizes and prime networking Taxes and fees extra.  No refunds 7 days before the event (after Jul 4).  Ticket transfers ok. If it rains the event will take place inside the Proof Bar Checkout photos from last ...
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Bitcoin.com | Avi Mizrahi | Jun 11, 2018 Canadian bitcoin investors and cryptocurrency traders are going to be subjected to an increased level of market surveillance soon if the government has its way. Once the proposed regulations are implemented, every transaction above $10,000 CAD will have to be reported. Crypto Exchanges to Report as MSBs The Department of Finance Canada has issued a Regulatory Impact Analysis Statement regarding proposed amendments to the country’s AML/ATF regime. The statement suggests that Canadian crypto exchanges will be treated as money service businesses (MSBs) and will have to report trades over a certain amount. According to the proposed amendments published in the Canada Gazette, “Persons and entities that are ‘dealing in virtual currency’ would be financial entities or other entities deemed domestic or foreign MSBs, as the case may be. These ‘dealing in’ activities include virtual currency exchange services and value transfer services. As required of all MSBs, persons and entities dealing in virtual currencies would need to implement a full compliance program and register with FINTRAC. In addition, all reporting entities that receive $10,000 or more in virtual currency (e.g. deposits, any form of payment) would have record-keeping and reporting obligations.” See:  Canada ...
Read More
Canadian Exchanges to Report Transactions Over $10k per Proposed Regulations
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The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, STO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. 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 Exchanges to Report Transactions Over $10k per Proposed Regulations

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Bitcoin.com | Avi Mizrahi | Jun 11, 2018

Canadian bitcoin investors and cryptocurrency traders are going to be subjected to an increased level of market surveillance soon if the government has its way. Once the proposed regulations are implemented, every transaction above $10,000 CAD will have to be reported.

Crypto Exchanges to Report as MSBs

The Department of Finance Canada has issued a Regulatory Impact Analysis Statement regarding proposed amendments to the country’s AML/ATF regime. The statement suggests that Canadian crypto exchanges will be treated as money service businesses (MSBs) and will have to report trades over a certain amount.

According to the proposed amendments published in the Canada Gazette, “Persons and entities that are ‘dealing in virtual currency’ would be financial entities or other entities deemed domestic or foreign MSBs, as the case may be. These ‘dealing in’ activities include virtual currency exchange services and value transfer services. As required of all MSBs, persons and entities dealing in virtual currencies would need to implement a full compliance program and register with FINTRAC. In addition, all reporting entities that receive $10,000 or more in virtual currency (e.g. deposits, any form of payment) would have record-keeping and reporting obligations.”

See:  Canada Seeks to Widen AML Compliance Net

 

Financial Action Task Force (FATF) Standards

The part about registering with FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) should not be too much of a hassle for the exchanges. Several Canadian exchanges have already taken it upon themselves to voluntarily do so in an effort to remedy regulatory uncertainty, as we recently reported. And the government concluded that compliance with the proposed rules should cost just $270,112 over a ten-year period.

Continue to the full article --> here

 

