NCFA Canada | Nov 16, 2018

Subscribe and tune in each Friday to check out the latest movers and shakers in fintech.

Listen to more Fintech Fridays podcasts here

Transcription of Interview

Intro: Welcome fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners.Covering all things fintech block chain be AI and alternative finance.

Manseeb Khan : Hey everybody Manseeb Khan here and you are tuning into Fintech Friday's brought to you by the NCFA Canada's leading national fintech crowdfunding association. Today I have Charlene from Coinsquare. Charlene thank you so much for sitting down with me today.

Charlene Cieslik: Sure, no problem.

Manseeb Khan : So, I guess just for the audience were the five or six people may not know who you are or essentially what your company could just give us a little bit of a rundown.

Charlene Cieslik: Sure, we'd like to refer to coin square as Canada's leading crypto currency trading platform where we have an offering of about seven or eight coins, I believe it is now, we’re adding more every day. We like to also think that we're Canada's safest platform with access to Fiat on ramps and off ramps - and we haven't lost a coin yet from our platform.

Manseeb Khan : Since you are the chief anti money laundering officer and chief privacy officer, I'd just like to get a little bit more in the nitty gritty of just regulation right regulatory uncertainty. Could you talk a little bit more of the uncertainty that's currently going on and much why it is there and what can companies like you or be it the government or people like me do to help clean up the uncertainty and just help better define when it comes to regulation?

Charlene Cieslik: Sure, not a problem. I think it's a big task that’s for sure. I mean I come from a long background of working with banking and typical financial institution, anti-money laundering regulations. And I think even in those environments there was still quite a bit of uncertainty as we go through every iteration of the changes in law. And it took a lot of years for Canada to even get on board with anti-money laundering regulation. They just released the Proceeds of Crime Act approximately less than 20 years ago. Oh, I hate saying that because I worked with a regulator up about that time when the new laws came into effect. Quite a growth period for Canadian financial institutions to really get into being able to comply or even start to begin to try to comply with anti-money laundering requirements. And I would argue that there are still a lot of struggle going on in traditional fields. So, I think that's just exacerbated by the fact that that crypto currency is so new, and that the concepts and the methods in which traditional finance are offered to people are, I would say, a little bit historical, a little bit stuck in the past. The laws were written basically from a - you have a relationship with your banker and maybe you see his kids play baseball on Sunday and he knows who you are, and you go into a branch to execute your transactions and that sort of physical relationship, face to face relationship building. And it was only later on in the regulations for, again, for traditional entities that the idea that finance could take place in a known face to face environment was added to the law because it wasn't something that was contemplated early on by the by the ACT and the regulations. So, when you add into the mix something, like this, where it's a little bit threatening a little bit uncertain and has a little bit of a negative history. Growth, history and trajectory behind it and it makes a lot of people nervous and uncomfortable because maybe they can't understand it, or they don't want to understand it. And then you try to apply some traditional concepts to it in a way that again traditional companies struggle with applying still to this day. And then you try to put it into this. It is truly a square peg in a round hole. You know we've all been kind of waiting for a while now for some clarity. But I always warn people that don't expect too much clarity. It's not really the job of the law or regulations to be wholyprescriptive about what needs to be done. Now if we want to be clear about what the Proceeds of Crime Act in various anti money laundering laws are trying to do, I think it really boils down to about three things.

1. Know who you're dealing with whether it's humans I call it people or businesses. Like prove that they actually exist and that they're doing what they say they're doing, and they are who they say they are.
2. That you’re monitoring activities to do your part for me or trade, your financial institution, or whatever you are, safe from exploitive criminal actors.
3. You keep certain records and periodically you have to report specific things to the government.

And again, I'll just say that it's a lot of work and a lot of effort. Some people make the joke that banks nowadays are compliance departments with banks attached to them. And we don't want that happening in the crypto space, but we've got to find the right balance that strikes between keeping customers safe, keeping their money safe, knowing who you're dealing with in a digital environment, in a global environment, and that hasn't really been tackled so well, I think again, in the traditional space.

Manseeb Khan : So, I guess it's just like, it really is knowing your customer. It's a very KYC driven.

