Category Archives: NCFA Blog

Toronto Fintech & Funding Networking Event (Jul 11, 2018): 4th Annual NCFA Summer Kickoff!

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NCFA Canada | Craig Asano | June 18, 2018

Summer Kickoff Networking - PATIO TIME!

Join the National Crowdfunding & Fintech Association of CanadaPegasus Fintech Inc.Fintech Growth SyndicateNikola Tesla Unite Ltd.,    Token FunderGowling WLG, Equibit Group, Mavennet, 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, blockchain, AI and crowdfinance 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 SOLD OUT!

$35 Standard SOLD OUT!

$50 Late - Last Chance SOLD OUT!

THANKS FOR ANOTHER GREAT EVENT - SOLD OUT!

AND OFFICIALLY KICKING OFF THE SUMMER!

  • All include entrance to private event, a complimentary drink, hors d'oeuvres, prizes, entertainment, 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 year's Summer networking event here
  • Inclusive Deals for fintech students, starving start-ups and women founders: email for code: info@ncfacanada.org
  • NCFA Members deal: Save 25% https://bit.ly/2IxBi4s  (Not a member yet? Join today and save)

All ticket registrations by July 3 will be automatically entered into a July 4th draw taking place 6pm at Yonge and Dundas square at driver/showcase event to WIN 2 VIP tickets:

Congrats to the following multiple winners of the tickets!

Ryan Correia,MD Equivesto Inc.

Emily Cornelius, Marketing, Equibit

  • Draw will take place July 4th at 6pm at Yonge and Dundas Niko race car driver/showcase event.
  • 2 winners will be drawn and receive 2 x tickets entrance with VIP pit passes for Saturday, July 7 at the Mobil 1 Sportscar Grand Prix sponsored by event partner NIKOCoin

 

This event is for the Fintech & Funding, Blockchain, AI and Alternative Investing Community

Innovators and investors interested in financial innovation, networking and collaborating with startups, investors, angels, early stage-focused VC's and industry experts and developers in alternative finance, crowdfunding, fintech, payments, cryptocurrency, blockchain, ICOs / STOs, Artificial Intelligence-driven investing and other financial innovation sectors.

  • Women founders
  • Companies actively raising capital
  • Investors and syndicates interested in investing
  • Fintech advisors, consultants, and development experts (startups, institutions, researchers, academia, government)
  • Financial innovators and developers looking to partner or collaborate
  • High growth fintech start-ups (stealth mode) and scale-ups.  Private or public.
  • Developers looking for opportunities and to connect with businesses
  • Funding platforms, dealers, providers and their client networks
  • Anyone interested in emerging fintech trends, regulations and industry developments

Those who are crazy enough to think they can change the world usually do - Steve Jobs

Venue (Patio and covered Proof Bar)

 

Event Host and Partners:

The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a 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 valued contributing member and get perks.

For more information, please visit: ncfacanada.org

 


Pegasus Fintech, Inc.focuses on supporting innovative solutions in the Financial Services, Technology, Blockchain and Cryptocurrency communities.  Pegasus has developed a full-service process for assisting organizations who want to do an Initial Coin Offering (ICO).  Together with our team of highly skilled industry professionals and partners we create, with our clients, the necessary business, legal, accounting, technology development, capital and funding strategies, whitepapers, roadmaps, marketing and sales processes to deploy successful and compliant ICOs.  Pegasus also has created an integrated network platform, called the Pegasus Matrix, supporting interactivity through Pegasus supported ICO use cases.  Pegasus is a partner of Polymath and is the first North American Sponsor Firm of the Gibraltar Blockchain Exchange (GBX).

For more information, please visit:  pegasusfintech.com


FinTech Growth Syndicate (FGS) is a business accelerator that accelerates sales, partnering and marketing strategies for new and growing FinTech companies and implements internal or external innovation strategies and projects for financial institutions and technology incumbents.  We are deeply connected to the FinTech community and stakeholders and help organizations find partners and build awareness within the FinTech ecosystem.

