Crowdfunding – Page 3 – FinTech and Blockchain Law Watch

FinCEN proposal to impose AML obligations on U.S. Funding Portals

May 09 2016

By C. Todd Gibson, Michael McGrath and Ken Juster

On April 4, 2016, the U.S. Financial Crimes Enforcement Network (a bureau of the U.S. Treasury Department) (“FinCEN”) proposed rules that would require “funding portals” established under new Regulation Crowdfunding to implement policies and procedures designed to prevent money laundering, terrorist financing, and other financial crimes.

Current regulations under the Bank Secrecy Act (“BSA”) define a “Broker or Dealer in Securities” as an entity registered, or required to be registered as a broker or dealer under the Securities Exchange Act of 1934. Certain funding portals that operate in compliance with Regulation Crowdfunding are exempt from such registration, and therefore fall outside of the BSA definition. FinCEN is proposing to amend the defintion of a “Broker or Dealer in Securities” to specifically include funding portals, which will have the effect of imposing the same BSA obligations on funding portals as are currently imposed on fully-registered broker-dealers, such as filing suspicious activity reports.

A copy of the proposed amendment can be found here.

SEC provides U.S. crowdfunding guidance to investors

May 03 2016

By C. Todd Gibson, Michael McGrath, Ken Juster

The SEC recently issued guidance to potential investors in crowdfunding offerings in the form of a Q&A posted on the SEC website, which can be found here. This guidance, which is intended to educate investors regarding the rules governing crowdfunding in the U.S., was issued in anticipation of the pending effectiveness of new Regulation Crowdfunding on May 16, 2016. K&L Gates has prepared a detailed summary of Regulation Crowdfunding and the exemption from broker-dealer registration available to intermediaries known as “funding portals,” which can be found here.

Intermediaries were first able to submit forms to register as a funding portal with the SEC and FINRA beginning on January 29, 2016. A list of approved funding portals is expected to be available on FINRA’s public website in the near future.

Australian Government gets more FinTech friendly

Mar 23 2016

By Jim Bulling and Michelle Chasser

The Australian Government has released its responses to the industry’s priorities for fintech development which it has called “Backing Australian FinTech”. As well as affirming existing commitments, such as introducing a crowd sourced equity funding (CSEF) framework and an incubator support programme, the paper includes a number of initiatives that the Government proposes to undertake. New developments include:

introduction of an entrepreneur visa in November 2016 for foreign entrepreneurs with innovative ideas and financial backing from a third party;
possibly increasing the asset and turnover eligibility threshold for CSEF to A$25 million and reducing cooling off periods for investors to 48 hours;
consultation on a potential framework for crowd sourced debt funding;
increasing the maximum fund size of Early Stage Venture Capital Limited Partnerships (ESVCLPs) to A$200 million and providing a 10% tax offset on capital invested;
introduction of a mechanism to allow Innovation Australia to issue binding advice in relation to the definition of ineligible activities for ESVCLPs;
Productivity Commission inquiry into options for improving access to comprehensive credit reporting (CCR) data;
a regulatory guide for robo-advice providers;
possibly allowing licensed insurance brokers to sell insurance policies from unauthorised foreign insurers where they offer consumers a better price and appropriate consumer protection;
possibly applying anti-money laundering laws to digital currencies;
a commitment to address the ‘double taxation’ of using digital currency to purchase goods already subject to the Goods and Services Tax (GST);
establishment of a new Cyber Security Growth Centre; and
a ‘regulatory sandbox’ in Australia to allow FinTech start-ups to test their products and business models.

Backing Australian FinTech indicates that 2016 will be a busy year for fintech regulation in Australia.

Read Backing Australian FinTech here.

Islamic Finance and FinTech

Mar 04 2016

By Jonathan Lawrence

FinTech and Islamic finance techniques are both disrupting traditional structures in the conventional financial industry. Therefore it is appropriate that companies, investors and consumers aiming to be Islamic-compliant are able to use technology to increase access to financing structures that accord with their beliefs or those of their markets in the Muslim and non-Muslin worlds.

Mobile based Islamic-compliant banking is on the rise, especially among those who were previously unbanked for logistical or religious reasons. Among the most prominent disruptive ventures in Islamic finance is Dubai-based Beehive, a platform that aims to provide low-cost alternative financing to small and medium-sized enterprises (SMEs) and is the first peer-to-peer lending platform in the world to have received independent Shariah certification for its investments. Beehive has so far provided more than $4bn in financing for SMEs in the United Arab Emirates.

FinTech in the UK: Regulating Disruption

Mar 04 2016

By Sonia Gioseffi, Shehram Khattak, Jonathan Lawrence and Ronnie Yearwood

Without doubt, FinTech companies are in some ways deconstructing the services offered by larger banks in the UK and elsewhere. However, risks are not resolved because of the technology, as information and financial products are marketed and sold via web-based platforms, social media or other technological applications. Consumers still need to be clearly informed about the firms and the financial products being offered. Firms must still ensure that they adhere to the principle that their communications are “fair, clear and not misleading”. It is, therefore, better for a FinTech firm to apply and take advice on best practice in this regard, which saves money and time in the interim, than to wait either for enforcement from the regulator or for market failure to drive responses. Find our longer article here.

London Calling: London FinTech Podcast

Mar 04 2016

By Jonathan Lawrence

If you’re interested in the industry view from London, how about listening and subscribing to London FinTech Podcast? It provides access to many of the leaders in the London FinTech space and provides podcasts discussing topics including start up and emerging growth, marketplace lending, crowdfunding, alternative currencies, payment systems, equity funding, invoice finance, investment and the existing financial services response to FinTech innovations.

Some Feedback on Crowdfunding Reforms in Australia

Feb 23 2016

By Jim Bulling

International banking group Investec Australia has purchased a 20% stake in equity crowdfunding platform Equitise. Equitise, which is based in New Zealand, was founded in Australia in 2014, but has developed its business model in New Zealand as a result of slow development to crowdfunding regulation in Australia. The deal values the startup at close to AUD$10 million.

U.S. and Australian Rules on Crowdfunding

Dec 14 2015

By Jim Bulling and Michelle Chasser

The past few months have seen considerable movement on the regulation of crowd-sourced equity funding on both sides of the Pacific. In the U.S., the SEC has adopted rules which allow companies to crowdfund through a registered portal while in Australia, the Australian Government has introduced a bill into Parliament which significantly enhances the viability and attractiveness of crowdfunding.

Category:Crowdfunding