Global fintech and funding innovation ecosystem

Questions Financial Regulators Love to Ask

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As any entrepreneur knows, when you are creating something new, there are no shortage of naysayers.  Among the 3 types of clients we work with (investors, corporates and financial regulators) the regulators tend to look at new things most skeptically.  But, of the many questions I’ve ever been asked by financial regulators, this one was the biggest surprise:

“How can we as the regulator help to stimulate the development of a healthy crowdfunding industry in our country?”

It is the moment you always hope you can reach in any sales process – when the prospect is thinking beyond the purchase and on to how to implement.   This regulator is now vested in the success of this new market and are wisely looking for appropriate action steps they can take to create a stable, growing and transparent market.

Here is how I answered…If you are talking with government officials (city/state/national) or regulators, please feel free to use these answers as your own.  I only ask that you hit me on Twitter @CrowdCapAdvisor to let me know how they worked and what you added/modified.

Actions the regulator/government agency should take to support crowdfunding:

Actively support the creation of a trade association by the industry itself.  The association should include all parts of the online finance industry (a.k.a. debt and equity crowdfunding, marketplace lending, etc).  This trade association can implement global standards/best practices for what services and safeguards platforms should deliver and then only members of that trade association can apply to the financial regulator for a license to conduct online finance (equity/debt crowdfunding, marketplace lending, etc).  This helps to align the interests of the industry and the regulator so they can lower the risk of fraudulent platforms coming into the market.


Meet with the ministries/departments/agencies of the government as well as private sector that are focused on economic growth, SME development and training entrepreneurs.

These organizations need a full understanding of what these new financing tools will deliver to their target audiences.  More importantly, these economic development organizations must take action and use global best practices and implement training programs to “prime the pump” for success stories and examples of how online finance can deliver capital to entrepreneurs and traditional SMEs.

This does not mean training every entrepreneur immediately.  Start small – maybe deliver hands-on training over the course of the first year to 100 startups and 100 traditional SMEs…these pioneers will localize the best practices and become local experts in these new methods of raising capital for startups and SMEs.  They can go on to train their peers.  (Also, don’t forget – large corporates can also use online finance in very interesting ways…I’ll discuss further in an upcoming post.)

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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 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

share save 171 16 - Questions Financial Regulators Love to Ask

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