Charlene Cieslik: It is. And I mean I struggled to think, “I'm not that old” and  I don't recall there was ever a time that you could just walk into a bank and not tell them anything about you and they would give you access to financial services. So, if crypto currencies, again, whether it's trading on a platform like Coinsquare, certain digital assets, or even if it's a token offering or a sale, an STO, that you would get into a financial relationship with someone without some basic safeguards in place. So, you know it's funny that if you talk, to older people, there was a time when a handshake and a hello was good enough to secure yourself a few thousand dollars’ worth of loans. But I think you know the world has certainly evolved since then. The risks have gotten greater, and the banks, in the bigger financial institutions, have seen some negative impacts of not doing some of these things properly. So, there was a lot of lessons learned in that environment about it which drove some of these decisions to try to put some safety and security in the financial world.

Manseeb Khan : That totally makes sense right being a just such a up and coming and emerging market. And now that it's so hot and hyper right now it makes sense that like having some kind of clarity just like protecting investors it makes sense that the banks will be a little bit more hesitant. People are being a little bit more hesitant. And like where  you've mentioned the past and you mentioned some of the past episodes. Education is very much the key right. Understanding what a cryptocurrency, how does blockchain work and how do all these things fundamentally work. And how can you be a part of it, how can you help it.

Charlene Cieslik: Yeah. I mean don't get me wrong I don't want toever be seen to be advocating that cryptocurrency should behave exactly like a traditional financial institution. I think part of the beauty of this space is that it is a greater risk-taking kind of space. But I think with risk comes reward and responsibility you know there is a history of crypto where people -  even our founders met in a coffee shop to trade digital currency.  - oming from a background I come from,t's a little bit shocking to me, but even for me it's been quite a good education working in a space like this the last eight or nine months and just seeing that there is an alternative. There are differences and there's room in the world for this alternative finance sector to really take off, but it can't be stifled by continually trying to “stuff a square peg into a round hole”. I think there's safety and security measures that can be put in place, some basic things that nobody should really be arguing with and then the rest of it falls into business decision making and where banks and financial institutions have different requirements, that cryptocurrency can take a few more risks, and that's up to them to make that decision.

Manseeb Khan : I guess it's a balance between regulation and innovation right like that beam it's very hard to teeter because it's like we don't want to overregulate. Right. Yeah exactly like I mean  You know better than anybody.

Charlene Cieslik: Oh, I do. I do. I wish I didn't somedays, you know and the whole thing is, Regulations are regional,nd finance is global, so that things do not mesh well together. I mean even in Canada we have all the provincial securities regulators separately, battling it out as to what to do about this. We do have a federal anti-money laundering regulator but money, and especially cryptocurrency moves quite freely across borders. Maybe not so free anymore with traditional finance and I think that's probably helped for some of the breeding ground, for something like cryptocurrency to pop up, is the speed and the efficiency in which money can move across borders. Not all of it is terrorist financing or money laundering and painted all with that brush under the guise of “we have to stop it, make it safer” because it's all being used for negative, I think is a terribly unfair assessment of the industry.

Manseeb Khan : No I absolutely agree with you but again it's players like you and like just amazing stuff that you guys were doing to kind of show that like hey again it's not everything that we do is not funding terrorist or just like anarchy like this is actually no like we're helping actually build businesses, build ecosystems that are put in place to make the world better.

Charlene Cieslik: Yeah, I mean I don't think anybody who deals in cryptocurrency really wants to be involved in this kind of thing. But I think unwittingly, just like financial institutions ar, you can be a victim of this and it's their willingness for anybody purposefully trying to attack platforms. Don't get me wrong, I'm sure there's some bad actors out there that are happy about it. But you know I think that's what one thing where Coinsquare tries to set itself apart, really, is to try to play by a set of rules that takes the better practices for insisting safety and security measures but works them in a way that allows for a risky business model to flourish.

Manseeb Khan : So, I guess could you talk a little bit more of the regulatory arbitrage then?

