A straightforward explanation of what digital assets are and a few ways they will directly impact your life
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Online Funding / Investing Portals
Exponential Launches $100MM Digital Asset Fund on DealSquare Leaning Into The Post-COVID-19 Future
Exponential Group | Sunny Durante | Apr 8, 2020
Toronto, April 8, 2020 Despite current market conditions, it is business as usual for a new digital fund. Exponential, a global financial services company focused on digital asset investing, fundraising and trading, has made its new, actively managed Digital Asset Fund available on investment crowdfunding platform FrontFundr and private markets dealer platform DealSquare. The $100 million fund gives retail and accredited investors access to this emerging digital asset class through a venture capital-style fund. This marks one of the first times retail public investors will have access to these investments which have traditionally only been available to accredited investors. Exponential’s Digital Asset Fund invests in companies of the future that bet on the promise of emerging and distributed ledger technologies to transition the market to a new, open, and enhanced digital economy.
Canadian retail investors can now participate in the Digital Asset Fund directly, subject to applicable securities law requirements, giving them access to classes of assets that are typically only accessible to accredited investors who represent only 4% of Canadian households. Exponential aims to make the fund available to US retail investors by the second half of 2020. In Exponential’s experience, digital assets are cost-efficient and generally have lower transaction costs than traditional assets. The Digital Asset Fund will only contain digital assets that comply with securities regulations in Canada.
“At Exponential, we are on a mission to migrate the old world to the new digital economy. The vision of our fund positions our investors for market disruptions. This could not be more relevant to us today than ever before as we face global disruptions due to COVID-19. The world is racing toward an unknown future, but what we do know is that Wall Street and Bay Street will look very different. We have known this for a long time and that’s why we created the Digital Asset Fund,” stated James Wallace, co-founder and co-CEO of Exponential. “We’re building a secure and efficient venture capital-style fund that supports the future economy. Together, we’re giving retail investors and investment advisors access to the digital economy, democratizing the playing field and promoting financial inclusion.”
How Technology Shapes Investor Access to Markets
The Digital Asset Fund will be available to retail investors through FrontFundr–– Canada’s leading equity crowdfunding platform and exempt market dealer. FrontFundr gives Canadian-resident retail and accredited investors the ability to review and invest in private companies on one digital platform. Accredited investors can also participate directly through Exponential, and those that wish to invest via their investment advisor or dealer can participate through DealSquare – a partnership between NEO and Silver Maple Ventures.
“Exponential’s mission to help build companies that will drive the future of our digital economy fits extremely well with raising capital online through platforms like FrontFundr and DealSquare. By working together, we are able to give the wider investor community the chance to participate in a unique opportunity, one that aligns with our mission of democratizing Canada’s private markets,” says Peter-Paul Van Hoeken, Founder and CEO of Silver Maple Ventures.
“We stand aligned with Exponential,” added Jos Schmitt, President and CEO, NEO. “In this rapidly emerging digital economy, their Digital Asset Fund allows for the smart thing and the good thing to be the same thing. We are proud to service a fund that targets exceptionally promising companies of the future who are advancing technologies that will drive our economy forward.”
To commemorate the launch of the Digital Asset Fund and educate investors on the capabilities and potential of the digital economy, Exponential hosted a live webcast on Wednesday, April 8, 12:00 pm ET. A secondary in-person launch is likely to be planned after social distancing restrictions lift.
For media inquiries, please contact:
Exponential: Sunny Durante sunny@exponential.io
Forkast.Studio: Joe Pan joe.pan@forkast.studio
About Exponential
Exponential consists of four teams: Ventures (seed capital), Capital (advisory and growth capital) and Markets (issuance and secondary trading), and Funds (venture and digital asset funds). Exponential also created a diversified digital asset fund that invests in several types of fractionalized assets including real estate, currencies, precious metals and venture capital. The venture portion of the fund invests in visionary founders, with a focus on exponential technology solutions, digital securities, and distributed ledger technology. Exponential believes that these technologies have the potential to alleviate human suffering, expand human potential, and enable access to a more meaningful life for everyone, everywhere. Exponential was the sole seed investor in the world’s first federally approved digital security, FIRE by tribeOS, and through that, has developed a blueprint that helps founders move from seed-stage to digital security offering rapidly and compliantly.
