snIP/ITs Insights on Canadian Technology and Intellectual Property Law

Tag Archives: fintech

Project Jasper Update: White Paper Release and Phase 3 Announcement

Posted in Fintech

Project Jasper is an experiment being done by the Bank of Canada, Payments Canada and R3 to test the viability and feasibility of using Distributed Ledger Technology (“DLT”) as the basis for wholesale interbank payment settlements. This project was launched in March 2016 and has completed two phases. Phase 1 of Project Jasper employed the Ethereum platform as the basis for the DLT, while Phase 2 employed the custom-designed R3 Corda platform. In June 2017, the Bank of Canada issued a report on its preliminary findings from Project Jasper, which were summarized in our previous article. On … Continue Reading

Ontario Securities Commission Approves First ICO in Ontario

Posted in Fintech, Regulatory Compliance

In a decision expected to be widely noted by the startup community, the Ontario Securities Commission (“OSC”) approved the first initial token offering (“ITO”, also known as an initial coin offering or “ICO”) in Ontario. The decision released October 17, 2017 comes in the wake of increasing innovation and market activity within the fintech and cryptocurrency space in Canada.… Continue Reading

Transatlantic Policy Working Group Releases Future of RegTech Report

Posted in Fintech, Regulatory Compliance

The Transatlantic Policy Working Group (“TPWG”), an organization set up by Innovate Finance and some of its partners and which is dedicated to Fintech policy discussion between the United States and United Kingdom, recently published a report entitled The Future of RegTech for Regulators (the “TPWG Report”).  RegTech refers to the use of technology to facilitate compliance with regulatory requirements via  improved data analytics, reporting, and information governance (please see our previous blog posts on RegTech here and here). These technologies have the potential to help business increase accuracy of their reporting and compliance programs … Continue Reading

B.C. Securities Commission Announces First Registration of Investment Fund Manager Dedicated to Cryptocurrency Investments

Posted in Fintech, Regulatory Compliance

On September 6, 2017, the British Columbia Securities Commission (“BCSC”) announced the first registration of an investment fund manager in Canada dedicated solely to cryptocurrency investments. First Block Capital Inc. (“First Block Capital”), which will operate a bitcoin investment fund, was registered as an investment fund manager and exempt market dealer. The company is also registered in Ontario, with the BCSC being its principal regulator.… Continue Reading

Canadian Securities Administrators Weigh-in on the Applicability of Canadian Securities Laws to Cryptocurrencies, including Coins and Tokens

Posted in Fintech, Regulatory Compliance

On August 24, 2017, Staff of the Canadian Security Administrators (the “CSA”) released CSA Staff Notice 46-307 Cryptocurrency Offerings (the “CSA Notice”), published in all Canadian jurisdictions except Saskatchewan.[1]

The CSA Notice addresses a number of considerations of relevance to Fintechs, investors and their advisors, including the potential applicability of Canadian securities laws to initial coin offerings (“ICOs”) and initial token offerings (“ITOs”), cryptocurrency exchanges and cryptocurrency investment funds. It follows a press release issued by the Ontario Securities Commission earlier this year confirming that Ontario securities laws may apply to … Continue Reading

Government of Ontario Issues Financial Services Report Following Red Tape Challenge: Implications for Fintechs

Posted in Fintech

On August 9, 2017, the Government of Ontario released its report on financial services following the Red Tape Challenge.  This report contains a number of recommendations and action items relating to Fintech:

  • New flexible, innovative provincial financial services regulator – As previously announced, the Government of Ontario is proceeding with its plans to establish a new financial services regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”), which is intended to be a “new, flexible and innovative financial services and pension regulator”, and which will replace existing provincial financial services regulators, including the Financial Services Commission of Ontario
Continue Reading

Bank of Canada Releases Fintech Discussion Paper

Posted in Fintech

In July 2017, the Bank of Canada released a discussion paper outlining a framework for the assessment of risks and opportunities for central banks in connection with Fintech. This paper also more generally explores potential implications of Fintech for central banks, given their mandate over monetary policy, the design and distribution of currency and/or financial stability. … Continue Reading

De-Risking in Financial Services: Perspectives and Implications

Posted in Financial, Fintech

The context of de-risking

In the past decade, the financial services sector across the globe has experienced increased regulatory scrutiny, particularly in the areas of financial crimes, anti-money laundering (AML) and anti-terrorist financing (ATF) regulation.