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Cointelegraph | Stephen O'Neal | June 23, 2018 On June 18, Carlos Torres, CEO of Spanish bank BBVA, declared that blockchain is “not mature” and faces major challenges. During the past month, blockchain’s effectiveness and maturity were also questioned by players as big as the Bank of Canada (BoC), the Russian Central Bank, and DNB, the Central Bank of the Netherlands. While blockchain can indeed improve the effectiveness of cross-border payments and cut the costs by eliminating the middleman, it hasn’t yet proven itself as a tool ready for industrial-scale use. What’s more important is that some of the banks might not be happy to give up those juicy margin fees. Ripple’s attempts to modify the system Ripple, a California-based payment network and protocol company, was established in 2012.  Essentially, it focuses on facilitating transfers between major financial corporations. See:  University of Waterloo joins Ripple’s $64 million CAD blockchain research initiative Ripple is not quite your average cryptocurrency — some argue it’s not a cryptocurrency at all. First of all, it doesn’t champion the dreams of overthrowing the government along with the banking system. Oppositely, it chose to work with mainstream financial players from the very start. As Brad Garlinghouse, ...
Read More
Do Banks Even Want to Go Blockchain?
The TD Ready Challenge The TD Ready Challenge is an annual North American initiative that has up to ten $1 million (CAD) grants available to catalyze innovative solutions for a changing world. Recipients will be organizations that have scalable solutions that will help open doors for a more inclusive and sustainable tomorrow. This new signature initiative, created and funded by TD, is a key component to delivering on the bank’s new corporate citizenship platform, The Ready Commitment. Each year, the TD Ready Challenge will invite eligible organizations to submit applications that offer solutions for a problem statement that is connected to one of the four drivers of change of the Ready Commitment: Financial Security, Vibrant Planet, Connected Communities and Better Health. The 2018 TD Ready Challenge Problem Statement focuses on Financial Security. See:  Most small business owners can’t pass a basic financial test The 2018 Problem Statement: Financial Security Technological acceleration is both an opportunity and a threat to financial security. The digital age has transformed the nature of work as employers continue to invest in technology and automation. In addition, part-time contracts and the gig economy have increasingly made income volatility a reality for many. These shifts create an ...
Read More
The TD Ready Challenge - Application Deadline July 27
Bleu Azur Consulting | June 17, 2018 A HEIGHTENED FOCUS ON RESPONSE AND RECOVERY Over a third of directors of US public companies now discuss cybersecurity at every board meeting. Cyber risks are being driven onto the agenda by high-profile data breaches, distributed denial of services (DDoS) attacks, and rising ransomware and cyber extortion attacks. The concern about cyber risks is justified. The annual economic cost of cyber-crime is estimated at US$1.5 trillion and only about 15% of that loss is currently covered by insurance. MMC Global Risk Center conducted research and interviews with directors from WCD to understand the scope and depth of cyber risk management discussions in the boardroom. The risk of cyberattack is a constantly evolving threat and the interviews highlighted the rising focus on resilience and recovery in boardroom cyber discussions. Approaches to cyber risks are maturing as organizations recognize them as an enterprise business risk, not just an information technology (IT) problem. However, board focus varies significantly across industries, geographies, organization size and regulatory context. For example, business executives ranked cyberattacks among the top five risks of doing business in the Asia Pacific region but Asian organizations take 1.7 times longer than the global median ...
Read More
Global Governance Insights on Emerging Risks
The Globe and Mail | Barbara Balfour | June 22, 2018 In today’s new model of real estate investment, a prospective investor can search for projects of interest on a laptop and, several mouse clicks later, send funds along. With no middlemen and no banks to decide which projects are worthy of financing, investment opportunities are no longer restricted to the very wealthy or the tried-and-true. “This is investing democratized, and this is how capital will be formed going forward,” said Eve Picker, a Pittsburgh-based architect, city planner and founder of a real estate equity crowdfunding platform called Small Change. Ms. Picker was a keynote speaker at the recent Building a Better City forum at the Westin Hotel in Ottawa, co-hosted by The Globe and Mail and Dream REIT. She was among a diverse group of panellists who discussed the challenges of progressive development as urban populations continue to grow around the world. According to Statistics Canada, more than 80 per cent of Canadians live in cities, which is one of the highest rates of urbanization in the G7. And as municipalities across the country tackle challenges that range from protecting heritage to improving road safety, finding capital to create ...
Read More
When banks balk, ordinary investors can become city builders with ‘small change’
NCFA Post | June 20, 2018 Launching your own crowdfunding campaign is a great way for you to start your journey as an entrepreneur. It is also a fantastic opportunity for you to generate a buzz around your business and to get people talking about your plans for the future. However, your attempts at crowdfunding will only be successful if you put the work in and plan ahead. Below are four steps that will help you to do this. Show what you have done already If you are going to get people excited about your crowdfunding campaign, you will need to show them what you have done already. Not doing so will make it extremely difficult for you to stand out from your crowdfunding competitors. It will also cause people to doubt your entrepreneurial spirit, as they begin to wonder why you haven’t achieved anything independently. Why not resolve this issue by setting up an investment portfolio for your business? This is a fantastic opportunity for you to raise your own funds. It will also provide a clear idea of what you are going to do with your future profits. If you are eager to learn more, you should research ...
