ICOs can work for companies, Bank of Canada paper finds

Investment Executive | James Langton | May 7, 2019

bank of canada 2 - ICOs can work for companies, Bank of Canada paper findsInitial coin offerings (ICOs) can be an effective approach to start-up financing, argues a paper from the Bank of Canada.

A new staff working paper from the central bank examined the ICO phenomenon that has emerged in recent years as a way for fledgling companies to secure early-stage financing.

While the approach has attracted a fair amount of negative attention amid reports of failed and fraudulent offerings, the paper found that it can actually be the ideal way to fund a company in certain circumstances.

Specifically, the paper looked at how the ICO structure impacts the incentives of entrepreneurs, compared with traditional debt and equity financing, and concluded that it can be the better way to finance a company.

“Our results show that ICOs can have beneficial economic properties when compared with conventional financing strategies,” it said. “For certain projects, ICO financing generates a higher net present value than conventional modes of financing and is sometimes the only profitable form of financing.”

According to the paper, the essential factor is that returns to ICO investors be based on a project’s sales revenue, rather than profits.

See: 

“This can make things better in situations where effort by the entrepreneur leads to cost savings rather than higher sales,” it noted, as the benefits of cost savings are entirely retained by the company.

At the same time, the paper also highlighted a couple of unique risks to ICOs, including the risk of market manipulation. “Token ownership needs to be sufficiently widely dispersed to avoid [that risk],” the paper said.

Continue to the full article --> here

Bank of Canada Staff Report:  'Entrepreneurial Incentives and the Role of ICOs


NCFA Jan 2018 resize - ICOs can work for companies, Bank of Canada paper finds 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

Latest news - ICOs can work for companies, Bank of Canada paper findsFF Logo 400 v3 - ICOs can work for companies, Bank of Canada paper findscommunity social impact - ICOs can work for companies, Bank of Canada paper finds
NCFA Fintech Confidential Issue 2 FINAL COVER - ICOs can work for companies, Bank of Canada paper finds

