Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Chainanalysis | Feb 1, 2023
Image: Chainanalysis
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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Guest Post | Feb 1, 2023
Image: Unsplash/Christina @ wocintechchat.com
Cryptocurrency has taken the world by storm since its entrance into mainstream awareness. This new form of money is quickly becoming a sought-after resource for individuals looking to acquire venture capital or to fund startups. The possibilities that cryptocurrency provides in the fundraising and venture capital industry are unique, adding another layer of complexity to the already intricate process, which requires careful consideration from entrepreneurs and investors alike.
This is because cryptocurrencies offer several advantages over traditional fiat currencies, such as lower transaction costs, higher security, and quicker settlements. Cryptocurrencies are also becoming more widely accepted as a form of payment. Because of this, cryptocurrencies are becoming more popular in the fundraising and venture capital sectors. In fact, some startups and venture capital firms now accept and trade cryptocurrency for investment deals.
Cryptocurrency fundraising refers to the process of raising funds for a project or venture by accepting cryptocurrency as a form of payment. This type of funding has become increasingly popular in recent years as it enables companies to tap into a global pool of investors. Using cryptocurrencies to raise money is an option that works well for initiatives tied to blockchain technology. A popular form of Cryptocurrency fundraising is the initial coin offering (ICO).
An initial coin offering is a fundraising event within the blockchain technology framework. It’s similar to an initial public offering (IPO), except that it employs cryptocurrency instead of traditional currency. There are two different kinds of initial coin offerings: private and public.
When a company makes a private initial coin offering, only a select group of investors who have met certain criteria are permitted to participate, whereas a public initial coin offering is a form of crowdfunding that is directed at the broader public. In addition, the initial public offering is considered more democratic than other forms of investing since virtually anybody can become an investor. Other forms of cryptocurrency fundraising include initial exchange offerings (IEO) and initial decentralized exchange offerings (IDO).
Venture capital is the funds that individuals invest in businesses in return for a stake in the company. Most of the funds generated are invested in the company's growth and expansion. Venture capitalists prefer to back startup companies that can develop into substantial enterprises, have a clear strategy for the future, and provide a favorable return on investment.
Venture capital funding is usually divided into five stages. These stages are pre-seed, which is also known as stage 0; seed capital (stage 1), startup capital (series A), early stage (series B), and expansion stage (series C).
Venture capital can serve various purposes for a startup, each tailored to the company's specific requirements at a given moment. For example, crypto venture capital, in the context of cryptocurrencies, can be used to speed up development, launch the project, recruit key personnel, and ready the business for an initial coin offering.
People investing in venture capital funds have the same goal: to amass a large fortune in a short period of time. Accordingly, administrators of such funds often extend invitations to potential investors using a prospectus.
Cryptocurrency fundraising is often compared to traditional equity fundraising, as both involve the exchange of funds for a stake in the project. However, there are a few differences between cryptocurrency fundraising and traditional fundraising. Firstly, cryptocurrency fundraising is often done through initial coin offerings, a crowdfunding type. Secondly, cryptocurrency fundraising is usually open to a wider range of investors, as it does not require accreditation.
There’s a rise in demand for investments in the blockchain/cryptocurrency industry. As a direct consequence, crypto venture capital companies are putting money into the crypto space to achieve high returns on their investments.
The following are some of the factors that contribute to the sector's attractiveness to potential investors:
Image: Unsplash/Art Rachen
All transactions on the blockchain are verified by a distributed network of nodes, making the data available to anybody. Since the blockchain record is accessible to the public, tracking the movement of money is easy, because cryptocurrencies are traded directly between digital wallets.
Raising funds through cryptocurrency could be the perfect way to get young investors interested. Not only is this a great way to access an increasingly valuable fund base, but these emerging investors come with a ready-made enthusiasm to make serious investments. Plus, it's the modern, tech-savvy solution that's sure to make any project stand out!
Since many participants who would normally function as middlemen in financial transactions are removed from a blockchain system, the transactions are usually processed more quickly and at a lower cost. This is especially helpful when making international donations, because banking costs and procedures might reduce the overall impact of the funds.
By accepting cryptocurrency donations, venture capital firms may expand their global reach without experiencing any of the many drawbacks that often outweigh the benefits of a more geographically dispersed donor pool.
