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Comprehensive Overview of Fintech in Switzerland H1 2018

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Baer & Karrer | By Daniel Flühmann and Peter Hsu | May 23, 2018

The Fintech Landscape

1.1 Please describe the types of fintech businesses that are active in your jurisdiction and any notable fintech innovation trends of the past year within particular sub-sectors (e.g. payments, asset management, peer-to-peer lending or investment, insurance and blockchain applications).

The Swiss fintech landscape has evolved significantly over the past few years and Switzerland continues to be an attractive base for innovators in the financial sector. Approximately 200 active companies in various sub-sectors form the core of the diverse Swiss fintech ecosystem. The total number of fintech-related businesses, however, is much higher. Many established financial institutions and other established financial market players have entered the fintech space in the recent past and, as a result, the distinction between fintech and traditional financial services has become increasingly blurred.

Swiss-based fintech businesses include robo-advisory and social trading services, crowdfunding and crowdlending platforms as well as payment systems and businesses active in the area of collective investment schemes. One of the key focus areas in the past year has been driven by blockchain-based businesses, in particular in the areas of cryptocurrencies and decentralised transaction platforms (e.g. Ethereum and Lykke), many of which are based in the socalled "cryptovalley" in the Canton of Zug. This development is accompanied by a notable increase in so-called initial coin offerings ("ICO") out of Switzerland, i.e. a digital method of raising capital through the issuance of tradable digital units (coins or tokens) to finance or develop early stage projects of start-ups, including but not limited to projects in the fintech sector.

See: Your guide to cryptocurrency regulations around the world and where they are headed

The Swiss fintech industry has formed a number of associations and shared interest groups (e.g. the Swiss Finance + Technology Association, Swiss Fintech Innovation, Swiss Finance Startups and the Crypto Valley Association) to promote, together with investors, experts and media, the development of a strong Swiss fintech sector.

1.2 Are there any types of fintech business that are at present prohibited or restricted in your jurisdiction (for example cryptocurrency-based businesses)?

Switzerland has no specific prohibitions or restrictions in place with respect to fintech. Generally speaking, Swiss financial regulation is technology-neutral and principle-based, which has so far allowed it to cope with technological innovation. That said, fintech operators may be subject to regulation and supervision by the Swiss Financial Market Supervisory Authority FINMA ("FINMA") or by selfregulatory organisations depending on the nature and specifics of their business. The relevance and application of Swiss laws on e.g. anti-money laundering, collective investment schemes, financial market infrastructures, banks, insurance companies and/or securities dealers has to be assessed in the individual case (see question 3.1). With regard to ICOs in particular, FINMA recently published a guidance letter in which it emphasised the concept of an individual review of each business case regarding the regulatory impact. It is therefore prudent for fintech start-ups to seek clearance from the regulator before launching their project in the market.

2 Funding For Fintech

2.1 Broadly, what types of funding are available for new and growing businesses in your jurisdiction (covering both equity and debt)?

Switzerland has an active start-up scene and various funding opportunities are available for companies at every stage of development. There are seed and venture capital firms for early funding as well as mature debt and equity capital markets for successful companies at a later stage. In addition, there are many financial institutions that have a potential interest in buying an equity stake in fintech companies or in a full integration.

Crowdfunding and crowdlending as alternative sources of funding have shown rapid growth rates in Switzerland. The first crowdfunding platform was founded in 2008 and currently there are now around 50 active platforms (compared to only four in 2014). A further professionalisation of the crowdlending market may be expected for the near future as Swiss Parliament is deliberating on changes to the Consumer Credit Act ("CCA") with the intention to subject crowdlending intermediaries to certain reporting duties and further obligations in connection with the review of the creditworthiness of the borrowers.

Furthermore, a growing number of incubators and accelerators, either exclusively fintech-related (such as the association F10 or Thomson Reuters Labs – The Incubator) or focused on digital innovation in general including fintech (such as Kickstart Accelerator), support and guide fintech start-ups in transforming their ideas into successful ventures.

2.2 Are there any special incentive schemes for investment in tech/fintech businesses, or in small/ medium-sized businesses more generally, in your jurisdiction, e.g. tax incentive schemes for enterprise investment or venture capital investment?