For more information, please visit:  fintechgrowthsyndicate.com

 


Gowling WLG is an international law firm created by the combination of Gowlings, a leading Canadian law firm, and Wragge Lawrence Graham & Co (WLG), a leading UK-based international law firm.  With more than 1,400 legal professionals in 19 cities across Canada, the UK, Continental Europe, the Middle East and Asia, Gowling WLG provides clients with top-tier legal advice at home and abroad in a range of areas.  Our clients have access to in-depth expertise and experience in key global sectors, including advanced manufacturing, energy, financial services, infrastructure, life sciences, natural resources, real estate and tech.  We see the world through our clients’ eyes, and collaborate across countries, offices, service areas and sectors to help them succeed – no matter how challenging the circumstances. Our culture is, above all, about people and teams, based on our belief in the power of relationships to deliver tangible business results.

For more information, please visit: gowlingwlg.com


Equibit Group is the company that developed the Equibit coin (EQB) and an initial product suite for application of the open-source Equibit network. This decentralized application of blockchain technology enables a worldwide, peer-to-peer equity and debt marketplace.  In much the same way that Bitcoin applied digital technology to currency and payments, Equibit eliminates the need for expensive infrastructure and third-party facilitation from depositories or transfer agents. The Equibit network connects issuers with investors directly. Registration, transfer, settlement and investor relations can all be managed securely and digitally within a decentralized environment.  With Equibit Group, capital markets meet the blockchain.

For more information, please visit: equibitgroup.com


TokenFunder is a Canadian company building a blockchain-powered venture funding platform and investment market. Our mission is to allow every investor equal access to invest in the best companies. We are a pioneer, the first company to work with the Ontario Securities Commission LaunchPad to launch Canada's first security token offering on the Ethereum public blockchain.

For more information, please visit: tokenfunder.com


 

Mavennet provides private enterprise blockchain solutions that enable high transaction throughput and interoperability between multiple blockchain platforms. These solutions are powered by Mavennet's core technology stack, Aion for Enterprise, built using foundational components of the public Aion network.

 


INTERESTED IN GETTING INVOLVED?

Contact us to learn more:  info@ncfacanada.org

Also seeking 1-2 Volunteers

 

SEE YOU THERE!

Photos from last year here

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Peer-to-peer lending will help small businesses stay afloat

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The Globe and Mail | Michael King and Craig Asano | May 30, 2018

With interest rates on the rise and the Canadian banks moving up lending rates, the higher cost and reduced availability of credit will affect all Canadian businesses, like a rising tide lifting all boats. Inevitably some boats will be swamped and sink, particularly if they are smaller and more vulnerable.

One set of borrowers at greater risk are Canada’s 1.14 million small businesses, defined as companies that employ up to 99 workers. Statistics Canada reports that small businesses represented 98 per cent of all businesses, employed 70 per cent of workers, and generated 30 per cent of each province’s GDP on average. This category includes startups and high-growth firms, which represent Canada’s best hope for job creation and economic growth.

As credit becomes less available, small businesses face a difficult choice of cutting back on investment or turning to more expensive borrowing, such as credit cards or payday loans. Either option is bad.

Fortunately, small businesses now have an alternative source for loans called peer-to-peer (P2P) lending. These online platforms match borrowers and investors directly and can provide loans cheaper and faster than traditional sources. How can that be? The answer is technology.

Taking a step back, small businesses are financed differently than big ones. Most Canadian startups have neither the credit history nor the collateral to secure a bank loan. Statscan reports that more than 80 per cent of startups rely on alternative funding sources such as the entrepreneurs’ savings and personal loans taken out by owners. Only 45 per cent can access credit from financial institutions and 19 per cent receive trade credit from suppliers.

Technology is disrupting this paradigm. P2P lending platforms allow businesses (and individuals) to take out a loan online with the funds crowdsourced by investors who pool their savings to fund loans. Traditionally only financial institutions were set up to screen borrowers and allocate credit. But technologies such as the internet, cloud computing, data analytics and artificial intelligence have opened this asset class to new lenders such as your neighbour or a fellow business owner.

Canada’s first P2P platform, Lending Loop, was launched in late 2015 – a decade after this model was pioneered in Britain by Zopa. Last month, Lending Loop passed $20-million in loans funded on its platform by more than 20,000 Canadian investors. While $20-million is impressive, it is still only a sliver of the $95-billion of credit outstanding to Canadian small businesses as reported by Statscan.