Charlene Cieslik: Well I think it's just it's just a matter of the fact that you know we hear a lot about places like Malta  as“crypto island”, and Zug Switzerland there and places that are embracing crypto and it's all it's really great to hear, like it's really everyone's really happy about it. In the crypto space and so Coinsquare e too. But it's just y, it doesn't mean that you go there and it's free of obligation or it's free of requirements. But what it does mean, is that some jurisdictions have taken it upon themselves to put signs that they’re “out for business” saying hey we're into this, we want to work with you and support you. And if you have another authority that saying  it’s not like this, we don't trust it, e're just going to put a ban on it, or we're not going to allow it to happen or make it really hard on you. People are going to want to get up and move to those jurisdictions that make themselves friendly but simply relocating a business address to a different authority doesn't mean that you're free of regulation because it's not only physically where you are located where your operations are. It's also based on where your customers are that you're serving. So even if you do set up in a place that's friendly to crypto, you've got to really think long and hard about where you're targeting customers and what Regulation, what legal obligations come along with the jurisdictions in which they live. And I do love to hear about places that are open to this, but I think people maybe sometimes mistake it for a Holy Grail or a promised land where it's all free and easy. And it's not because those places also still have concerns about things like safety and security. They also have concerns about things like bringing jobs and  bringing money into their economy. And they can't do that while putting themselves at risk to become a haven for money laundering and terrorism by doing no due diligence or requiring you know no rules be followed. So, I think it's just a little bit of a misnomer to say oh we're just going to go set up in Malta and that's going to alleviate you from any regulatory obligation. But what I do like is that it that the government is open to the discussion and the governmenthas reached out and told people like “hey we're new at this too and we're trying to figure out what works best for us” and there is a process and we're walking through it. We'll hold your hand. Not all jurisdictions are like that. So, it does end up being sort of an arbitrage of those who have an open environment are going to benefit. Sure, they're going to take on some of the risk but they're also going to reap the rewards and those that don't are going to be the ones that are left behind. And I think this kind of thing happens traditionally as well too. It's just now we're seeing it (in crypto). I think a little bit on speed almost in the crypto space (has forced it to happen sooner).

Manseeb Khan : Traditionally Canada's been very conservative, and they haven't been first movers in many aspects. So, it’s kind of makes sense why you are seeing a lot of these smaller crypto islands pop up we're not seeing. And you’re not seeing bigger countries actually fully adopt it yet.

Charlene Cieslik: Yeah. And I think that all sort of remains to be seen. I think what a lot of people forget too is just how new this is. Like even though there was a lot of early adopters before any of us, probably, particularity people in my position, historically that heard of Bitcoin there were people already operating with it, enjoying it. Like it was an underground sort of cool thing that “the man” wasn't involved in, and that to get that sort of wider adoption and to get that the all the use cases that sounds so promising and into reality and into practice. You know that does come with some tradeoffs with that and some risks, right? So yeah, I think we got to remember that it's still in its infancy for that, and there's growing pains along the way and believe me - this  means some growing pains when it comes to this kind of thing. Yes. It's hard to identify someone they don't know and face to face environment in a regular bank let alone in a crypto trading company right.

Manseeb Khan : Yeah no absolutely. Because it's like it's tens of thousands of interactions within seconds. So, it's kind of hard. It's a lot harder to like shake everybody's hand and meet them and make sure your kid plays baseball together.

Charlene Cieslik: Exactly. And I think the good news of that is that also the traditional markets are having to play catch up with this digital world in a way that they didn't previously. And when you look at the surveys and things that come out of governments, we'll use millennials. Millennials and those after millennials. Nobody wants to go into a bank, and nobody even wants to answer a phone call anymore, let alone go into a bank and make an appointment to do something. The world is like this, and the slow will be left behind. And then you'll be like my mother when she got her first bank card and like needed to be walked to the machine, like, “what does it do and how does this work.” There's a little bit of an accelerated speed to technology, and involvement with technology, that wasn’t seen in the previous 20 years. So, laws have never been able to keep up. I don't expect them to start suddenly now keeping pace with the change of technology when it is moving so fast.

Manseeb Khan : Yeah no I absolutely agree with you. I mean the whole physically walking into a bank  that you said and then I got a little bit of anxiety over it.

Charlene Cieslik: I've got to renew my mortgage this month and I'm like - “you call me and have all the paperwork emailed over.” There there's no need for me to book an afternoon off work to go talk to someone, who is going to try to upset me on a million other products that I don't need. Just, like, redo what I already had down. Sadly, the higher rate it's coming, but I think it's a little bit of a struggle for those markets and I think that's part of where the fear and the demonization of cryptocurrency comes from -  it’s  like “don't look over here (at banking) look over there (at crypto)”. That's where all this scariness is, and I've done a lot of research since I've joined Coinsquare when we're looking at our risk assessments and things like that. And the  grand fear that all the bad stuff is happening here isn't hasn't really played out for me in the available research. So, it took a little while for me to come around to that myself. But now that I'm here I'm like,those who live in glass houses shouldn't throw stones.