Read More
How to Draw People Into Your Crowdfunding Campaign
Coindesk | Wolfie Zhao | June 20, 2018 On Wednesday, roughly 35 billion Korean won (around $31 million) in cryptocurrency was stolen by hackers from the South Korea-based exchange Bithumb. Although the breach may not be as severe as the $530 million hack of the Coincheck exchange earlier this year, the fact that Bithumb now ranks as the sixth biggest trading venue in the world still marks it as a notable, and worrying, incident. While more details about the heist have surfaced in the hours following the event's confirmation, providing a glimpse into Bithumb's internal operations, some important questions about the hack still remain unanswered. Here's what we know about the hack so far, and some details we still don't. What we know XRP compromised While Bithumb has not yet disclosed full details of the stolen coins, news emerged following the hack that XRP, the native token of the XRP ledger and the world's third-largest cryptocurrency, has been targeted, according to a report from CoinDesk Korea. Based on data from CoinMarketCap, Bithumb accounted for 10 percent of the global trading volume of XRP over the last 24 hours, with a total of $32 million-worth changing hands. Bithumb has so far ...
Read More
Bithumb $31 Million Crypto Exchange Hack: What We Know (And Don't)
NCFA Canada | Craig Asano | June 18, 2018 Summer Kickoff Networking - PATIO TIME! Join the National Crowdfunding & Fintech Association of Canada,  Pegasus Fintech Inc.,  Fintech Growth Syndicate,  Nikola Tesla Unite Ltd.,    Token Funder,  Gowling WLG, partners, affiliates and the Fintech & Funding community in the heart of upscale Yorkville (neighborhood) on the InterContinental's PATIO and Proof Bar for a night of revelry and prime networking mixer.  Interested in disrupting the finance industry, raising capital or participating in Canada’s growing alternative finance and fintech sectors? Here's a perfect opportunity to connect with emerging fintech startups (stealth mode) and experts, strategize with partners, pitch investors and mingle with Toronto’s burgeoning fintech ecosystem. EVENT DETAILS: Wednesday, Jul 11, 2018 ~5:30 PM - 9:00PM+ InterContinental Yorkville (PATIO & Proof Bar) 220 Bloor Street West, Toronto, M5S 1T8 (map) LIMITED TICKETS - GET'M BEFORE THEY'RE GONE! $25 Early / $35 Standard / $50 Late All include entrance to private event, a complimentary drink, hors d'oeuvres, prizes and prime networking Taxes and fees extra.  No refunds 7 days before the event (after Jul 4).  Ticket transfers ok. If it rains the event will take place inside the Proof Bar Checkout photos from last ...
Read More
Toronto Fintech & Funding Networking Event (Jul 11, 2018): 4th Annual NCFA Summer Kickoff!
Bitcoin.com | Avi Mizrahi | Jun 11, 2018 Canadian bitcoin investors and cryptocurrency traders are going to be subjected to an increased level of market surveillance soon if the government has its way. Once the proposed regulations are implemented, every transaction above $10,000 CAD will have to be reported. Crypto Exchanges to Report as MSBs The Department of Finance Canada has issued a Regulatory Impact Analysis Statement regarding proposed amendments to the country’s AML/ATF regime. The statement suggests that Canadian crypto exchanges will be treated as money service businesses (MSBs) and will have to report trades over a certain amount. According to the proposed amendments published in the Canada Gazette, “Persons and entities that are ‘dealing in virtual currency’ would be financial entities or other entities deemed domestic or foreign MSBs, as the case may be. These ‘dealing in’ activities include virtual currency exchange services and value transfer services. As required of all MSBs, persons and entities dealing in virtual currencies would need to implement a full compliance program and register with FINTRAC. In addition, all reporting entities that receive $10,000 or more in virtual currency (e.g. deposits, any form of payment) would have record-keeping and reporting obligations.” See:  Canada ...
Read More
Canadian Exchanges to Report Transactions Over $10k per Proposed Regulations
Crowdfund Insider | JD Alois | Jun 14, 2018 Ethereum rose dramatically today following the comments of William Hinman, Director of the Division of Corporate Finance at the Securities and Exchange Commission (SEC), who inserted a statement in a speech today that ended the question of Ethereum being a security. Hinman told an audience at Yahoo Finance in San Francisco; “And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.” The reassuring comments not only helped Ethereum, but other cryptocurrencies followed higher in its wake. CoinList co-founder and President Andy Bromberg commented on the news from the SEC that it doesn’t consider Ether or Bitcoin – for that matter, a security: “The SEC’s recent comments are a validation of the possibility of non-securities tokens and a big step towards more definitive guidance on how and when individual tokens can be defined as non-securities. The precedent they are indicating here is a powerful one that will enable new projects to continue to flourish in the space.” Of course, the comments by the SEC ...
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Ethereum Rises on Positive Comments by the SEC
IT Business | Bret Conkin | June 12, 2018 Real estate and fintech have been integrating in exciting new ways in recent years. Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025. Why would developers consider an online and alternative financing route? A big reason, beyond the capital, is the significant marketing benefits that campaigns can generate, including community building. Check out:  GAME-CHANGERS: Crowdfunding real estate projects in the GTA To investigate where the Canadian market for real estate crowdfunding is going in the next 12 months, we interviewed the two leading portals in Canada, online investment platform NexusCrowd and private equity firm R2 (though R2 notes that they position themselves as an online marketplace or fintech in commercial real estate, not as “crowdfunders”). Learn more below. Bret Conkin: How many projects and capital were raised via your portal in 2017? To date in 2018? Amar Nijar, CEO of R2 Capital & ...
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Real estate crowdfunding in Canada: portal insights for 2017/18