The average small business borrower on Lending Loop’s platform is borrowing $75,000 to $100,000 for three to five years. While interest rates vary substantially, P2P loans typically start at around 6 per cent with an average interest rate of 12 per cent, significantly lower than a credit card. These loans are used to finance inventory and equipment, or to hire new employees.

The Canadian P2P lending market got a boost this month when the Ontario government announced it would contribute $3-million over the next two years to loans funded on Lending Loop’s platform. The Ontario government will fund up to 10 per cent of small business loans, supporting funding of $30-million.

See:

Besides the obvious benefit to small businesses, Ontario’s announcement was important for two reasons. First, Ontario has drawn attention to P2P lending as an alternative funding source and raised awareness among businesses to accelerate adoption. And second, by partnering with a fintech startup, Ontario is leading by example and giving a boost to entrepreneurs working to democratize finance.

Here are four more steps that Canadian policy makers can take to promote P2P lending:

First, Canada should follow Britain and adopt new P2P lending regulations, as opposed to shoehorning this sector under existing equity regulations. New regulations should ensure the cost of due diligence borne by lenders is proportionate to the investment risk.

Second, retail investor caps for P2P lending should be raised over time if this asset class is proven to be low risk, increasing the pool of funds available to meet the needs of small businesses.

Third, the federal government should partner with industry to provide more education for investors and small businesses. This effort should include data collection and benchmarking to allow researchers to establish what is working and what is not.

Fourth, Canada should adopt Britain’s mandatory referral program. Banks that reject a small-business loan must refer unsuccessful applicants to a government portal that connects them with alternative lenders who may be able to assist them.

Our hope is that Canadian politicians recognize that promoting innovation means more than cutting ribbons and offering tax credits. It is about plugging holes in a leaky financial system and adding wind to the sails of small businesses to move them forward.

 

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:  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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Could Cryptocurrency Be the Investment Opportunity of a Lifetime?

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NCFA Guest post | Laura Buckler | May 18, 2018

2017 was a big year for cryptocurrency, and we’re still witnessing the power of this trend. Cryptocurrencies and digital assets are arguably one of the most liberating and transformative fintech innovations of our time, attracting a growing number of retail and institutional investors yet they challenge the status quo and are difficult to regulate.

Olaf Carlson-Wee, founder of cryptocurrency hedge, said it well: “We are seeing more managed money and, to an extent, institutional money entering the space. Anecdotally speaking, I know of many people who are working at hedge funds or other investment managers who are trading cryptocurrency personally, the question is, when do people start doing it with their firms and funds?”

It’s a good question, and it’s only a matter of time before we see that happening on a large scale. Cryptocurrency will irreversibly change the course of our society’s development.

This is what most people are wondering about: is cryptocurrency the investment opportunity of a lifetime? People are rushing to get in before it’s too late, so are they doing the right thing?

The answer is more complex than a simple yes or no.

The Positive Sides of Cryptocurrency Investments

Why should you invest in cryptocurrencies? Because of the potential return. Ronnie Moas, independent research analyst, predicted the growth of Bitcoin and Ethereum well enough: “Bitcoin is already up 500 percent since I recommended it in the beginning of July, and I’m looking for another 500 percent move from here,” – he said. The prediction continues: “The end-game on Bitcoin is that it will hit $300,000 to $400,000 in my opinion, and it will be the most valuable currency in the world.

Here are few reasons to go for it:

  1. Exchange fees are minimal, usually circling around the rate of 0.2%. In comparison, the Bank of Canada has set much higher fees for foreign currency. The exchange fee for Swiss franc, for example, is around 1.27%, and UK pound sterling is being exchanged with a fee of 1.7293%.
  2. The process of investment is very easy. Many digital asset exchanges have simple on-boarding processes and advanced features to help investors with online wallets, several trading options and multiple currencies.
  3. Political instability is pretty good for cryptocurrencies. Global and local political issues are usually bad for the stock market. The reason for that? Stock markets are tied to companies that depend on strong financial institutions and government services. Cryptocurrency is independent from those factors. In May 2017, major stock markets dropped because of the potential for scandals between U.S. and Brazilian presidencies. Bitcoin, on the other hand, rose more than 3.5%. Currently, the world is experiencing serious political instability, which could be a sign of growth for cryptocurrencies. There’s proof for that, too: due to the recent nuclear deal crisis, Iranian investors started turning to Bitcoin.
  4. Beyond straight investments, many cryptocurrencies offer perks to owners and they can be used to purchase products and services with the number of merchants and markets accepting crypto growing globally with each passing day.