Canadian Consulate General in Hong Kong | Eunice Wong | July 16, 2019 [INVITATION] Webinar:  FinTech Market and Opportunities in Hong Kong / Canadian FinTech Trade Mission to Hong Kong @ HK FinTech Week 2019 You are invited to attend a Webinar - Hong Kong FinTech Market and Opportunities on July 23, 2019 (Tuesday)  9:00AM - 10:30AM Toronto Time Join us as we discuss the current Fintech Market in Hong Kong. This webinar will cover the following topics: HK Fintech Market and Ecosystem HK Fintech Opportunities HK Fintech Week 2019 as a platform Canadian FinTech Trade Mission to Hong Kong FinTech Week 2019 Speakers: Mr. Charles Ng, Associate Director-General of Investment Promotion, InvestHK Mr. King Leung, Head of Fintech, InvestHK Mr. Musheer Ahmed, General Manager, Fintech Association of Hong Kong See:  Hong Kong being pulled into the 21st Century — digital banking licenses finally arrive Agenda: Event Introduction by Ellen Cao, Ontario government (10 minutes) Hong Kong Fintech Market by InvestHK, Mr. Charles Ng, Associate Director-General of Investment Promotion; and Mr. King Leung, Head of Fintech (30 minutes) Hong Kong Fintech Market by Fintech Association of Hong Kong Mr. Musheer Ahmed, General Manager (10 minutes) Q&A (15 minutes) Government of ...
Read More
Government of Canada Hong Kong - ICOs can work for companies, Bank of Canada paper finds
NCFA Guest Post | July 16, 2019 Managing Finances in a New Startup Every day, new startups are launched and another entrepreneur decides to begin building a business. One of the challenges that startups often face is managing their money effectively. Managing business finances can differ from personal finances as one mistake could trigger several issues in your business. Being as meticulous and accurate as possible is one of many ways to grow finances in a healthy way. It’s also imperative that you keep your expenses low which can be done in numerous ways. On that note, here is how you can manage your finances if you happen to have a new startup. Create a Budget Every business that wants to effectively manage its finances needs a budget. This will give you an accurate idea of what your income and expenses look like so that you’re able to spend wisely and plan effectively. Below, you’ll find a couple of tips for creating a budget. Income: Firstly, you’ll need to write down every source of income that your business has. In the case that you don’t have any income yet, create a financial forecast and estimate how much you think you’ll ...
Read More
Managing finances in a new startup - ICOs can work for companies, Bank of Canada paper finds
Impression Ventures | Christian Lassonde | July 16, 2019 Intro:  NCFA Fintech Confidential spoke with some of Canada’s experienced fintech investors, on their background, how Canada has evolved, what we should be doing, advice to fintech founders and what keeps them awake at night.  This is part 3 of a 4 part series. What is your background, and how did you come to found Impression Ventures? I'm graduated from Western in the mid-90s with two degrees. Comp-Eng and Comp-Sci. I immediately started my own business, excited by the endless possibilities the internet could bring to gaming. I had no idea what I was doing - needless to say, that company didn't work out. But the lessons I learned being a first-time entrepreneur have stayed with me to this day. From there I moved to the Valley, worked for some all-star companies; Electronic Arts, LucasArts, Linden Lab, got an MBA and founded two more businesses, Millions of Us & Virtual Greats. After a decade in the San Francisco area, I moved back to Toronto. After a fourth startup (didn't work out) - I got very interested in the intersection of finance and technology, two businesses sectors Canadian's excel at, but there was ...
Read More
Impression Ventures - ICOs can work for companies, Bank of Canada paper finds
Coindesk |Michael J Casey | Jul 15, 2019 Let’s be clear: It was not the substance of Donald Trump’s tweet that made his critique of bitcoin and Libra so important last week. It should be of no surprise that this US President would declare himself “not a fan” of “highly volatile” cryptocurrencies “based on thin air” that “facilitate unlawful behavior” or that he much prefers a “dependable and reliable” currency “called the United States Dollar!” (Anyone who assumed Trump would be a “drain-the-swamp” libertarian advocate for censorship-resistant money had an ill-informed view of a man whose government is stacked with former Wall Street execs, who opposes free trade and immigration, and takes a draconian approach to a variety of civil rights and social liberties.) What matters is the very fact that a sitting president mentioned cryptocurrencies at all. Indeed, from a price perspective, Trump’s disparaging remarks are, on balance, positive for bitcoin. By Friday evening, the post-tweet price action reflected that. See:  Fintech Fridays Episode 32: Rallying behind Bitcoin with Frederick T. Pye More importantly, the tweet marks a symbolic milestone in the gradual but ever-expanding presence that cryptocurrency occupies in the public conversation around money and policy. It also marks ...
Read More
donald trump not a fan of bitcoin - ICOs can work for companies, Bank of Canada paper finds
Cointelegraph | Helen Partz | July 10, 2019 Global payment giant Visa has recorded its second investment in a crypto project by leading a $40 million funding round of Anchorage startup, according to a Fortune report on July 10. Visa has reportedly led the round along with major cryptocurrency venture capital (VC) firm Blockchain Capital to support institutional-grade crypto custody service Anchorage, which previously raised $17 million in an investment led by Andreessen Horowitz. In the new round, both the amount of Visa’s contribution and Anchorage’s private valuation were not disclosed, the report notes. Both Visa and Anchorage are founding members of Facebook’s cryptocurrency project Libra, which was officially revealed on June 18. See:  Ethereum will match Visa in scale in a ‘couple of years’ says founder As Fortune noted, the recent funding round is the second known investment of Visa in a crypto-related firm, with the payment giant having participated in a $30 million funding round in blockchain startup Chain back in 2015 alongside with Nasdaq and Citi. In late 2018, Chain was acquired by Stellar-focused firm Lightyear. The new funding will be used in Anchorage’s mission to provide an alternative to cold storage-based institutional custodies to ensure the ...
Read More
visa invests in crypto - ICOs can work for companies, Bank of Canada paper finds