Although there are a lot of benefits linked with them, the use of cryptocurrencies comes with various challenges, such as uncertainty over regulatory requirements and market volatility.
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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Kramer Levin | Jan 23, 2023
Image: Unsplash/Milad Fakurian
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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FIS Release | Kim Snider | Jan 24, 2023
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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Decrypt | Kate Irwin | Jan 19, 2023
Image: NYX Pro Makeup US
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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GST | Jan 12, 2023
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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Guest Post | Jan 20, 2023
Image: Freepik/crypto
Cryptocurrency is a revolutionary new form of money and it’s here to stay. With its decentralized, digital nature, it can be utilized for financial transactions with greater privacy than a traditional currency like dollars and euros. But even though blockchain technology offers more security than other systems, there are still necessary steps that need to be taken in order to ensure that crypto transactions are done safely. In this blog, we'll be taking a look at why knowing your customer (KYC) is important for crypto transactions.
KYC stands for ‘know your customer’ and is a set of procedures required by most financial institutions. It is a process by which businesses verify the identity of their customers in order to ensure that they are not involved in any illegal activities such as money laundering or terrorism financing. This involves collecting information like names, addresses, and other documents to verify the customer’s identity.
AML stands for ‘anti-money laundering’, which is a set of laws and regulations to prevent criminals from using the financial system to launder money. AML requires businesses to put in place certain measures to help identify suspicious activity and ensure that customers are who they say they are.
Crypto is a digital form of currency that exists on a decentralized, secure network called the blockchain. It can be used to make payments, store value, and transfer funds without any third-party interference like banks or governments. This makes it an attractive alternative for those who want to make financial transactions without having to worry about the regulations associated with traditional currency. Transactions are secure, private and fast, so it’s no wonder that more and more people are turning to cryptocurrency as time goes by.
AML regulations were put in place to protect businesses and consumers from financial crime such as money laundering. They also help ensure that the customer is legitimate and not attempting to use someone else’s identity for illegal activities. These regulations can help reduce fraud, as well as provide better protection for customers and businesses alike.
Examples of AML regulations include customer due diligence (CDD), suspicious activity reports (SARs), and know-your-customer (KYC) processes. Let's look further into two and how they prevent money laundering:
Customer Due Diligence: This is a process where businesses perform due diligence on their customers to ensure that they are not involved in any criminal activity. This includes verifying the customer’s identity, assessing their source of funds, and monitoring their transactions for signs of suspicious activity.
Suspicious Activity Reports: Businesses are required to report any suspicious activity or transactions that may be related to money laundering. This helps prevent criminals from using the financial system for illegal activities.
Combined with KYC, these regulations help make sure that businesses are not unwittingly used for money laundering and other financial crimes. This keeps cryptocurrency transactions safe and secure, while at the same time ensuring that customer data is kept private and secure.
Cryptocurrency transactions are often anonymous, meaning that there is no way to verify the identity of the sender or receiver. Therefore, it is important for businesses involved in crypto transactions to ensure that proper KYC measures are taken.
Let's take a look at some of the benefits of using KYC for crypto transactions:
The blockchain is an immutable ledger, meaning that it is nearly impossible for anyone to alter or reverse a transaction once it has been written to the chain. However, this does not mean that there are no risks involved with using cryptocurrencies. Without KYC procedures in place, there is still a risk of malicious actors exploiting the system and attempting to launder money or steal identities. That’s why it is so important for businesses to use KYC when dealing with crypto transactions.
Cryptocurrency is still a relatively young industry, and it’s uncertain whether it will become widely adopted in the future. But one thing is for certain: KYC procedures are essential for businesses involved in crypto transactions to ensure that their customers' funds and identities are safe.
By taking the necessary steps to implement KYC regulations, businesses can help protect themselves and their customers, as well as create a more secure crypto environment.
KYC is an important part of any cryptocurrency transaction. By implementing proper KYC procedures, businesses can reduce the risk of fraud or money laundering while also creating a smoother and safer experience for customers. This helps to promote customer trust and loyalty, while also ensuring compliance with AML regulations. With the right measures in place, businesses can help ensure that crypto transactions are secure and compliant.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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NCFA Canada
Craig Asano
CEO and Executive Director
casano@ncfacanada.org
ncfacanada.org