The wave of optimism regarding cryptocurrencies is more than justified. But are there any risks that could undermine the success of this investment?

See:  Bitcoin price LIVE: BTC to SOAR as survey finds one in five banks warming to crypto

Potential Issues to Consider

  1. Cryptocurrencies are not immune to design issues. Transaction times, in particular are a serious problem for the Bitcoin network. In August 2017, we saw a phenomenon called “hard fork,” when the blockchain split in two. The split led to the creation of Bitcoin Cash – a spinoff of the cryptocurrency. With an unknown future, it’s safe to tread carefully.
  2. The interest in cryptocurrencies is constantly increasing, and that’s clogging the blockchain network. The design is not strong enough to cope with all that traffic.
  3. The huge interest imposes another problem: there are too many speculators who expect cryptocurrencies to grow rapidly and provide high margin returns but how these currencies are valued remains to be seen. The market is also suffocated with people who think that Bitcoin is going to become a widely used currency for daily purchases but the volatility makes the use of bitcoin as a payment system impractical. Both of these groups could be wrong.
  4. The biggest issue, however, are the unexpectedly big listing fees. According to an investigation by Business Insider, cryptocurrency exchanges charge between $50,000 and $1 million to list initial coin offerings. One CEO told Business Insider that a top-tier exchange asked for $1 million to list their coins. “Good exchange means a high probability of good market fit, because you have access to liquidity and investors,” – sаid Oliver Bussmann, owner of a Swiss fintech advisory firm. “If you don’t get access to certain exchanges, then it’s tier two exchanges, which means access to investors is limited.”

What conclusion does this bring us to?

The discussion is complex and no one can correctly predict the future of cryptocurrencies. As in any other investment, risk is still involved. The expectations are bright, but we mustn’t neglect the problems related to these investments. The only thing we can recommend is to get well informed before making any investment.

Laura Buckler is a freelance writer and contributor at https://essays.scholaradvisor.com/ who brings a hands-on approach to each of her in-depth articles. Through her work as a social media marketer, she learned many skills in are the areas of social media, content writing and digital marketing. Find her on Twitter.

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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, 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:  ncfacanada.org

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How Blockchain is Impacting Canadian Fintech Markets

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NCFA post | Grace Carter | May 4, 2018

Blockchain is an exciting and emerging technology that has the potential to change the business world, and the lives of many people. This technology serves as a digital ledger where data, such as financial transactions can be securely recorded, immutable and digitally transferred to anywhere around the globe without a traditional intermediary. By its nature, blockchain technology leverages peer to peer networks and resource nodes and has garnished interest from start-up innovators to multi-national banks to governments who see potential use cases across virtually all industry sectors ranging from finance to blockchain for social enterprise and good.  The most well-known use of blockchain technology is bitcoin, a digital currency not connected to any government or bank. Blockchain is best known for eliminating the middleman in online financial transactions, but there are many other possible uses for it, such as electronic voting technology, and keeping people’s data away from third-party information harvesters.

See:  WEF’s Sheila Warren: blockchain is the door to new digital reality

Blockchain has become very interesting to the Canadian federal government, which is attempting to make the technology part of its goal of increasing innovation in the Canadian economy. Canada, specifically Toronto, has emerged as a leading center of blockchain development. Jeremy Clark, a blockchain expert from Concordia University, believes the technology can expand in his country if regulations are relaxed. He believes Canada can become an international leader in blockchain under the right conditions.

Blockchain’s fortunes in Canada will largely be determined by how regulations emerge for initial coin offerings (ICOs), as a means to help early stage ventures raise crowd capital to launch a start-up or project (ICOs are similar to shares a person buys in a company, the main difference being that they can also be used to purchase goods and services) and regulatory requirements for how cryptocurrency exchanges will be overseen as well as how digital currencies/commodities will be treated as a means to generate and store wealth. Investors are hoping that over-regulation doesn’t strangle Canada’s fervently growing blockchain industry, as was the case in China, which temporarily banned ICOs in the second half of 2017 although some of the Canadian banks such as TD Canada have already implemented decisions to restrict consumers from paying for cryptocurrency with their credit cards.