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. 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 provide additional guidance on securities law implications for offerings of tokens

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CSA | Staff Notice 46-308 | June 11, 2018

Montréal  The Canadian Securities Administrators (CSA) today published CSA Staff Notice 46-308 Securities Law Implications for Offerings of Tokens, which provides additional guidance on the applicability of securities laws to offerings of coins or tokens, including ones that are commonly referred to as “utility tokens.”

“Since publishing initial guidance, we have engaged with numerous businesses considering token offerings and have found that most of these offerings involve securities,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Our notice sets out additional guidance based on situations we have seen to date and common inquiries we have received from businesses and their advisors.”

CSA Staff Notice 46-308 outlines specific situations that may have an implication on the presence of one or more of the elements of an investment contract in the context of an offering of coins or tokens.

This notice supplements the CSA’s August 2017 publication of CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings, initial token offerings, cryptocurrency investment funds and the cryptocurrency platforms trading these products.

See: 

Any business planning to raise capital through an offering of coins or tokens should consider whether it involves the distribution of a security. In order to avoid costly regulatory surprises, businesses are encouraged to consult qualified securities legal counsel about the potential application of, and possible approaches required to comply with, securities legislation. Businesses should also contact their local securities regulatory authority to discuss possible flexible approaches to complying with securities laws, including time-limited exemptive relief.

The CSA Regulatory Sandbox is an initiative of the CSA to support financial technology (fintech) businesses seeking to offer innovative products, services and applications in Canada. The CSA has granted, through the CSA Regulatory Sandbox, exemptive relief from certain securities law requirements to firms in the context of offerings of coins or tokens that involve the distribution of securities, subject to conditions to ensure adequate investor protection.

CSA staff monitor cryptocurrency offerings activity and will continue to take action against businesses that do not comply with securities laws.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

Source:  Security law implications for Offerings of Tokens

Download CSA Staff Notice 46-308 --> here

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. 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 chief says agency won’t change securities laws to cater to cryptocurrencies

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CNBC | | Jun 6, 2018

  • The head of the Securities and Exchange Commission Chairman made it clear Wednesday that the agency won't be bending the rules for cryptocurrency when it comes to defining what is or what isn't a security.
  • "We are not going to do any violence to the traditional definition of security that has worked for a long time," SEC Chairman Jay Clayton told CNBC Wednesday.
  • The agency is also not adjusting rules for initial coin offerings, and Clayton underlined that tokens or digital assets used in that fundraising process are securities.

The head of the Securities and Exchange Commission made it clear Wednesday that the agency won't bend the rules for cryptocurrency when it comes to defining what is or what isn't a security.