There are no specific tax or other incentives for the benefit of the fintech industry in Switzerland. However, depending on the tax domicile of the company and the residence of the shareholders, there are certain tax benefits for start-up companies and tax schemes benefitting investors. In addition, again, depending on the tax domicile of the company, the ordinary profit tax rate in Switzerland can be as low as 12%. Currently, there are also discussions in Switzerland regarding the introduction of special R&D deduction regimes and of an IP box regime.

See: How Blockchain is Impacting Canadian Fintech Markets

In particular, start-ups may benefit from a tax holiday on the cantonal and federal level if their tax domicile is located in a structurally less developed region of Switzerland. Furthermore, if a company sells a stake of at least 10% in an investment which has been held for at least one year prior to the sale of the participation, the realised profit benefits from a participation deduction. In addition, Swiss resident individuals are not taxed on capital gains realised on privately held assets. Dividend payments to companies which hold a participation of at least 10% or with a fair market value of at least CHF 1 million in the dividend paying company also benefit from the participation deduction. Dividend payments to Swiss resident individuals on substantial participations of at least 10% are taxed at a reduced rate. Switzerland levies annual wealth taxes. In order to lessen the tax burden for start-up investors, start-up companies are often valued at their substance value for wealth tax purposes (e.g. in the Canton of Zurich).

Finally, it is common in Switzerland to discuss the tax consequences of an envisioned structure with the competent tax administration.

2.3 In brief, what conditions need to be satisfied for a business to IPO in your jurisdiction?

The requirements for a listing on the SIX Swiss Exchange (the main Swiss stock exchange) are laid down in its Listing Rules and its Additional Rules and can be divided into (i) requirements regarding the issuer, and (ii) requirements regarding the securities to be listed. Essential criteria include e.g. that the issuer has existed as a company for at least three years, has a reported equity capital of at least CHF 2.5 million, a free float of at least 20% and a minimum capitalisation of the securities in public ownership of CHF 25 million.

2.4 Have there been any notable exits (sale of business or IPO) by the founders of fintech businesses in your jurisdiction?

There have not been any recent IPOs in Switzerland in the area of fintech. However, in 2017, Warburg Pincus acquired 45% of the shares in Avaloq Group AG, a leading Swiss provider of software solutions and business process outsourcing services for the financial industry.

3 Fintech Regulation

3.1 Please briefly describe the regulatory framework(s) for fintech businesses operating in your jurisdiction, and the type of fintech activities that are regulated.

The Swiss financial regulatory regime does not specifically address fintech. Rather, the legal framework governing the activities of fintech operators consists of a number of federal acts and implementing ordinances as well as circulars and other guidance issued by FINMA. Fintech business models have to be assessed in light of this regulatory framework on a case-by-case basis (see question 1.2).

Based on their (intended) activities, fintech operators may in particular fall within the scope of the Banking Act ("BA") (if engaging in activities involving the acceptance of deposits from the public; see question 3.2), the Anti-Money Laundering Act ("AMLA") (if active as a so-called financial intermediary, e.g. in connection with payments or lending; see question 4.5), the Collective Investment Schemes Act (if issuing or managing investment funds or engaging in other activities relating to collective investment schemes), the Financial Market Infrastructure Act (if acting as a financial market infrastructure, e.g. a multilateral trading facility), the Stock Exchange Act (if acting as a securities brokerdealer or as a proprietary trader), or the Insurance Supervision Act (if acting as an insurer or insurance intermediary). Moreover, inter alia, the CCA, the Data Protection Act ("DPA") as well as the National Bank Act may apply.

More: Fintech As a Pathway to Financial Inclusion? The Case of China

Depending on the specific business model, regulatory requirements may include licence or registration requirements as well as ongoing compliance and reporting obligations, in particular relating to organisation, capital adequacy, liquidity and documentation, as well as general fit-and-proper requirements for key individuals, shareholders and the business as such. Certain types of regulated businesses are prudentially supervised by FINMA on an ongoing basis in a two-tier approach whereby a regulatory audit firm appointed by the supervised firm conducts a significant part of the on-site reviews. The individual financial market laws provide for de minimis and other exemptions that can potentially be relevant for fintech operators depending on the type and scale of their activities. FINMA is the unified supervisory authority for the Swiss financial market, ensuring a consistent approach to the qualification and regulatory treatment of fintech operators. Furthermore, Switzerland has an established system of industry self-regulation by private organisations such as the Swiss Bankers Association SBA, the Swiss Funds & Asset Management Association SFAMA as well as numerous professional organisations for financial intermediaries. Some of the regulations issued by self-regulatory organisations have been recognised by FINMA as minimum standards (e.g. in the area of money laundering prevention).