Blockchain poses a conundrum to regulatory bodies such as the Canadian Securities Administrators (CSA). The CSA has announced that ICOs may begin to face regulations, as if they were securities. Fintech companies have protested that coins purchased through ICOs are not shares in a company, but are also used for purchases. Because of the confusion and uncertainty surrounding ICOs, offering companies often decide to not allow citizens of certain countries to participate.

“A example is the Canadian based company Kik, which did not allow Canadians to purchase ICOs during their campaign in 2017. For the industry to grow, such confusion needs to be clarified by regulation by bodies, such as the Financial Transactions and Reports Analysis Centre of Canada (FinTrac), to ensure users are trading fairly and following proper protocol,” says Heather Janson, fintech writer. Kik is just one of the companies funding projects through ICOs, also known as crowdsales, enabled by the peer to peer networks facilitated by blockchain technology.

See:  Compliant Airdrops: CoinList Service to Offer Investors Free Crypto Giveaways

The hope is that regulators can find a happy-medium between fostering innovation and avoiding unpredictable consequences from new business technologies, such as ICOs. The arrival and disruptive nature of blockchain is throwing fresh scrutiny on Canadian fintech companies and how they operate. Regulators are seeking to protect consumers from shady business practices and also to protect companies by providing them with clear rules and regulations. Perhaps most importantly, regulatory bodies are concerned about the effects of blockchain on the financial system itself.

In February 2017 the CSA began its Regulatory Sandbox Initiative (RSI). Sandbox policies allow approved innovative companies to do business with people and test out their business models while being exempt from securities laws and regulations. The RSI should allow Canadian authorities to get a better idea of how blockchain startups are affecting the market. The initiative will also give regulatory bodies a chance to evaluate the sector so they may update their securities regulatory framework for fintech companies. There seems to be a general consensus from those in the Canadian blockchain world that clear regulatory guidance is its best chance at survival and growth.

We’ve seen how insufficient regulation can stymie an industry like blockchain, but the other fear is over regulation. Over regulating could strangle an industry in its infancy by driving companies to places like Singapore, which is known for more supportive regulations of innovation finance models. It would be an absolute tragedy for an industry valued at over $500 billion to be lost to Canada because of poor government policy.

Check out:  Convergence of the titans: Nobel Peace Prize Recipient, Irakli Beridze, to Present in Toronto at AiDecentralized Summit (May 22)

Blockchain, and particularly cryptocurrency, has been taking the financial world by storm recently. Canada has found itself in an ideal position to benefit from this new technology by creating a new sector of innovation. There are a lot of hopes resting on the successful regulatory navigation by the Canadian government and its regulatory bodies. Blockchain technology is here to stay; the only question is, will it set up shop in Canada or leave for better opportunities elsewhere?

Grace Carter is guest writer at NCFA and a business coach at BoomEssays and UKWritings writing services. She helps people improve public speaking and create eye catching presentations. Also, Grace is content proofreader at Essayroo writing service.

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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 in Canada.  For more information, please visit:  ncfacanada.org

 

 

 

 

 

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Ontario government invests in fintech to boost small-business lending

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The Globe and Mail | Clare O'hare | May 2, 2018

The Ontario government is turning to Canada’s financial technology sector to help small businesses get better access to financing.

On Wednesday, Lending Loop, a peer-to-peer online lending platform for small-business loans, announced a pilot project in partnership with Ontario that will provide $3-million of loans over the next two years. The government will boost Lending Loop’s loans by 10 per cent, which will help fund more than $30-million of loans to businesses across Ontario. The government will receive a full re-payment of the loan plus interest at the end of the loan terms.

“This pilot program is important as it will significantly benefit small businesses, accelerate Fintech adoption, and provide new opportunities for financial institutions,” Jeff Leal, Minister Responsible for Small Business, said in a statement.

Small-business loans are seen as risky, with borrowers facing annual interest rates between 8 per cent to 40 per cent as a result of challenges such as absence of collateral, a lack of operating and credit history, unaudited financial information or an absence of steady cash inflows.