"We are not going to do any violence to the traditional definition of a security that has worked for a long time," U.S. Securities and Exchange Commission Chairman Jay Clayton told CNBC Wednesday. "We've been doing this a long time, there's no need to change the definition."

Clayton said the U.S. has built a $19 trillion securities market that's "the envy of the world" following the current rules.

See:  Don Tapscott urges ‘sensible’ cryptocurrency regulations

The agency is not adjusting rules for the fundraising process known as initial coin offerings, or ICOs, either, he said. ICOs have raised $9.1 billion this year alone, according to the latest research from Autonomous Next.

"If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules," Clayton said "If you want to do any IPO with a token, come see us."

The SEC is "happy to help you do that public offering" if issuers take the responsibility SEC laws require, he said.

The chairman also addressed a growing debate over which cryptocurrencies should fall under SEC jurisdiction.

"Cryptocurrencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin," Clayton said. "That type of currency is not a security."

A token, or a digital assets used in a fundraising process known as an initial coin offering, or ICO, are securities by Clayton's definition.

"A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say 'you can get a return' that is a security and we regulate that," Clayton said. "We regulate the offering of that security and regulate the trading of that security."

Whether an asset is a security right now follows the "Howey Test." The ruling comes from a 1946 U.S. Supreme Court case that classifies a security as an investment of money in a common enterprise, in which the investor expects profits primarily from others' efforts.

Clayton made it clear in March that all ICOs constitute securities, and reiterated that Wednesday saying "if it's a security, we're regulating it."

But companies tied to those cryptocurrencies have argued that some should be fall under a different category, in many cases because of their utility.

The financial watchdog has been balancing consumer protection and innovation in what has become multi-billion dollar cryptocurrency market. The market capitalization of bitcoin alone is more than $130 billion, according to CoinMarketCap.

On Tuesday, the SEC picked a new leader for its emerging cryptocurrency division. Valerie Szczepanik, who already worked at the agency, was promoted to a role that didn't exist until this week: Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation.

Continue to the full article --> here

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. 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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Re: OSC Notice 11-780 Statement of Priorities – Request for Comment Regarding Statement of Priorities (the “SofP”) for Financial Year to End March 31, 2019

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NCFA Canada | May 28, 2018

VIA EMAIL

May 28, 2018
Robert Day
Senior Specialist Business Planning
Ontario Securities Commission
20 Queen Street West
22nd Floor
Toronto, Ontario M5H 3S8
Email: rday@osc.gov.on.ca

Re: OSC Notice 11-780 Statement of Priorities – Request for Comment Regarding Statement of Priorities (the “SofP”) for Financial Year to End March 31, 2019

 

Dear Sirs/Mesdames:

The NCFA thanks the OSC for the opportunity to comment on its draft 2018-9 Statement of Priorities (“SofP”).

Summary

We are concerned that the OSC’s laudable commitment to investor protection (“Investor protection is always a top priority for the OSC”) has come to overwhelm the organization’s role, and effectiveness, in fostering fair and efficient capital markets and confidence in capital markets, at least with respect to financial services models and other innovations that are emerging to meet investor and market needs.

As a result, and despite some successes to-date, Ontario is not at the forefront of financial sector innovation. Other jurisdictions, from the United Kingdom to Singapore, have taken a risk-based approach and have focussed equally on the objectives of consumer protection and fair and efficient capital markets. They are now leading both on financial innovation and regulatory innovation, with impressive economic gains to show for it. Sadly, that is not the case in Ontario.

 

Detail

In its Strategic Outlook 2015 - 2017, the OSC states that “Capital raising will be transformed in Ontario through the expansion of the ‘exempt’ market. The OSC will improve access to capital by introducing a suite of changes to the securities regulatory framework that will offer greater opportunity for companies to raise capital without a prospectus and for investors to make investments in those companies (for example, through offering memorandum and crowdfunding exemptions). The OSC will support the transformation of the exempt market in several ways including, for example, by facilitating the registration of crowdfunding portals and the filing of offering memoranda and reports of exempt distributions by issuers who have raised capital in reliance on those exemptions.