Manseeb Khan : No but you're absolutely right that's where open banking gets really exciting because it's the access of just like again you are going to be able to. You can do that on your lunch break or coffee, but you can just quickly. I just renewed my mortgage same terms same everything maybe means I'm a better rate because I've switched to XYZ.

Charlene Cieslik: So yeah. Yeah, I don't want to discount the people that are involved. I mean there's always going to need to be humans. Nothing's going to be able to be entirely digitized when it comes to this, and there's always going to be something you're going to need to go into a bank for. But I think that's where some of the promise to blockchain comes in as well. Like outside of just pure cryptocurrency, smart contracts, and things like that trying to get rid of some of this the onerous steps in the paperwork. I could see that can, I can see that can be seen as a threat to some industries.

Manseeb Khan : Yeah no absolutely because it's the more frictionless that more or less human interaction that I guess millennials like me just would be lost.  And less Human error. Well yeah exactly right like it just like hey like I don't need the small talk I just want to deposit this money  like I got all the stuff to the right, like I got a podcast. I mean like I'm doing a thousand other things.

Charlene Cieslik:  I've got to get on Instagram and get my followers!

Manseeb Khan : Well  I mean I get a pretty good Instagram wise so I'm not really worried. Good stuff. So, could you talk a little bit more of I guess there's a clear lack of guidance when it comes to just the interpretations of the rules and regulations right. Again, you know you know this better than anybody. Coinsquare being one of leading companies. What does guidance in Coinsquare look like. What is some of the be it the holes that you're seeing when it comes to interpretation. And could you just talk a little bit more about that.

Charlene Cieslik: I mean the basics are pretty simple and straightforward and maybe that's only cuz I've been in this field so long is that things like KYC are pretty straightforward to me. e have to be able to prove that you are who you say you are whether you're human or business. Those are things that don’t have  much interpretation involved in them. I think where the challenge comes in is the what is considered acceptable in a non-face to face environment. We know of her challenges especially in Canada but not only in Canada around the world. Let’s not will talk about “humans” for a minute we'll talk about businesses. There's a big transparency international report that came out a couple years ago in Canada and one of the holes in the Canadian regulatory environment, has nothing  specifically to do with the proceeds of crime act or KYC or AML. But what it has to do with specifically is how to set  up a company, it basically takes you about less than 30 minutes. You pay a small fee and boom you've got an incorporated company, numbered company no name, no numbers, or people behind it. Essentially just a shell on paper that may or may not do anything. The anti-money laundering laws are asking you to prove that something exists. But the very thing that you are required by law to reference, to make that assertion, is itself not reliable, not monitored. Then it makes it very difficult to make a case . I did what I could, to find out when I could, short of driving over and seen the physical location with my own eyes. So, whether your traditional finance or you’re in cryptocurrency you're trying hard to follow some basic KYC laws.

You're at a little bit at a loss as to what you can do.  I can refer you to where under the definition of what a money service businesses is, which to me is traditionally that guy on young street that will change dollar bills for you, or the the ethnic-based money transfer business that has a good remittance corridor back to the countries that a lot of big immigrant populations in Canada that do send money back home to. They've sort of thrown cryptocurrency dealing in cryptocurrency under that definition, and I'm not certain that's the most helpful definition of what cryptocurrency is, but it is a little bit. There's a precedent set for it. And even within Canada, we’re not really sure what the interplay is between say the financial regulator, k FINTRAC, as a regulator, calling us money services businesses from “dealing in cryptocurrency”. They're still not really being monitored  by the government and we are kind of. I would argue again that's really no different than any other entity that's listed in section 5 of the Proceeds of Crime Act because,even this morning I was looking at the definition of “what is a Casino” under the Actwho qualifies as a casino under the Proceeds of Crime Act, and it has sort of a three bulleted definition. Then  you think “Well, what about a certain kind of business makes it  fit into the definition of casino?” It’s the same thing that's going to happen with cryptocurrency, under the proposed definition of“dealing in” cryptocurrency - what does that mean? I know we sent back a very lengthy 10-page commentary to the draft regulations asking for some clarity, but understanding again that you know they are they'll never be fully prescriptive, and I think that's where the industry has to take the lead. I think having talks like this, and the industry taking a leading role in holding the government accountable for interpretation, actually providing guidance that addresses these, very confusing sometimes, interpretations. If I argue with you that you are regulated but you argue with me that you're not because it's not clear and that leaves us in a bit of a precarious position.