“The new lending commitment from the province recognizes the contribution that non-traditional channels can play in improving businesses’ access to capital,” says Cato Pastoll, co-founder and CEO of Lending Loop. “This partnership is a major step forward for peer-to-peer lending in Canada. Globally, over $40-billion has been lent to businesses through the peer-to-peer model, and we are incredibly excited to see the Ontario government involved in helping support the growth of businesses across the province.”

In Canada, there are a handful of online lenders offering small-business loans. The majority of the platforms are fintech start-ups that have been looking to address challenges many small businesses face when accessing financing from traditional sources – such as Canada’s five big banks.

As part of Ontario’s strategy to support small businesses, the 2017 Fall Economic Statement included a commitment to establish a pilot project to address small-business financing challenges.

In early 2018, the ministry held a number of consultations with representatives of lending platforms, credit unions and large financial institutions to determine the best approach. The government found that many businesses struggle when it comes to securing loans between $500,000 and $1-million.

See:  Lending Loop launches “Auto-Lend” after raising new round of funding

“Peer-to-peer lending platforms play an important role because they increase the amount of capital for small businesses by creating new sources of loan capital, more sophisticated credit models, and efficient access,” said a spokesperson for Mr. Leal’s office. “Platforms in other markets have proven that lending to small businesses with affordable, long-term capital not only benefits the small businesses but is also a highly attractive investment for investors.”

The three-year “access to capital” pilot program also includes a commitment to provide a grant of up to $750,000 to the Toronto Financial Services Alliance to promote awareness of alternative forms and sources of lending programs available to small businesses.

Continue to the full article --> here

 


The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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 in Canada.  For more information, please visit:  ncfacanada.org

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NCFA Canada’s response to BCSC Notice 2018/1 ‘Consulting on the Securities Law Framework for Fintech Regulation’

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NCFA Canada - Join Today | Robin Ford | April 3, 2018

The NCFA is a national non-profit organization engaged with both social and investment crowdfunding and fintech stakeholders across the country. It provides education, research, leadership, support, networking opportunities and services to over 1600 members and works with the private sector, government, academia, and community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry in Canada. The NCFA supports ‘innovation finance’ - aiming to make the financial ecosystem more accessible and inclusive and to enhance the use of technology for smarter, faster, and more secure decisions and services.

Thank you for the opportunity to comment. We appreciate the active steps that BCSC is taking to better understand a fast moving ecosystem and to adapt accordingly.  The NCFA provided both oral and written input on many of the issues below to the BCSC in 2017. Except in response to the questions posed by the BCSC, the NCFA does not repeat those submissions here.

Consultation questions and responses

1 (a) Although we are limited by a serious absence of data in Canada, the limited data we do have, supplemented by anecdotal evidence from our members, supports our assertion that moving to a lifetime raise of $1 million would increase the effectiveness of the start-up crowdfunding exemption. The $250k cap per 6 month subscription is unduly limiting for most types of businesses that could rely on the exemption.

However, we have argued previously for no caps (or at least a higher limit of $5 million over the fund-raising lifetime but ideally possible in one financing). This would be more in line with other (successful) jurisdictions. In the UK, for example, there is no cap on the total amount an issuer can raise in any given year and no limit on the amount an in- vestor can invest - https://www.wealthforge.com/insights/crowdfunding-gaining-traction- in-the-uk-but-what-about-the-us. Assuming other appropriate requirements (such as for disclosure and KYC), there is no significant risk to consumer protection of which we are aware that should prevent this.

We wonder how the higher cap is working in Alberta?

(b) The BCSC will know from our earlier submissions that the NCFA is strongly in favour of removing the requirement for “eligible securities” or expanding the definition to allow for eg convertible securities.

(c) We continue to propose other changes to the crowdfunding exemptions across Canada. We argue that many restrictions are not justified by the risks. Their only effect is to restrict or prevent start-ups in Canada. (To the extent that the BCSC continues to be of the view that those prescriptive requirements are justified by the risks, we ask that the analysis be made public so that we can more effectively respond.)

Our main recommendations for regulatory change across Canada remain:

  • harmonize crowdfunding/start-up requirements across Canada
  • permit advertising and general solicitation (or make it easier)
  • increase the threshold for required review or audited financial statements
  • allow accredited investors to fully participate (without caps)
  • eliminate retail investor caps (or at least increase them)
  • provide a reasonable sunset clause for audited financial statements
  • increase the period for filing of the distribution reports.