Connect with Exponential: Website | Twitter | Linkedin | Facebook | Medium
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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United States: FDIC Proposes Roadmap For Fintechs To Become Insured Banks
Lewis Brisbois Bisgaard & Smith LLP (via Mondaq) | Thomas Brooks and Jane Luxton | Apr 4, 2020
The term “fintech” is used to describe the application of new technology to improve the delivery and use of financial services and products in a more cost-effective way than is available in the traditional financial marketplace. The fintech industry is growing by leaps and bounds with an explosion of new products and services. While most fintechs are regulated by a variety of state and federal regulators, increasingly fintechs are considering the advantages of regulation by traditional banking authorities, a simplifying approach that consolidates regulatory oversight in one agency.
See: Bank/Fintech Partnerships: The Fad Is Over
This emerging trend offers opportunities and potential pitfalls for fintechs and requires careful planning and implementation. However, the Federal Deposit Insurance Corporation (FDIC) took a big step toward providing some clarity for fintechs that are considering this path with its March 17, 2020 “Proposed Rule: Parent Companies of Industrial Banks and Industrial Loan Companies.”
If adopted, this proposal would provide a transparent roadmap for a non-depository financial entity to either acquire an existing industrial loan company (ILC) or to apply for deposit insurance for a newly chartered ILC, ensuring federal regulation by the FDIC.
What is an ILC?
An ILC is a type of state-chartered bank that is insured by the FDIC, but its parent holding company is statutorily excluded from supervision and regulation by the Federal Reserve Board. ILCs generally have the same lending powers as traditional commercial banks. However, the parent of an ILC has an advantage over traditional banks because it can engage in commercial activities, while the parent of a traditional bank -- a bank holding company regulated by the Federal Reserve -- is prohibited from doing so. Over half of the current ILCs are chartered in Utah, but they also exist in California, Hawaii, Minnesota, and Nevada. No ILCs have been established since 2008, largely due to moratoria imposed by the FDIC and Congress. Now, however, the situation is changing.
Why is an ILC Charter Useful for an Online Lender?
An ILC is regulated by one federal entity (the FDIC) and one state regulator that granted its charter. Consolidating regulatory oversight saves time and money by avoiding the need to comply with several state licensing laws and regulations, as banks must do. Also, the ILC does not have to submit to multi-state examinations of its operations. Another significant advantage is that insured deposits provide a much lower cost of funds than other sources of funding. A lower funding cost would still allow reasonable profits, but would make lending more competitive with traditional bank lending rates. A further benefit is that an FDIC insured ILC can rely on interest rates of the state in which it is chartered instead of having to comply with the usury laws of several states.
What are the Requirements to Become an FDIC Approved ILC?
The purpose of the proposed rule is to codify existing practices utilized by the FDIC to supervise ILCs and their parent companies. It is designed (1) to mitigate undue risk to the FDIC insurance fund that may otherwise be present due to the absence of consolidated supervision of an industrial bank and its parent company, and (2) to ensure that the parent company that owns or controls an industrial bank serves as a source of financial strength for the industrial bank.
See: Fintech’s fast pass to traditional banking is now cut off
For typical state-chartered banks, the FDIC would be the primary federal regulator of the bank and the Federal Reserve would be the primary federal regulator of its parent holding company. Because the Federal Reserve does not regulate the activities of the parent of an ILC, the proposed rule provides that the FDIC, the ILC, and its parent enter into a written agreement to ensure that the ILC and the parent are operating in a safe and sound manner.
The proposed rule requires that written agreements must contain specific elements. However, depending on the type of applicant and its business plan, the elements contained in the agreement can be expanded. These requirements are in addition to the standard information that an ILC applicant for deposit insurance must provide to the FDIC.