Financial institutions have generally reacted to the new regulatory environment by bolstering their compliance and risk management divisions with increased budgets and headcounts.[i]  However, as the price and regulatory risk of banking increases, some financial institutions are assessing the cost-benefit analysis of certain activities and are opting, simply, to exit entire product lines or customer segments. This phenomenon is one aspect of what is … Continue Reading

Financial Stability Board Issues Report on Fintech Credit Platforms

Posted in Fintech

On 22 May 2017, the Financial Stability Board (FSB)[1] and the Committee on the Global Financial System (CGFS)[2] released a report entitled “FinTech credit: Market Structure, Business Models and Financial Stability Implications” (the “Report”).  The Report aims to provide an accurate picture of the extent and nature of Fintech credit activity by analysing the functioning of Fintech credit markets, including the size, growth, and nature of such activities, and the benefits and risks of Fintech credit platforms.… Continue Reading

European Banking Authority Publishes Draft Recommendations for Cloud Computing

Posted in Fintech, Regulatory Compliance

In March 2017, the European Commission (EC) issued a public consultation document on Fintech. Cloud computing is a major area covered by the EC request for comment and requires delicate balancing between innovation and risk minimization. On one hand, cloud is an easily scalable and cost effective way for financial institutions to manage their data storage and processing.  However, cloud also presents major banks with increased cybersecurity and compliance risk.  The topic of cloud is particularly relevant because certain Fintech enterprises may not be subject to the same regulatory constraints as major financial institutions.

The European Banking Authority (EBA) published … Continue Reading

European Banking Authority Responds to European Commission Public Consultation on Fintech: Potential Takeaways for Canada

Posted in Big Data, Cybersecurity, Financial, Fintech

In March 2017, the European Commission issued a public consultation document on Fintech.  The goal of the European Commission (EC) document is to further the objective of a digital single market within Europe.  This will be done by supporting the development of digital infrastructure,  improving access to goods and services, and ensuring rules foster technological development.

The European Banking Authority (EBA) published its response to the public consultation in June 2017.  The EBA response is significant because it sheds light on how European banks are approaching the areas of artificial intelligence, roboadvisors, crowdfunding, and big data.  Institutions in other countries, … Continue Reading

“Not There Yet”: Bank of Canada Experiments with Blockchain Wholesale Payment System

Posted in Fintech

The Bank of Canada has issued a report on Project Jasper, its recently completed experiment testing the viability of distributed ledger technology (DLT) as the basis for a wholesale payment system. The experiment was a combined effort by the Bank of Canada and Payments Canada, along with Bank of Montreal, Canadian Imperial Bank of Commerce, HSBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Canada Trust. The experiment revealed that such technology is not more beneficial, at least for now, than the current centralized system of wholesale payments. However, the successful proof-of-concept highlighted best practices for wide-scale … Continue Reading

Australian Regulator Issues Guidance on Use of Distributed Ledger Technology: The View from Canada

Posted in Fintech, Regulatory Compliance

In an effort to help regulated entities and interested parties evaluate whether the use of distributed ledger technology (DLT) would enable them to meet their regulatory obligations and to fast-track its discussions with stakeholders, the Australian Securities and Investments Commission (ASIC) has released an information sheet, “Evaluating Distributed Ledger Technology” (INFO 219), offering guidance for entities licensed by ASIC and start-ups that are “considering operating market infrastructure, or providing financial or consumer credit services” using DLT or blockchain.

Noting the “intense interest in DLT” ASIC is seeing from a wide range of financial services market players in recent … Continue Reading

Blockchain applications may be caught by Ontario’s securities law

Posted in Fintech, Regulatory Compliance

The Ontario Securities Commission (OSC) has issued a press release advising stakeholders that Ontario securities law may apply to any use of distributed ledger technologies (DLT), such as blockchain, as part of financial products or service offerings.

The OSC emphasized that it is keen to support the innovative potential of DLT because, among other things, DLT has the potential to increase transparency and efficiencies in the capital markets. However, because of DLT’s novelty, the OSC encourages business to speak to the OSC about securities law and investor protection requirements that may apply.

The OSC has cautioned that “[p]roducts or other … Continue Reading

Initiatives des Autorités canadiennes en valeurs mobilières sur les Fintech : bac à sable réglementaire et coopération

Posted in Fintech, Regulatory Compliance

Le 23 février 2017, les Autorités canadiennes en valeurs mobilières (ACVM) ont annoncé le lancement d’un bac à sable réglementaire. L’objectif du bac à sable réglementaire est d’appuyer les Fintech en leur permettant de faire une demande à l’organisme de réglementation compétent afin de bénéficier d’une approche plus adaptée en matière de réglementation. Cette approche doit faciliter l’utilisation d’applications, de produits et de services novateurs chez les entreprises au Canada, tout en protégeant adéquatement les investisseurs.… Continue Reading

Canadian Securities Administrators Fintech Initiatives: Regulatory Sandbox and Co-Operation

Posted in Fintech, Regulatory Compliance

On February 23, 2017, the Canadian Securities Administrators (CSA) announced the launch of a regulatory sandbox. A regulatory sandbox aims at supporting Fintech businesses by allowing them to apply to the regulator to benefit from a more tailored approach to regulation that balances the need to facilitate the use of innovative products, services and applications all across Canada with appropriate investor protection.