3.2 Are financial regulators and policy-makers in your jurisdiction receptive to fintech innovation and technology-driven new entrants to regulated financial services markets, and if so how is this manifested?

Representatives of FINMA have expressed on various occasions that the Swiss regulator encourages innovation in the Swiss financial marketplace. FINMA has, inter alia, established a dedicated fintech desk to interact with fintech start-ups and held a roundtable focusing on blockchain technology with interested parties in May 2017. Furthermore, FINMA's CEO in particular supports legislative change to lower market entry barriers for innovative financial services providers and to establish Switzerland as a fintech hub. In the recent past, FINMA revised several of its circulars, which specify the practice of the regulator under the current legislation, to render them technology-neutral (e.g. by not requiring certain documentation to be held in physical written form). FINMA also published new circulars with the purpose of removing obstacles for technology-oriented financial services providers, notably a circular enabling video and online customer identification for anti-money laundering purposes (see question 4.5).

To further the efforts of the financial regulator for facilitating fintech, projects for legislative changes at various levels were initiated in late 2016. Certain elements of these projects were already implemented in 2017. In particular, the Swiss Federal Council (i.e. the Swiss federal government) amended the Swiss Banking Ordinance ("BO") with effect as of 1 August 2017, introducing the following reliefs with regard to licensing requirements:

  • Innovation sandbox: Firms accepting deposits from the public or publicly holding themselves out as accepting deposits may profit from an exemption from the requirement to obtain a banking licence as long as the deposits accepted do not exceed CHF 1 million. This threshold is measured on the basis of the aggregate deposits held at any given point in time. The exemption is available to fintechs as well as any other type of business. However, operators that are mainly active in the financial sector are only allowed to benefit from the exemption if no interest is paid on the deposits and the funds are not invested. A business making use of the sandbox exemption is required to inform its customers that it is not supervised by FINMA and that deposits are not covered under the Swiss depositor protection scheme. The sandbox introduced with the amended BO allows fintech innovators (and other businesses) to develop and test their business idea without incurring the burden of requiring a banking licence or having to comply with prudential supervision requirements at an early stage of development.
  • Extension of the maximum holding period of third-party monies on settlement accounts: With the amended BO, third-party monies accepted on interest-free accounts for the purpose of settlement of customer transactions do not qualify as deposits from the public (and therefore do not count towards a potential banking licence requirement) if the monies are held for a maximum of 60 days (instead of only seven days, as was the case before 1 August 2017). Crowdfunding platforms in particular, but e.g. also payment service providers, the business model of which typically requires holding third-party funds for a certain period of time, benefit from this broadened exemption. It should be noted that settlement accounts of foreign exchange dealers generally do not fall within the scope of the exception for settlement accounts. In the context of fintech, this may in particular affect cryptocurrency traders, which are subject to the same limitation if their business is conducted in a manner comparable to a traditional foreign exchange dealer.

Irrespective of the reliefs granted by the amended BO, anti-money laundering regulation continues to apply to fintech firms if they qualify as financial intermediaries (see question 4.5).