The approvals for deposit insurance submitted by Square and Nelnet were implemented under existing FDIC policies and procedures. These were important breakthroughs because for the first time in 12 years, the FDIC approved deposit insurance for ILCs. The FDIC’s move to codify these procedures in the proposed rule means that other fintechs will have clearer guidelines for obtaining the same results, which is an important takeaway.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Intersection of Small Business, Tech and Our Financial Ecosystem is More Important Than Ever
Techcrunch | Ann Marie Mehlum, Javier Saade | April 10, 2020
The two of us oversaw the U.S. Small Business Administration’s capital, investment, loan and innovation programs serving America’s small businesses. The nation is rooting for our 30 million small businesses. They employ more than half of the country and create most net new jobs, and 80% of them have less than 60 days cash on hand.
The world has never experienced dislocation of labor and business activity at this scale and speed. We applaud Congress and the White House for stepping up with a $2 trillion relief package, of which, $350 billion is being injected into America’s small businesses. Another $250 billion is being contemplated and negotiated as we write this.
See: First two fintechs added to coronavirus emergency loan scheme (UK)
Washington has been talking regularly with the financial sector, and for small business relief to be effective, banks of all sizes, fintechs, other tech companies, community banks and other capital conduits need to be involved in the solution. There is an urgent need to deploy the funds, and technology will be critical to that end.
Two encouraging developments occurred on Wednesday: 1) SBA launched a new AWS-powered gateway for a streamlined lender entry point and 2) an application for non-bank, non-insured (read: fintech) lenders was made available.
Good steps for sure, but retrofits always come with limitations at their root.
Looking back to move forward, the crisis of 2008 was in many ways a “dress rehearsal” of what we are experiencing now. While there are some similarities, the pandemic’s massive toll on virtually every sector of the economy is happening simultaneously, as evidenced by the fact that 17 million people have filed for jobless claims.
This 21st century problem requires 21st century solutions, and that requires fresh thinking, from policy-to-execution. The large part of our economy that lives at the intersection of small business and the financial system is expecting this thinking and execution.
See: UK fintech community comes together to build Covid Credit and let sole traders self-certify lost income
It must be pointed out that some constraints and limitations of implementing the CARES Act are not regulatory in nature — they are born out of legacy technologies that slow banks down. The antiquated systems of our government agencies, such as SBA’s much talked about and clunky E-Tran system, do not help either.
Government agencies, let alone their systems, were not built to deal with anything of this magnitude and urgency. But the inherent scalability, penetration, infrastructure, algorithmic capability and plumbing of financial technology should be brought to bear, and now!
The financial system has significant tech adoption lags, organizational inertia and regulatory constraints — all contributing to the chaotic nature of the programs’ implementation. The design of a potential fourth phase of relief should take this into account. While pumping more money into small businesses is a good decision, the process and its underpinning needs to be improved.
Probably more important for people to understand is that when banks secure loan guarantees, that does not immediately translate to funded loans injecting cash into small businesses.
For cash to move, a few things would help smooth the glide path from CARES Act to small businesses:
1) finalizing definitive guidance on bank notes;
2) enhancing secondary market liquidity;
3) developing a 21st century digital interface for more streamlined touch points for all stakeholders; and
4) opening the pathway to new players, including fintech companies as service providers, rails or lenders themselves.
This is important because SBA has been tasked to increase its capacity by a factor of at least 50. All of its credit programs combined put out $25 billion a year. The task at hand: $350 billion in 8-12 weeks. We know SBA has been working 24×7 — along with Treasury, FRB and other agencies — on systems, technology and execution, but there are real friction points working against solving the problem at hand.
See: Survey finds Canadian small businesses seeing 50 percent revenue decline amid COVID-19
The use of digital constructs and 21st century technology is highly needed due to the amount of dollars, number of loans and the short window we have to deploy them. We urge the SBA, other agencies and regulators to deploy energy and resources to leverage digital finance and financial technology.