The Block Crypto | Frank Chaparro | July 10, 2019 Quick Take The Security and Exchange Commission approved Blockstack’s token offering under Reg A+, an accelerated path for smaller companies to raise money publicly This is the first approval the SEC gave for a token offering, after a series of crackdowns the regulator led against unregistered ICOs it deems as securities The Securities and Exchange Commission (SEC) gave blockchain startup Blockstack the go-ahead today to conduct a $28 million digital token offering under Regulation A+, the first token offering of its kind ever approved by the SEC, according to the firm. The SEC has launched a series of crackdowns on unregistered initial coin offerings (ICOs), with the latest including a dispute with messaging app Kik over its $100 million ICO. Still, Reg A+ offerings have had their own headaches. Reg A+ is a fast track for smaller companies to publicly raise money with less strenuous accounting and disclosure standards than a regular token offering requires. Even so, Blockstack founder Muneeb Ali told the Wall Street Journal that the process is still very long and costly since the SEC had to devise a brand new protocol for token offerings under Reg ...
Read More
Blockstack Reg A token sale 1 - ICOs can work for companies, Bank of Canada paper finds
NCFA Canada | July 6, 2019 JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY. Ep34-July 6: Accelerating Fintech Growth HOST: Manseeb Khan, Fintech Friday's show host GUEST:  BRENDAN HOLT DUNN, Founder Holt Accelerator, (Linkedin) BIO:  Brendan is an investment guru who has close to 15 years in managing multi-billion dollar asset portfolios. He is currently the CEO of Holdun, a 5th generation family business which offers family office services, wealth management services, trust services, corporate services, concierge services and financial services and was awarded best Multi-Family Office in the Caribbean 2017 for Holdun Family Office. A tech savvy investor, he has made many investments in startups including Stradigi AI, Addepar, Uber, LeAD Sports Accelerator, Sway Ventures, and Falcon 5. He has accumulated five finance and investment certificates to compliment his finance degree from King’s University College. He’s considered by entrepreneurs to be founder friendly. About this episode: On this week's episode of NCFA's Fintech Friday's Podcast, our host Manseeb Khan sits down with Brendan Dunn the Managing partner of the Holt Accelerator program. They talk about why are accelerators are important, how the can find the right companies and what their Fintech Show is. Enjoy! Subscribe and tune in each ...
Read More
FF EP34 Brendan Holt Dunn - ICOs can work for companies, Bank of Canada paper finds
CNN Business | Clare Duffy | July 4, 2019 New York (CNN Business)American lawmakers are concerned that Facebook's Libra cryptocurrency may try to challenge the dollar and are demanding the company stand down. They want Facebook to immediately halt development of Libra until regulators have time to examine the plans and "take action," according to a letter sent Tuesday to the company by a group of lawmakers from the House Financial Services Committee. Chairwoman Maxine Waters, a Democrat from California, first suggested a moratorium on development the day Libra was announced. The new letter represents an escalation of pressure on Facebook's digital currency plans, which have also been scrutinized by regulators around the world. Other interest groups have weighed in, too: More than 30 organizations sent a similar request to Facebook on Tuesday, saying US and foreign regulatory systems are not prepared to address questions about "national sovereignty, corporate power, consumer protection" and other issues raised by the project. The lawmakers said they want to hold public hearings on the "risks and benefits of cryptocurrency-based activities and explore legislative solutions." "Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to ...
Read More
libra - ICOs can work for companies, Bank of Canada paper finds
Bicameral Ventures Release | June 27, 2019 TORONTO, June 27, 2019 /PRNewswire-PRWeb/ -- Bicameral Ventures, the fund powering value creation through their "Interconnected Investing" model, announced today a highly strategic investment in Balance aimed at accelerating its growth. The investment brings Bicameral's portfolio to nine projects that are targeting challenges in various layers of the technology stack, with an aim of delivering superior end-user experiences by leveraging the blockchain and associated virtualized technologies. "Most M&A destroys value, especially as the problems centrally-planned corporations are trying to solve grow increasingly complex. Instead, Bicameral has brought together a group of independent yet 'interconnected' projects working at all layers of this novel technology stack, to attack multiple facets of the largest challenges. Balance, with its unique take on institutional grade custody for digital assets and hyper focus on UX and connectivity, provides an important building block in the delivery of unparalleled end user experiences that leverage decentralized technology," said Alex McDougall, Chief Investment Officer, Bicameral Ventures. See:  Crypto Custody: Our Shared Journey Towards Mass Adoption Balance adds another critical component to Bicameral's unique portfolio of highly complementary projects focused on accelerating Web 3.0 adoption. As a key aspect of executing on Bicameral's "Interconnected Investing" ...
Read More
Bicameral and balance - ICOs can work for companies, Bank of Canada paper finds
Bank of England Review of UK’s financial system | By Huw van Steenis | June 20, 2019 Overview My report, The Future of Finance , looks at how the economy is changing; how finance can serve and support these changes; and what it could mean for the Bank of England. We have looked beyond the immediate challenges posed by the UK’s withdrawal from the EU to identify longer-term trends shaping the economy and finance — and how the Bank can support this evolution for the good of the people of the United Kingdom. A new economy is emerging driven by changes in technology, demographics and the environment. The UK is also undergoing several major transitions that finance has to respond to. What this means for finance Finance is likely to undergo intense change over the coming decade. The shift to digitally-enabled services and firms is already profound and appears to be accelerating. The shift from banks to market-based finance is likely to grow further. See:  Tech’s raid on the banks EY Global FinTech Adoption Index finds over half (64%) of global consumers use FinTech The Roadblocks to European Fintech Expansion Ultra low rates, new regulations and the need to invest ...
Read More
review of UK financial system report June 2016 - ICOs can work for companies, Bank of Canada paper finds