See: NCFA: Canada Needs a Harmonized Securities Environment as Current Provincial Approach is a Fintech Innovation Killer

In addition to the changes to the BO, Swiss Parliament is currently preparing changes to the BA with the aim to introduce a new regulatory licence category below the fully fledged banking licence, i.e. a licence geared towards financial innovators (sometimes referred to as banking licence "light"). This project is being discussed in Swiss Parliament in the context of the deliberations on the planned Financial Services Act ("FinSA") and Financial Institutions Act ("FinIA"). The new licence category is intended to be available to fintech firms, but also other entities that accept public deposits but do not engage in commercial banking. Holders of the licence will be able to accept public deposits up to a total value of CHF 100 million, but will not be allowed to invest the deposits or pay interest on them. A higher threshold in excess of CHF 100 million can be approved by FINMA on a case-by-case basis if customers are protected through additional safeguards. The regulatory requirements for obtaining and maintaining the licence will be significantly reduced versus a fully-fledged banking licence. Inter alia, less demanding standards are expected to apply regarding financial reporting and audits as well as organisational, equity, capital adequacy and liquidity requirements. Deposits accepted under a banking licence "light" will not be covered by the Swiss depositor protection scheme, a fact that licence holders have to inform their customers about. As the National Council (the large chamber of Swiss Parliament) proposed a number of changes to the current drafts of the FinSA and FinIA, the Council of States (the small chamber of Swiss Parliament) will deliberate on the revised drafts (including the relevant provisions in the BA) again in its 2018 spring session. The reconciliation of differences between the National Council and the Council of States may be expected to take place in summer 2018 at the earliest.

The Swiss Federal Council is furthermore in the process of examining whether further regulatory measures with regard to fintech are necessary. In this context, the Federal Department of Finance together with the State Secretariat for International Financial Matters and FINMA work on a legal solution regarding the qualification of virtual currencies and regulatory requirements for ICOs. Moreover, the Swiss Federal Council has initiated roundtables with representatives of the financial sector and FINMA.

3.3 What, if any, regulatory hurdles must fintech businesses (or financial services businesses offering fintech products and services) which are established outside your jurisdiction overcome in order to access new customers in your jurisdiction?

The Swiss inbound cross-border regulatory regime for financial services is relatively liberal. Many Swiss financial market regulatory laws do not apply to fintech (and other) businesses that are domiciled abroad and serve customers in Switzerland on a pure cross-border basis, i.e. without employing persons permanently on the ground in Switzerland (including by frequent travel). Notably, the BA and the AMLA apply only to foreign operators that have established a relevant physical presence in Switzerland, e.g. a branch or representative office. That said, cross-border operators that are not regulated in Switzerland should refrain from creating an (inaccurate) appearance of "Swissness", e.g. by using a ".ch" website or referring to Swiss contact numbers or addresses.

It should be noted that some areas of Swiss financial regulation are more restrictive with regard to cross-border activities, notably the regulation of collective investment schemes as well as insurance regulation.

Furthermore, as Switzerland is not a member of the EU nor of the EEA, no passporting regime is available.

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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 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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New Zealand: Is This Fair Dealing Or Not? The FMA Makes A Guidance Note For Peer – To – Peer Lending Services & Crowdfunding Services

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Mondaq | Christine Leung (Hesketh Henry) | May 2, 2018

The Financial Markets Authority (FMA), New Zealand's regulator for financial services, has released a guidance note to licensed peer-to-peer (P2P) lending services, licensed crowdfunding services for fair dealing in advertising and communicating offers of financial products or services.

The FMA's media release and guidance note is available here and here.

Who is this guidance for?

  • The FMA addressed the guidance note to P2P lending services and crowdfunding services, but it is useful for anyone who is promoting or advising others about these services (i.e marketing teams, investment bankers, lawyers).
  • The fair dealing expectations stretch beyond New Zealand's borders, so they apply to people overseas. Anyone who acts in relation to, or makes an offer of financial products or services in New Zealand should take note.
  • The guidance note is applicable to any media channel that businesses use to communicate and advertise their financial products and services (be it snail-mail or social media).

What points are made in the guidance note?

Check out:  Ontario government invests in fintech to boost small-business lending

All important facts should be laid out clearly in an advertisement

  • Warnings, disclaimers and qualifications (fine print) should be seen clearly or heard at a comprehensible speed.
  • If an advertisement includes fees and costs, it should be an accurate estimate of what the customer will pay in total.

The information given to consumers should be consistent

  • If an advertisement is published on multiple media channels, they should all contain the same information.
  • The meanings for phrases and terms used across advertisements should stay consistent.
  • The same terms should be used for information targeted towards investors and issuers.