 

Online lending

Although the staff of securities regulators in Canada, including the BCSC, have supported the development of peer to peer (P2P) lending platforms such as Lending Loop, there are fundamental aspects of the securities regime that are not well suited to regulating what is in substance a loan brokerage activity linking lenders (investors) with small and medium sized business (SME) borrowers under a simple loan agreement.

We call for the establishment of a regulatory regime that recognizes and accepts that the activities of P2P lenders (and simple loan agreements) are inherently different from equity investments and should be regulated differently.

We ask that CSA examine and adopt the regulatory models in other jurisdictions such as the UK and New Zealand where frameworks were developed specifically for P2P lending (see https://fma.govt.nz/compliance/role/peer-to-peer-lending-providers/). Secu- rities regulators should exempt P2P lenders from securities legislation on the condition that they comply with provisions designed for P2P lenders.

A new regulatory paradigm should improve a lower rate of adoption in Canada than seen in other jurisdictions where P2P and B2B have provided significant economic stimulus by supporting the growth of the SME sector.

 

2. The BCSC asks whether it should make changes to the regime that would increase differences with other jurisdictions.

Since the changes would (presumably) reduce burden, the answer has to be, in principle, yes. The benefit should outweigh the cost (if any).

 

3. What is the likely impact of ICOs on existing crowdfunding opportunities?

There are similarities and differences between traditional crowdfunding and ICOs in terms of mod- els, regulations, ownership, usage, and liquidity to name but a few. However, they both seek to use technology to raise early stage capital for new products/services and ven- tures while allowing a wider pool of investors to participate.

We view ICOs and tokens as the next generation of crowdfunding using DLT and de- centralized models that improve liquidity and contract reliability in ways that traditional crowdfunding platforms cannot achieve. For example, ICOs can reduce or eliminate the need for transactions to be verified by third parties via decentralized networks that are in a way self-regulating. Blockchain allows smart contracts/tokenization that can automate and execute pre-agreed conditions once they are met.

All stakeholders are assessing ICOs and the risks associated with them in a rapidly evolving market that has unfortunately also attracted the interest of many speculators whose primary concern is not necessarily compliance or honest behaviour. This has not been a major concern with traditional crowdfunding. Nevertheless we are seeing the emergence of best practices from KYC and AML processes to governance and trans- parency standards. We expect this trend to continue. See the recent ICO best practice document from the Hong Kong FinTech Association.

On the one hand we urge regulators not to over-react to risks of financial crime and poor operating behaviour by ICOs (but to deal firmly and expeditiously with either under existing laws). It would be a mistake to substitute over-regulation for (for example) inad- equate criminal enforcement. On the other hand, we urge ICOs to improve their self- regulation so regulators can be less concerned about the risks. We recognize that if ICOs do not themselves improve, then they can expect regulators to tighten up.

Meanwhile, regulators should strive not to unduly delay applications for exemption by existing dealer licensees who have built up appropriate operating practices and who would like to manage the distribution of ICOs across all jurisdictions.

If ICOs are regulated appropriately and a vibrant market develops, then they will likely supersede many of the investment crowdfunding models in the market today.

As with traditional crowdfunding, if ICO regulation is too costly, then companies, in- vestors, and infrastructure providers will move to foreign markets and jurisdictions that offer more facilitative and supportive capital raising. Lack of certainty is also driving ICOs to other markets. Canadian issuers and investors both need more guidance, soon, on the regulatory approach(es) in Canada.

 

4. What kind of educational/awareness outreach opportunities or mechanisms should BCSC be considering?

The Financial Consumer Agency of Canada has taken the lead on financial literacy with good results. They may be best placed to take the lead on education and awareness of crowdfunding and innovation finance. One body should be working with regulators, the private sector, and others for consistent online/offline educational programs, developing and tracking key metrics, benchmarking, and participating in research initiatives. We should be working together to do more and not wasting resources by re-inventing the wheel.

 

Part 4 - Online advisers

We leave this section for response by our members.