“Through its ongoing analysis of exempt market data and supervision of the conduct of dealers, the OSC will assess whether the changes introduced are having the desired impact of giving businesses more options through which to raise capital and giving investors for whom they might be suitable greater access to more diverse investment opportunities.”

Reading between the lines, if this strategic priority was intended to mitigate the threat of overly burdensome regulation which would threaten “fair and efficient capital markets and confidence in capital markets” then the NCFA strongly agrees with this priority. The threat is a serious one.

However, as the NCFA has noted publicly, so far as we are aware, the OSC initiatives within this priority have largely fallen short or failed compared with other jurisdictions and Ontario continues to fall further behind more progressive economies.  (We were unable to locate  the OSC’s assessment of “whether the changes introduced are having the desired impact of giving businesses more options through which to raise capital and giving investors for whom they might be suitable greater access to more diverse investment opportunities”.)

 

Suggestions

The NCFA has argued strongly that overly prescriptive and non-harmonized regulation of start-ups, crowdfunding, and fintech is stifling innovation and sending our entrepreneurs to the US and elsewhere. It seems clear to us that poor regulation of this sector remains a key risk to the OSC’s mandate of fostering fair and efficient capital markets and confidence in capital markets and so requires much stronger action (as we have already advocated in submissions to the OSC).

In the NCFA’s view, the OSC should be urgently prioritizing revamping the regulatory regime together with other CSA regulators in line with (and cooperating with) progressive international regulators. It is also crucial that more and better data be collected, analyzed, and published so that we can see exactly where we are compared to other jurisdictions and year on year.

The collection of better data and analysis would allow the OSC to set performance measures that would help to show, over time, that more start-ups are enabled and supported to the next stage (or not), that capital raising has increased (or reduced) among this cohort, that more (or fewer) entities are being driven out of the jurisdiction, that unjustified compliance costs have been reduced, and so on, compared to other jurisdictions. Simply measuring (how?) perceptions of Ontario as an innovative fintech hub is not enough. And we already know that sandboxes alone will not fix Ontario’s problems in this sector.

Metrics for measuring regulatory and economic outcomes (or at least the development of metrics) should be incorporated into the SofP. These could include:

  • Capital flowing into fintechs
  • Number of listed debt and equity portals and capital raised
  • Company financings via these new mechanisms and successes/failures
  • Loan volumes via these alternative channels, especially to small businesses
  • Time spent to comply with regulatory exemptions
  • Cost($) of compliance.

 

Simply continuing existing work without a proper analysis of what is working and what is not, with proposed next steps to fix the problem, is not good enough.

The NCFA firmly believes that effective strategic planning, a risk-based approach, fact-based decision-making and a defined measurement program (with accountability) is the only workable path towards cost-effective regulatory policy that achieves a balance between multiple objectives. We would be pleased to work with the OSC in the development of robust data collection and metrics for 2018-9.

Thank you for your time.

On behalf of NCFA Canada

Download the submission -->here

Links:

http://www.osc.gov.on.ca/en/Publications_pub_20150618_osc-2015-2017-strategic-outlook.htm

https://www.fca.org.uk/publications/corporate-documents/our-business-plan-2018-19

http://www.conferenceboard.ca/hcp/provincial/innovation.aspx


About NCFA:

The NCFA was established in 2012. Its members are the leading-edge firms and portals dedicated to offering Canadians alternatives to the established financial industry players and supporting innovation and competition in fintech. These alternatives range from debt and equity crowdfunding platforms to companies in the blockchain and cryptocurrency spaces.

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State and Provincial Securities Regulators Conduct Coordinated International Crypto Crackdown

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NASAA | May 21, 2018

Borg: “The actions announced today are just the tip of the iceberg.”

WASHINGTON, D.C. (May 21, 2018) – The North American Securities Administrators Association (NASAA) today announced one of the largest coordinated series of enforcement actions by state and provincial securities regulators in the United States and Canada to crack down on fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and those behind them.

NASAA members from more than 40 jurisdictions throughout North America participated in “Operation Cryptosweep,” which to date has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May. NASAA members are conducting additional investigations into potentially fraudulent conduct that may result in additional enforcement actions. These actions are in addition to more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products. Many NASAA members also are conducting public outreach initiatives to warn investors in their jurisdictions of the risks associated with ICOs and cryptocurrencies.