Nothing should confuse, deceive or mislead people

  • The context of statements and the way the advertisement presents information should not be confusing, misleading, or deceiving:
    • if terms or conditions might change, the fact that they could change should be noted; and
    • terms and phrases should be used in a way they are commonly understood.
  • If a business is only licensed for some of the financial services it offers, it should make clear which services it is licensed for.
  • If a service or product is limited to a certain type of customer, an advertisement should state this.
  • A third-party's logo or motifs should only be used with the owner's consent. Nothing should imply a service or product is endorsed when it is not.

See:  Australia to Fix Gap in Crowdfunding Regulations as Private Companies May Gain Eligibility in New Legislation

The information given should be balanced

  • Important information (particularly about risk) must be included. The emphasis on risk and reward should be balanced so that a consumer's impression on a product or service is not biased.
  • When making comparisons with competitors, the platform should compare services which are alike, and not make irrelevant comparisons just to make itself look good:
    • The advertiser should identify the differences and explain why their product or service is superior.
  • Advertisements should state past performance only predicts, but does not indicate future performance. To give consumers adequate information to make a decision, the predictions should not be based on:
    • unreasonable assumptions;
    • selectively favourable information; or
    • a short timeframe or a volatile time period in the market.

Stick to facts—no puff pieces

  • Statements should be based on facts and backed up with sources and not opinions.
    • Testimonials or reviews should only be used sparingly if at all. They must be genuine and relevant to the service or good offered.
  • Advertisers should give informative links to consumers so they can find out more if needed.
  • Flowery and descriptive phrases should be amended. Avoid:
    • phrases like "rigorous checks" unless information is given on how the checks are rigorous;
    • terms such as "inflation proof"; they can make consumers believe their investments are guaranteed; and
    • saying an offer has "limited availability" if the offer is not actually limited.

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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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THE CRA’S Position On Cryptocurrency: Income Tax Implications

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BDO Canada | March 15, 2018

We live in a digital age — information is transferred and transactions are completed at a speed that past generations never thought possible. We have seen some amazing innovations in the last decade. One is the creation of digital currency, or cryptocurrency, the best-known of which is Bitcoin. While it sometimes seems that tax authorities play catch-up to technology’s latest advances, not much escapes the scrutiny of the Canada Revenue Agency (CRA).

Cryptocurrencies have moved into the mainstream. More and more, we hear of people who not only transact with and trade cryptocurrency, but who also “mine” it. Mining cryptocurrency involves solving increasingly complex mathematical problems that are meant to protect cryptocurrency transactions from becoming vulnerable to hackers. In exchange for solving these equations, the miner is rewarded with cryptocurrency coins or tokens. The increased frequency of cryptocurrency transactions, along with the recent volatility in the value of cryptocurrencies, has left many people who have traded, earned or transacted using cryptocurrency wondering whether income tax reporting obligations apply.

See:  Ontarians and Cryptocurrencies: A First Look

The CRA has provided general, and rather limited, guidance about the taxation of transactions carried out using cryptocurrency. While the CRA acknowledges that cryptocurrencies can be used to buy and sell goods or services over the Internet, cryptocurrencies are not recognized as legal tender in Canada. As a result, the rules governing barter transactions will apply where cryptocurrency is used to purchase or sell goods or services. In addition, the CRA maintains that cryptocurrencies should be treated like a commodity when bought or sold in return for traditional currency, or transferred from one person to another.

It appears unlikely that the CRA will make significant changes in the near future to its position on cryptocurrency. This is largely because the federal government believes the existing tax rules are sufficient to address the tax implications of transactions involving cryptocurrency. In January 2018, Finance Minister Morneau commented that there are no plans to make changes to existing tax legislation to include specific rules dealing with cryptocurrency.

Using cryptocurrency to buy or sell goods or services

It is the CRA’s position that where cryptocurrency is used to pay for goods or services from a vendor or service provider carrying on a business, that vendor or service provider is considered to have provided a taxable good or service. However, unlike a similar transaction carried out using traditional currency, a transaction using cryptocurrency is subject to the barter rules for income tax purposes. As such, it will be necessary to put a Canadian dollar value on the business transaction for tax purposes. Once a value has been established, the vendor or service provider will then be considered to have received that dollar value for the sale of the good or the service rendered.