Financial technology can help streamline applications, comply with know-your-customer and anti-money laundering rules and application automation. Technology also improves origination, underwriting, loan disbursement and loan servicing, and should be leveraged. Millions of small businesses, the most vulnerable ones in fact, don’t use bank credit. Yet many use Square to accept payments, for example. Fintech now has an open door to participate — good!
We encourage regulators to fully leverage the collective capabilities of technology.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Raising Capital in a Pandemic World
Medium | Victoria Bennett | March 18, 2020
This week has seen considerable changes in the world, from markets falling, oil prices falling, schools closed, borders closed. We’re moving into a new world order, and this isn’t for a week or two. How can your business stay healthy and grow?
Your company needs to prepare for this new world order. Firstly, look at spending and consider how you can reduce your burn rate? Look at your revenues. What will this ever-changing world do to your revenues? If some taps are turned off, how can you reposition your company to access new revenue streams? Government stimulus funding may help you to access the new revenue streams or pivot.
It’s not all doom and gloom. The 2008–2009 recession founded Uber, AirBnB and Slack, disruptive businesses that took the opportunities in the market. Other companies grew through acquisition and benefited from cheaper assets.
How can you raise the capital to grow and grab the opportunities that the changes with coronavirus bring?
Most outside money, such as Angel Investors or VCs, requires kissing many frogs. You have to meet a large number of people, typically face to face, to build understanding, trust and secure funding.
Last week our company was due to host three investor events. The first one on Tuesday, had over fifty people in Vancouver, the second on Wednesday twenty in Calgary. Then the third back in Vancouver had to be cancelled as the venue went on COVID-19 lockdown. With Social Distancing measures, traditional fundraising needs to be turned on its head.
See: Funding in the Time of Coronavirus
Crowdfunding may be the solution to raise capital from a large number of investors across the whole country without meeting them face to face. The whole process takes place online, from reviewing the offering documents, signing and paying. It can all take place without any face to face interaction. That provides social distance for the investor, the company’s employees and lawyers.
Crowdfunding works best where you can tell a story because people like to back what they believe in, and that is certainly the case for retail investors. For larger investors, they are often looking for deal flow. A crowdfunding platform can provide both. The video gives you a chance to see the team, and to understand their why? The “why” is vital because that motivates companies through the bad times as well as the good.
It is important to tell your story and make it relevant to the current reality, but you need to be authentic too. Next week we are launching an equity crowdfunding campaign for a pain-free needle. The device is pre-dosed and has an enclosed sharp; therefore, it doesn’t require sharps disposal. In the not too distant future, there will be a need to vaccinate a large global population quickly, without fear of pain, or mis-dosing or sharps disposal in developing countries, and at a similar price to a syringe and vial of the drug. PKA SoftTouch, who developed the device, has a story that is natural and resonates in the current landscape.
Breaking through the noise
It is noisy out there; social media feeds are full of COVID-19 advice and emails acknowledging that every company you have ever dealt with has a COVID-19 policy. This too will pass. Advertising spend is already decreasing. With potential drops in revenue, this does make sense, but the companies that responded best after 2008 were the companies that remained in the market and continued to tell their stories. If you are crowdfunding, it will be easier to get your story out, as you will be competing with fewer companies and lower overall marketing spend.
See: Getting In Early: SEC Sees Growth In Equity Crowdfunding
We are social creatures; working from home, we may look to other ways to stay connected. Business channels such as Slack, LinkedIn and Zoom and social channels such as Instagram and Facebook will be our source of connection. These are the main outreach channels for crowdfunding. The increase in working from home means potential investors could have more time without the daily commute and be online more, as well.
A webinar will replace the events cancelled on Thursday and this Tuesday. Potential investors have the opportunity to ask questions and gain trust and understanding so that they can move forward to invest. A face to face launch event scheduled the following week will be live-streamed. This will allow a small group from the company to be present and the larger group of interested investors to meet the team and hear the key information.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Revolut lets your purchase gold | SoFi hires Amazon exec to lead deposit, card businesses
American Banker | Kevin Wack | March 12, 2020
The latest high-level hire at Social Finance is a former Jeff Bezos deputy who will oversee the San Francisco firm’s deposit, credit card and brokerage units.