 

Part 5 - Cryptocurrency funds

Given the present uncertainties, we advocate a wait and see approach (as in the UK - https://www.coindesk.com/uks-fca-chief-warns-bitcoin-investors-be-prepared-to-lose- your-money/. Regulators should not hastily impose more requirements where they quite possibly are not needed. We commend BCSC for its more open attitude to cryptocurrencies.

NCFA also supports the creation of a Canadian crypto task force - https://cointele- graph.com/news/britain-introduces-crypto-task-force-to-foster-fintech-innovation. It is extremely important that stakeholders collaborate, that Canada remain in synch with important jurisdictions, and that regulation is essentially global.

 

Part 6 - ICOs and cryptocurrencies

  1. At this point in the evolution of the ICO markets, we think that the exemption power is sufficient, along with general warnings to investors about the risks of both regulated and unregulated ICOs. It is not obvious to us that new regulatory requirements are needed. What is obvious is the need for close collaboration among regulators and the industry across Canada and globally, and firm enforcement of existing laws.
  2. We do not comment on the variables listed. The main point here that Canada must remain broadly in synch with important jurisdictions such as the USA , Australia, New Zealand, Singapore, and the UK.

 

Part 7 - Fintech regulation in the future

34/35. The NCFA supports a 12-month exemption similar to the ASIC exemption, with similar safeguards.

36.  The NCFA has already provided its views to the BCSC on regulatory requirements or approaches that stifle innovation and how they should be removed or changed.

39 to 42. We support the risk-based approach of the UK Financial Conduct Authority where data collection and analysis are also a priority.

Regulators, governments, and other stakeholders in Canada should be closely following what more advanced regulators (and markets such as the UK, Australia, New Zealand, China, and Singapore are doing). These jurisdictions are well ahead of us.

Most studies of fintech around the world assert that collaboration among regulators, governments, and with the private sector needs to improve. Without improved collabora- tion, and without an over-arching strategy for innovation, both regulation and the mar- kets in Canada (overall) will remain sub-standard.

 

Other points

The BCSC Notice states that BC’s start-up ecosystem has been ranked among the strongest in the world. Although we agree that the regime is more supportive of start-ups than in other Canadian jurisdictions, it would be helpful to know who has provided this ranking (and to see the data that supports it).

It is a constant struggle in the start-up ecosystems in Canada to gain access to data and analysis about what is going on the markets of the provinces and across Canada as a whole. Smart regulation and meaningful cost/benefit analysis is impossible without it.

We lag far behind the UK and others in data collection and analysis. To provide one ex- ample of how this is problematic, the BCSC Notice states that “respondents noted the limited risk appetite among BC investors and pool of available capital in BC as signifi- cant non-regulatory barriers to growth and development”. We wonder whether better data would support that conclusion. Our members do not perceive that BC investors are inherently risk averse. Rather they may lack education or awareness about investing in innovation and fintech, but are keen once they learn and feel more comfortable with the ecosystem. (We have explained in earlier submissions that certain regulatory changes would actually help investors to manage/spread their risks.)

At Globe Forum 2018 in March, Canadian capital providers noted that their Canadian investments in innovation were limited less by the lack of capital and more by the lack of good projects coming up through the system. This suggests to us that start-ups are blocked by the costs of start-up in Canada, rather than lack of capital as such. But we do not have the hard data to back this up.

We very much support the creation of the BCSC Tech Team and have been impressed by the team’s willingness to learn, to talk openly with our members, and to provide guid- ance to entrepreneurs where appropriate. The BCSC has become an increasingly valuable sponsor and participant at NCFA conferences such as VanFunding.

We are encouraged by BCSC and OSC collaboration with other regulators to improve the sandbox in a way that is consistent with other jurisdictions such as the UK and Aus- tralia, and by efforts to harmonize regulatory approaches to licensing and guidance across CSA. However, we repeat the NCFA’s recent submission to Finance Canada where we said -

The NCFA urges the federal and provincial governments, as well as the provincial and territorial securities regulators, to work together with the private sector on a strategy:

  • to reduce regulatory burden,
  • to champion innovation,
  • to make good use of proven tax and other incentives, and
  • to ensure adequate data collection and analysis, as well as education and awareness.

April 2018

Download the PDF submission --> here

 

The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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 in Canada.  For more information, please visit:  ncfacanada.org

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