See:  Plowing Ahead: Bermuda Continues Crypto-Friendly Push With Digital ID Partnership

“The persistently expanding exploitation of the crypto ecosystem by fraudsters is a significant threat to Main Street investors in the United States and Canada, and NASAA members are committed to combating this threat,” said Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission.

“Despite a series of public warnings from securities regulators at all levels of government, cryptocriminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams.”

In April 2018, NASAA organized a task force of its member state and provincial securities regulators to begin a coordinated series of investigations into ICOs and cryptocurrency-related investment products. Regulators identified many cryptocurrency-related products and as part of its work, the task force identified hundreds of ICOs in the final stages of preparation before being launched to the public. These pending ICOs were advertised and listed on ICO aggregation sites to attract investor interest. Many have been examined and some were determined to warrant further investigation. A number of these investigations are ongoing and others resulted in enforcement actions announced today.

“Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution,” Borg said.

“The actions announced today are just the tip of the iceberg,” Borg said, noting that the task force also found approximately 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.

A critical component of “Operation Cryptosweep” is raising public awareness of the risks associated with ICOs and cryptocurrency-related investment products.

For more information about ICOs and cryptocurrencies, watch NASAA’s video “Get in the Know About ICOs” or read NASAA’s Investor Advisories: “What to Know About ICOs” and “Be Cautious of the Crypto Investment Craze.”

View the list of Operation Crypto-sweep Enforcement Actions and Activities

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry.  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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OSC Investor Alert: BTCReal, BitSerial, Hypercube Ventures LP, CabinCoin OÜ, and BaapPay Inc.

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OSC Release | May 18, 2018

TORONTO – The Ontario Securities Commission (OSC) is warning investors about BTCReal, BitSerial, Hypercube Ventures LP, CabinCoin OÜ, and BaapPay Inc. These firms appear to be involved in schemes that target Ontario investors and encourage them to trade or invest in cryptocurrencies.

BTCReal, BitSerial, Hypercube Ventures LP, CabinCoin OÜ, and BaapPay Inc. are not registered in Ontario to solicit investments or provide advice on investing in, buying or selling securities.

BTCReal manages the website btcreal.biz, where it claims to provide full investment services for cryptocurrency-related investments and forex. BTCReal claims it can provide investors with high returns in short periods of time.

BitSerial operates the website bitserial.io, which claims to offer opportunities to invest in “BTE Tokens.” BitSerial’s website also encourages investors to participate in a lending program where they can exchange Bitcoin, Litecoin, or Ethereum for BTE Tokens that are “lent out” for high returns.

See:  CSA Staff Notice 46-307: Cryptocurrency Offerings

Hypercube Ventures LP manages the websites hypercube.vc, hypercube.fund, vnn.money and vnn.cash, which encourage investors to buy “emission pools” for the purpose of generating “VNN cryptocurrency.”

CabinCoin OÜ operates the websites cabincoin.com and cabincoin.exchange, and is currently advertising an unregistered token sale for “CabinCoin Tokens.” CabinCoin claims that the future value of these tokens will far exceed their initial price.

BaapPay Inc. manages the website baappaytoken.com, and is also currently advertising an unregistered token sale.

Any distribution to an Ontario resident requires a prospectus or exemption from the prospectus requirement, which Bitserial, Hypercube, CabinCoin and BaapPay do not have.

Anyone who has invested in, or had dealings with the above businesses should contact the OSC Inquiries and Contact Centre at 1-877-785-1555 or inquiries@osc.gov.on.ca.

Investors should consider the risks associated with investing in cryptocurrencies, and be aware that the marketing of high returns is often an indication of investment fraud.

Information on common signs of investment fraud, helpful material on cryptocurrency basics and initial coin offerings, and more on Ontarians and cryptocurrencies can be found on the OSC’s investor website GetSmarterAboutMoney.ca.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in the capital markets, and to contribute to the stability of the financial system and the reduction of systemic risk.  Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.gov.on.ca.

View source:  release


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to over 1700+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry.  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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