Maria Renz, who spent 21 years at Amazon, joined SoFi on Wednesday as an executive vice president and group business unit leader. She reports to CEO Anthony Noto, who joined SoFi in 2018 from Twitter.
The hiring shows how much emphasis SoFi, which has been building out its menu of financial products, is putting on operations and customer experience.
See: Can Fintech Make the World More Inclusive?
Renz has no previous experience in financial services, but she does have an extensive background in consumer-facing businesses that have operational complexities. She joined Seattle-based Amazon in 1999, rising through the e-commerce giant’s ranks and eventually leading a team of 80,000 employees who provide customer service around the globe.
The three SoFi business-unit leaders who now report to Renz all have backgrounds in the financial services industry. Eugenia Gibbons, who heads SoFi Money, the company’s cash management account, is a former BBVA executive.
John Gardner, who leads SoFi’s investment, insurance and advisory unit, was previously a co-founder of the personal finance software firm LearnVest and chief operating officer at Cabezon Capital Management.
And Naga Parvatharajan, who heads SoFi’s credit card unit, formerly worked in Goldman Sachs’ consumer banking division. SoFi’s foray into the credit card business is expected to launch later this year in partnership with Mastercard.
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TechCrunch | Romain Dillet | March 12, 2020
Fintech startup Revolut has introduced a new trading feature for premium users. Starting today, Premium and Metal users can access gold exposure from the app.
Revolut works with a gold services partner (London Bullion Market Association) so that money you spend on gold exposure is backed by real gold held by this partner. In other words, you’re not going to receive gold coins in the mail. You can just invest money based on the price of gold.
The startup has been building a financial hub and already lets you purchase cryptocurrencies and buy public shares. Gold is part of a new feature called Commodities.
See: The 5 Debates That Will Shape Fintech In The 2020s
There are multiple ways to invest in gold. You can purchase gold exposure directly at market price, set a limit price to auto-exchange gold when it reaches a certain price or get cashback in gold for Metal customers.
At any time, you can convert your gold investment back into fiat currencies or cryptocurrencies. If you spend money with your Revolut card and you only have gold, Revolut will use your gold exposure automatically. You can also transfer gold exposure to another Revolut user.
According to the company’s website, Revolut charges a 0.25% markup when you trade gold during the week and a 1% markup from Saturday at midnight to Monday at midnight U.K. time.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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3 Ways Digital Assets Will Reshape The World
Exponential | Sunny Durante | March 9, 2020
A straightforward explanation of what digital assets are and a few ways they will directly impact your life
Digital assets are poised to revolutionize the way people operate and exchange value in the world. Adoption of distributed ledger technology, which is the platform digital assets are built upon, has provided the infrastructure for this new asset-class to bring much-needed innovations to the world of finance and beyond.
In their simplest form, digital assets are units of value or ownership stored on a distributed ledger. Stock shares, equity, property, and nearly any other unit of value imaginable can be stored and represented on these ledgers. They also enable fractionalization, so you can own a small percentage of a larger item.
See: Early-stage Investing – The Public gets a Seat at the Table
The number of applications for digital assets is vast and steadily expanding, yet few people truly understand how this exciting and innovative technology will impact their lives. In this article, we look at three areas where digital assets will make a direct noticeable change to people’s lives and our financial system.
Democratizing Access To Investments For All
Traditionally, private capital markets have been exclusive, disorganized, and disconnected from the majority of investors. The best-performing investments from the past decade have also come through private capital markets, but have only been available to accredited investors. These are wealthy individuals typically classified as having a net worth of at least $1 million, not including the value of a primary home, or households where the combined income has been $300K or more for a few consecutive years. In the United States, this only accounts for 9.86% of all households. The other 90.14% are classified as retail investors and are, by law, not allowed to participate in these deals — which we see as a form of financial exclusion.