Consider the example of a car mechanic who accepts payment in cryptocurrency for a routine maintenance check. For tax purposes, the mechanic is considered to have received a payment equal to the value of the vehicle maintenance service provided. This value will generally be the same amount as would have been charged to a customer paying for the same service in Canadian dollars. It follows that this value will be included in the mechanic’s income for tax purposes.

The same principle applies where goods, rather than services, are exchanged for cryptocurrency. The Canadian dollar value of those goods will similarly be brought into the taxpayer’s income where the transaction is business related. For example, if a consumer electronics store accepts cryptocurrency in exchange for a computer, the retail value of that computer in Canadian dollars will be included in the store’s income for tax purposes.

See:  CSE aims to be Canada’s first blockchain platform for trade clearing and settlement

Similarly, where a taxpayer uses cryptocurrency to purchase services or goods for their business, the CRA seems to hold that the value of the services or the goods purchased in Canadian dollars would become the amount the taxpayer must use to record their costs or expenses for tax purposes. This is due to the fact that, where the goods given up (i.e., cryptocurrency) cannot readily be valued but the goods or services received can, the CRA’s position has been that, in a barter transaction, it will normally accept the value of the latter as being the price at which the transaction took place if the parties were dealing at arm's length.

In the early days of cryptocurrency, determining the value of the cryptocurrency being exchanged for goods or services at a point in time would have likely been difficult. In such a case, the value of the good or service being exchanged would have been used to assign a price to the transaction for tax purposes. However, with the technology currently available, it is now much easier to quickly and accurately determine the Canadian dollar equivalent of most cryptocurrencies. As such, it may generally become more practical for the taxpayer using cryptocurrency to purchase goods or services to value the transaction based on the fair market value of the cryptocurrency given as consideration.

Trading cryptocurrency

Cryptocurrency can also be bought or sold. In this regard, the CRA has specifically stated that cryptocurrency is to be treated as a commodity for income tax purposes and any resulting gains or losses arising from the trading of cryptocurrency will be taxable in the same manner as any other commodity.

Whether such gains or losses are taxable as income or capital will depend on the facts surrounding the transactions. Similar to transactions involving other types of commodities, the tax consequences of realizing any resulting gains or losses would be determined by considering a variety of factors, including the intention of the taxpayer, as well as both the nature of and the frequency of the transactions. Other factors to consider could also include the following:

  • the period of ownership
  • the taxpayer’s expertise and knowledge of cryptocurrencies
  • the relationship, if any, between the cryptocurrency transactions and the taxpayer’s ordinary business
  • the time spent engaged in cryptocurrency activities
  • the type of financing that is required to support the taxpayer’s cryptocurrency activities
  • whether the taxpayer has advertised or otherwise made it known that they are engaged in this activity.

In most cases, the courts and the CRA have relied on a combination of these factors when determining whether a taxpayer’s activities are on account of income. For instance, a taxpayer who actively and regularly speculates in cryptocurrency, such as a day trader, will be more likely to be taxed on income account, whereas a taxpayer who buys cryptocurrency infrequently with the intention of holding it as an investment will be more apt to have such transactions taxed as capital in nature.

See:  NCFA Canada’s submission to Finance Canada (March 2018): Urgent Need for Regulatory Change and Government Support

There may be some uncertainty, however, as to whether transactions arising from the mining of cryptocurrency are on account of income or capital. Consider that cryptocurrency mining can be a complex undertaking that generally involves the use of highly specialized and powerful computer equipment that consumes an almost astronomical amount of electricity. In this case, where a taxpayer mines cryptocurrency in a commercial and business-like manner, the value of the cryptocurrency coins mined would be included in the miner’s income for tax purposes. However, the upshot of this position would be that any outlays to purchase computing equipment or expenses incurred for electricity could likely be claimed to reduce the net amount of mining income included in taxable income. Conversely, it may be possible that in some circumstances the mining of cryptocurrency could be treated as a hobby or a personal endeavour (and not subject to income tax).