As a result, the CSA will assess the merits of each business model, on a case-by-case basis, and allow innovative businesses to register or grant them relief from certain requirements to permit them to test their products and … Continue Reading

Partnerships between Banks and Fintech Companies: A Continuing Trend for 2017

Posted in Fintech

Fintech companies are offering game-changing products and services in the financial services sector, responding to customer demand for frictionless technology. Canadian banks are likewise increasingly seeking to offer innovative products and services. In addition to developing such products and services in-house, banks have been partnering with Fintech companies, seeking to leverage their technological know-how and cost-effective offerings.  Fintech companies in turn seek to leverage banks’ customer relationships, their reach and experience and their expertise in compliance and risk management.  Partnerships between Canadian banks and Fintech companies increased in late 2015 and 2016, and this trend is expected to continue. Some … Continue Reading

Fintech Regulatory Developments: 2016 Year in Review

Posted in Fintech, Regulatory Compliance

This year was a tremendously active year for Fintech in Canada and internationally, and 2017 promises to be even more so.  In the Fall of 2016, we co-authored a comprehensive report together with the Digital Finance Institute, “FinTech in Canada: British Columbia Edition” on the state of the Canadian Fintech ecosystem, highlighting a number of the then-current industry and regulatory developments.  As we head into 2017, we provide a brief summary of some of last year’s Fintech regulatory developments in Canada and globally, and some developments to watch for in the upcoming year.… Continue Reading

Ontario Enacts Ban on the Expiry of Rewards Points

Posted in Fintech, Regulatory Compliance

On December 6, 2016, Bill 47 – Protecting Rewards Points Act (the “Act”), amending Ontario’s Consumer Protection Act, 2002 (the “CPA”), received Royal Assent.  The Act was first introduced on October 20 as a private member’s bill.

The primary effect – and stated purpose – of the Act is to prohibit the expiry of rewards points under consumer agreement due to the passage of time. Any provision to the contrary in any consumer agreement will be rendered void, with retroactive effect to October 1, 2016, such that all points purporting to expire after October 1, 2016, will need to be … Continue Reading

US Exploring Special Purpose National Bank Charters for Fintech Entities

Posted in Fintech

On December 2, 2016, the United States’ Office of the Comptroller of the Currency (OCC) announced that it would move forward with considering applications from Fintech companies to become special purpose national banks. The OCC also published a paper discussing the issues and conditions that it will consider in granting special purpose national bank charters (the “OCC Paper”).… Continue Reading

Government of Ontario Announces Launch of Consultations to Cut Red Tape in Financial Services and Insurance Regulation

Posted in Fintech

On December 1st, the Ontario Government announced it was launching consultations seeking public input to identify any “unclear, outdated, redundant or unnecessarily costly” financial services or insurance regulation in Ontario, with the aim to modernize and improve such regulation and achieve a regulatory regime that supports innovation and growth, while at the same time protecting the public interest. These consultations specifically include the following:

  • Provincial credit union legislation
  • Provincial mortgage brokering legislation
  • Provincial loan and trust corporations legislation
  • Provincial insurance legislation
  • the Financial Services Commission of Ontario (“FSCO”) Act.

The consultations come as Ontario is in the process … Continue Reading

Chatbots, Open Data and Sandboxes: Trending Topics from the 2016 Money20/20 Conference

Posted in Fintech

With 10,000+ attendees, including more than three thousand companies from seventy-five countries, Money20/20 is the largest annual global event focusing on payments and financial services innovation. The 2016 conference in Las Vegas this October featured a packed agenda of talks by industry and thought leaders on a broad range of current and emerging Fintech issues, as well as an exhibition area featuring Fintech companies, investors, incubators, venture capitalists, consultants, regulators and lawyers. A team of McCarthy lawyers attended again this year and report back on some of the hottest topics of the 2016 conference: machine learning and artificial intelligence (AI), … Continue Reading

2016 FATF Mutual Evaluation Report for Canada Released: Implications for Canadian Fintechs

Posted in Fintech

The Financial Action Task Force (FATF) released its Mutual Evaluation Report (the “Report”) for Canada on September 1, 2016, outlining its assessment of current anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) measures in Canada. The FATF is an independent inter-governmental body that develops and promotes global AML/ CTF policies and sets global standards. This Report assesses Canada’s level of compliance with the FATF 40 Recommendations and the level of effectiveness of Canada’s AML/CFT regime.

The prior 2008 Mutual Evaluation Report issued by the FATF rated Canada as non-compliant in a number of areas. Since then, a number of amendments to … Continue Reading

FinTech takes flight: Insights from the 2016 Canada FinTech Forum

Posted in Fintech

McCarthy Tétrault was a sponsor of the recent 2016 Canada FinTech Forum held in Montreal on September 20-21, 2016.  Steve Forbes was the conference’s keynote speaker.  McCarthy’s introduced the excellent conference panel on blockchain in the financial services industry, with Haskell Garfinkel (PWC) as moderator and Jerry Norton (CGI UK), Todd McDonald (R3), Sujan Menezes (Microsoft) as co-panelists.  The number of attendees at the conference more than doubled over the 2015 conference, demonstrating the ever-growing level of interest in the nascent FinTech industry for both start-ups and incumbents. Below, we set out a high level summary of some of the … Continue Reading