Even if you are an accredited investor, the process of making informed decisions in private markets can be difficult. Unlike publicly-traded asset markets (i.e. stock markets), you likely won’t find a neat and organized list of all investable companies with all the details necessary to make a proper evaluation.
Looking at the larger global market, the percentage of investors that can legally participate in private equity fundraising is much smaller. Most private markets tend to be most accessible to domestic investors and less so, or even completely inaccessible for international investors. For example, if you are a citizen of the US and want to invest in a specific company based in the UK or Germany, it’s highly impractical to via private markets. Even public markets have limited options. The only common exceptions are if the company is large enough to list publicly on a US stock exchange or if you are willing to select that company’s stock along with a basket of other shares via a national ETF such as NYSEARCA: EWU or NYSEARCA: EWG.
See: Architecting a New World: Investment Crowdfunding and Digital Assets
Digital assets and digital ledger technology will break down these barriers and create a truly global system where anyone can invest in any company anywhere on the planet 24/7/365 for very low cost– all with the click of a few buttons.
This marks a massive tangible leap forward for financial inclusion and an end to slow and complicated private market investment processes. We already see this with digital currency exchanges, so why shouldn’t this level of accessibility be the standard for all other forms of investment?
Unlocking The Value Of Illiquid Assets
Illiquid assets are any assets that can’t be bought, sold, or transferred easily. Most assets in the world are currently illiquid. A classic example would be real estate. Buying or selling a piece of real estate involves a lengthy, complicated, and expensive process that typically requires many external parties, like realtors, lawyers, and title companies to complete.
Aside from being difficult to transfer, all the inherent value of the asset, along with your capital investment, is locked-up in an all-or-nothing ownership model. While it might feel good to see the value of your investment going up, that increase only lives on paper. You don’t actually get to enjoy that up-side or utilize that gain toward another investment until you sell or refinance the property.
Digital securities are poised to disrupt this restrictive model by enabling fractionalization. With fractionalization, there is no longer a need for lengthy paperwork, complex fee structures, or all-or-nothing ownership. Investors will be able to break the larger asset into smaller components and sell off as many of those pieces as they desire — thus unlocking value previously trapped within the asset and freeing up your capital to be reinvested elsewhere.
See: Bank of Canada Speech: Money and Payments in the Digital Age
This isn’t a completely new concept, we’re all familiar with this idea as it relates to stock markets and publicly traded companies. That said, the overwhelming majority of assets in the world follow the old model, with all their value locked-in until a sale frees up the trapped value.
Soon, as the trend towards digital assets continues to build momentum, you will have the option to enjoy any upside to your investment almost immediately or raise capital against an asset when you really need it. Imagine being able to quickly cash-out your gain in an investment so you could apply it to a new opportunity that just came across you desk or a professional sports team having a tough economic year was able to raise capital by selling small fractions of their franchise to devoted fans who would be delighted to own a portion of the team they love.
This feature not only improves mobility for investors but can also have a massive positive impact on society. Let’s use the example of a residential apartment building struggling financially. Currently, they have three options: A) sell the property and take a potential loss B) refinance the building, likely on poor terms or C) raise the rent for the tenants, who may not be able to afford the increase and be forced to move.
Fractionalization through digital assets would create an option D) where the building owner can easily sell a fraction of the building’s equity to investors who have the funds and see the long-term value. This would create a win-win-win situation where the owner’s immediate financial need is solved, the new investor gets a stake in a promising property, and the building residents remain able to stay in their current homes.
See: Fearless: How Technology Helps Conquer our Fear of the Unknown
While this is just one of many scenarios, it clearly shows the ability of digital assets to not only support investors with capital mobility, but it’s potential to create real positive impact for entire communities.
Cutting Out Middlemen & Value Extractors
One of the few things most people universally agree upon is that they don’t like paying excess fees — yet our current financial system is rife with them. Let’s imagine you want to wire money from your Canadian bank account to your US bank account. To start, there is a fee to have a checking account in the first place. The exchange rate you’re quoted isn’t the actual exchange rate, but one padded with multiple convenience fees. Then, there is a wire transfer fee to actually send the money. A fee to receive the wire on the other end, and the potential for additional unexpected and unexplained fees if the bank uses any intermediary financial institutions to facilitate the transaction. All of those fees just to move your money.