Finally, the CRA takes the position that the foreign reporting requirements extend to cryptocurrencies that are situated, deposited or held outside of Canada. This means that Canadian taxpayers who hold cryptocurrency outside of Canada with a cost that exceeds CDN$100,000 at any time during the year, either directly or indirectly through funds, that is not used or held exclusively in the course of carrying an active business, will have an obligation to file Form T1135 to report the property.

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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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Royal Bank of Canada Enters Agreement with VersaPay to Offer ARC™ to Business Customers Under RBC Brand

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Newswire.ca |

Royal Bank of Canada Enters Agreement with VersaPay to Offer ARCTM to Business Customers Under RBC Brand (CNW Group/VersaPay Corporation)

TORONTOJuly 6, 2017 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoice-to-cash solutions including electronic invoice presentment and payment, automated accounts receivable, cash application and collections management, today announced a strategic relationship with Royal Bank of Canada RBC (TSX: RY). As part of the agreement RBC will offer its business customers VersaPay ARC, an integrated accounts receivable solution, under the RBC brand.

"RBC is always looking for new and innovative ways to help clients use digital platforms to manage and grow their businesses," noted Greg Grice, EVP, Business Financial Services at RBC. "The invoice-to-cash process is vital to the success of all businesses. Integrating this offering into RBC's leading cash management solutions, our business clients now have another way to improve the customer experience and better manage their receivables and cash flow."

RBC's relationship with VersaPay is unique amongst major banks in Canada — the collaboration between the Canadian Fintech and one of Canada's largest banks has provided commercial businesses with a leading and robust cash management solution.

"We are delighted to collaborate with RBC to deliver this new offering. With the bank's breadth and depth of banking and cash management services, and an impressive roster of business customers, RBC is in an ideal position to expand the use of ARC," commented Craig O'Neill, CEO of VersaPay. "The RBC team has been a pleasure to work with as we integrated our systems and prepared our market launch. We look forward to serving many customers together."

As part of the agreement, RBC will offer the solution to its business customers, with support from the VersaPay team. The bank has already introduced the service to select clients with the first RBC customer already signed. By signing up for the new service, RBC clients can offer an enhanced customer experience, reduce manual effort and operational costs, gain greater insight into their customers' accounts, and get paid faster.

About VersaPay

VersaPay is a Fintech company and leading provider of cloud-based invoice-to-cash solutions, enabling businesses to provide a superior customer experience, get paid faster, streamline financial operations, and dramatically reduce DSO and costs. VersaPay ARC is the new standard in accounts receivable and collections management with a customer self-service environment to view invoices online, collaborate on inquiries and disputes, and facilitate secure online payments (EFT/ACH and credit card). Businesses gain access to a suite of powerful tools that enable efficient collections, cash application and real-time insight into accounts receivable. VersaPay ARC automatically reconciles payments and account information through integrations with a wide range of ERPs and accounting software providers.

More information about VersaPay is available at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.

Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Source: VersaPay Corporation  

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.

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MONEY:TWO GUYS WITH A BIG DREAM TRANSFORMING BANKING

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Everything Zoomer | By Peter Muggeridge | June 20, 2017

When most of us go about our daily banking, without really thinking about what happens to our money. We deposit our cheques, invest in a GIC or pay our mortgages with the comfort that our money is safe and secure. But seldom do we consider the mechanics of the banking system, such as where our money is invested and what ventures it supports.

Paul Allard and Andy Krupski want to change all that. This pair of disruptors ran into each other a few years ago and realized they had similar goals. Allard, from Montreal, Krupski, from Toronto, wanted to make two changes in the financial industry: a) change the ways banks do business and b) change the way customers interface with their banks.

That's the concept behind impak Finance – an enterprise that isn't only in the business of making money but also wants to help individuals and companies improve the world.

Changing an entrenched industry like the banking sector is a lofty dream. Allard and Krupski spoke recently at ideacity 2017. Here's their story:

Allard and Krupski came to the financial world from diverse backgrounds. Krupski ran Sprint Canada before moving into the marketing and communications field, with The Hive. Allard's path was more eclectic: he studied music and engineering, became a stage performer (touring with Les Miserables) before becoming highly successful in the world of tech start-ups, including Engagement Labs. Both were doing well in their fields. Yet both felt something was missing.