Trading is no different. Charles Schwab, Fidelity, and TD Ameritrade all charge $49.95 or more to execute a single fund trade. Broker-assisted trades from these companies come with a fee of $25 or higher. Some firms even charge a redemption fee if you sell a mutual fund within 60 to 90 days after opening.
This is madness. A clear example of a legacy financial system seemingly designed to reward unnecessary middlemen and institutions aimed at extracting value rather than providing it. Up until now, we were forced to endure this as banks and other large financial institutions were the gatekeepers. They set the rules we all had to play by, and very few appealing alternative solutions existed — but now, with the advent of digital securities, the winds of change are blowing.
See: How Big Data and Blockchain are enhancing FinTech
Distributed ledger technology enables transactions to be executed quickly, cheaply, and directly. With digital assets, you circumvent traditional gatekeepers and other unnecessary middlemen looking to extract value from your transaction without providing any real benefit. Additionally, this is a truly global technology, meaning it can be accessed anytime from anywhere with zero foreign transaction fees. One anonymous person was even able to instantly transfer $468.5 million worth of digital assets for only $374.98. Sending that same amount using one of today’s lowest-fee traditional solutions would have an estimated fee of over $1.6 million and multiple days of wait time for the funds to land. Obviously, this is an extreme example and investors are typically happy to pay some reasonable fees to ensure the safety of their trades, but it does showcase what’s possible when utilizing this new technology. This same protocol can be applied to transferring mutual funds, stocks, real estate deeds, and numerous other stores of value — cutting costs, time, and unnecessary middlemen along the way.
While we only looked at three examples, the potential use-cases for digital assets are nearly infinite. Digital assets are faster, safer, and far less expensive than traditional solutions. The technology offers greater transparency and it’s distributed immutable nature ensures ultimate protection against tampering and corruption.
While most of the buzz surrounding digital assets remains focused on its high-end financial applications, of which there are many, perhaps its biggest benefit remains largely unsung. The real gift to the world rests in its capacity to promote financial inclusion, leveling the playing field and allowing everyone, everywhere access to the new digital economy.
As support and adoption continue to grow it’s a truly exciting time to witness how digital assets and the technology they’re built on may improve our lives, and hopefully, help repair our world.
For more information, please visit: Exponential
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canadian securities regulators propose new nationally harmonized crowdfunding rules for comment by May 27
CSA| Release | Feb 27, 2020
The Canadian Securities Administrators (CSA) is seeking comment on proposed harmonized rules for start-up securities crowdfunding.
Proposed National Instrument 45-110 Start-up Crowdfunding Registration and Prospectus Exemptions would replace and enhance the requirements currently in effect in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.
Enhancements from the current requirements include:
- Increasing to $1 million (from $500,000) the maximum total amount that could be raised by a business under the crowdfunding prospectus exemption per year;
- Increasing to $2,500 (from $1,500) the maximum investment a purchaser can make in an offering, with a higher limit of $5,000 if the purchaser obtains advice from a registered dealer that the investment is suitable for the purchaser;
- Requiring funding portals to annually certify that they have sufficient working capital to continue operations for the following year.
“Small businesses and start-ups need unified regulatory requirements for securities crowdfunding to expand their access to capital,” said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. “This proposed National Instrument would introduce a single, harmonized set of rules, and increase the thresholds for capital-raising and investing, while still providing appropriate investor protection.”
Since 2015, about 70 distributions of securities have taken place under the existing start-up crowdfunding prospectus exemptions, with an average investment of $734 from each purchaser.
See: NCFA Canada’s response to BCSC Notice 2018/1 ‘Consulting on the Securities Law Framework for Fintech Regulation’
The notice and request for comment can be found on CSA members’ websites. Stakeholders are invited to submit their comments in writing by May 27, 2020.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
View the original release --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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