Krupski: "About 10 years ago, I decided that, when all the shouting is done, can I leave a legacy somehow? I reframed my company's mission to do what's right for the customers and, where possible, what's right for the world."

Allard: "I was seeking something with more purpose. I wanted to combine my entrepreneurial skills with my knowledge of tech but to give a purpose to all of it."

When they bumped into each other, they batted around ideas before eventually settling on transforming the banking industry.

Krupski: "About two years ago, I was studying the financial business trying to understand how Millennials are interfacing with their banks and a lot of the research coming out was that they were distrustful ­ – the financial institutions were certainly safe (especially here in Canada) but their motivations were questionable, especially with the amount of money they were making."

Allard: "Through my work raising money through investment bankers, I got really interested in understanding the mechanics of the financial economy. And the more I read, the more and more pissed off I became. I read all the thought leaders and I began to understand that banks don't work for most of the people on the planet."

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This led to the novel idea of not trying to take on the big banks but to offer an alternative to the way banks carry out their business. Traditionally, financial institutions take your deposits and much of it is invested in complex financial vehicles (derivatives, hedge funds, financing transactions) that have nothing to do with the real economy. While bank profits are massive, their motivation is solely to make profit, not improve the world. Both men saw an opportunity to change this construct.

Krupski: "The big banks have the ability to leverage money. There's a lot of money swirling around but not enough of it is going into the real economy."

Allard: "There's been sort of a disconnect with the financial economy and the real economy. I always felt finance and financial tools should help support the real economy. The real economy creates job and creates wealth."

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.

 

 

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2016 Small Business Forum Oct 25th: Visit Booth #135 for Chance to Win #CCS2017 Tickets!

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NCFA Canada | Oct 24, 2016

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CHANCE TO WIN FREE #CCS2017 TICKETS!

NCFA Canada will be at the Small Business Forum 2016 at Booth #135.  Come visit our Booth on Tuesday, Oct 25th and get your photo taken with the National Crowdfunding Association (NCFA) for an opportunity to win a ticket to the 3rd Annual Canadian Crowdfunding Summit (#CCS2017) on March 1st at the MaRS Discovery District.

Rules:

  1. Visit our booth and let us snap a photo of you by the NCFA banner.
  2. We will post the photo to our Twitter and/or Instagram account and tag your company/organization.
  3. All you have to do is share it and ask others to like and/or share your photo with “Help me get FUNDED & win a ticket to #CCS2017 with @NCFACanada
  4. The photo with the most engagements, retweets and likes will enter our draw to win a complimentary ticket to the 3rd Annual Canadian Crowdfunding Summit (#CCS2017)

Small Business Forum 2016 Info:

Tuesday, October 25, 2016
Metro Toronto Convention Centre
222 Bremner Boulevard
South Building, Level 800, Exhibit Hall F &G
Toronto, Ontario M5V 3L9

*Attendee tickets are FOC

Full list of exhibitors:  http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=5aeb34c42bca7410VgnVCM10000071d60f89RCRD

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Anti money-laundering watchdog assessing vulnerability of fintech startups

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BNN | Alexandra Posadzki |The Canadian Press

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TORONTO -- The director of Canada's anti-money laundering watchdog says the agency is studying how vulnerable certain emerging technologies, such as those being pioneered by so-called fintech startups, are to financial crime.

Gerald Cossette says it's important for the federal government to encourage innovation by emerging financial technology companies.

But, he adds, Ottawa must balance that with the need to protect the integrity and stability of the financial system.

Cossette says many fintech startups -- for example those that deal with currency exchange or sending cash -- may not realize that they are required to register with Fintrac, the anti money-laundering agency, as money services businesses.

The definition of a money services business was expanded in 2014 to include companies that deal with virtual currencies, and the Finance Department is working on regulations to specify which virtual currency activities will be covered.

See:  The Rise of Fintech – What You Need to Know & Financial Services Now Offered

While some innovations are actually new takes on existing technologies and business models, others have been "more revolutionary in nature," says Cossette.

"In these cases there are some concerns that new entrants and technologies are disrupting traditional trusted intermediaries and existing business models, ultimately challenging Canada's existing regulatory paradigm," he says.

Continue to the full article --> here


The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at ncfacanada.org.

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