Manseeb Khan : I mean like crypto casinos that's will be a pretty interesting, seeing that in a couple of years. But no, you're right it's it goes out the whole vagueness and we talk. like how we even started with this conversation with a lot on certainty. There's a lot of grey area when it comes to the space and it's like OK, we want government regulation to come in. OK. If we get government regulation and then we get OK, then we got the old system, but we don't really want the old system coming in.  It gets very just missed construed.

Charlene Cieslik: You know you have to do something like that exactly. You don't want the old system! Like I if I wanted to work at a bank, I'd still be working at a bank, right? But, we still do need a bank. Coinsquare does have the added bonus of being one of Canada's strongest fiat on ramp and off ramp/crypto trading platforms, and maintaining a bank relationship is as important for your business as selling crypto because, until crypto has an entire use case outside of Fiat (which we all pray for that day), we still need a bank. But this kind of back and forth and uncertainty…  the government,I think, has tried to capture it all by just putting “and cryptocurrency” into the draft law It's funny, if you read it all at once it's over a thousand pages so I recommend if you can't sleep at night have a look at the draft regulations and the edits they've made to it, because they've just they've captured “dealing in crypto”underneath the definition of a money service business. But back to my casino example they've also added that too, if you're any other kind of entity - so if you're a bank, if you're a credit union, if you're a casino, if you're a securities dealer, the list goes on, accountants, lawyers like there's a whole list in Section 5 that tells you who has to comply. And it's like they just added the words “dealing in cryptocurrency” next to any kind of transaction-based requirement under the law. So, it's really is trying to capture it anywhere it can. So, if you are an accountant that decides to take cryptocurrency as payment for your services you now are subject to coming next year in the year to implement the Proceeds of Crime Act requirements for cryptocurrency. It's very interesting to watch how and to see how this is going to play out. Just remember the banks have had 20 years at this and they still struggle with it. The biggest banks with the largest compliance departments with the biggest budgets and the most people have a hard time with this.

Manseeb Khan : Yeah, Good luck to the 30 crypto guys trying to figure out what to do with all the like new regulations, the new laws that like. They have lawyers and accountants.

Charlene Cieslik: And ignoring it isn't going to help you, and if for no other reason that then you won't be able to get a bank account for your business. Now I hate to use that as the  a sort of threat. I don't really mean to use it as a threat,but like sometimes you need to pay money for things - you need to pay rent in fiat. You need to maybe pay some hydro bills in fiat. n Toronto we have this like we have a City Councilor Norm Kelly (Scarborough—Agincourt). I don't even know if he's still a city councilor, going to have to find out and edit it back into this podcast (NOTE: HE IS) Well he  has kind of been advocating in Toronto to be able to pay for parking tickets and your property taxes in cryptocurrency! Small situations like that and advocates like that I think bring it more into the mainstream and show you that we could get there someday.

Manseeb Khan : You mentioned that some foreign exchange places here and that are accepting crypto and they're just trying to like slam it together sees what works and what doesn't work. Yeah. You've been seeing like cute little convenience stores that accept Bitcoin and either have Bitcoin ATM or just accept cryptocurrencies which is the small steps.

Charlene Cieslik: It's amazing to see, right?. I was in Hong Kong last year. Oh god maybe two years ago. And you know you can't pay cash for anything there. And even up and down King Street,which is a little bit like our little fintech alley over here in Toronto,there is a lot of stores here like just food shops that also don't take cash. Now I don't know they're quite at the point of taking cryptocurrency yet. But you'll see things like WeChat payaccepted and I can't remember what the other (Alipay).  Alipay and like those are starting to get like you know it's not quite crypto but it's a payment adoption form that you never would have seen even a year or two ago here in Toronto. It's all kind of paves the way I think for just a new mindset.

Manseeb Khan : I mean absolutely agree with you like think about like the amount of people that are adopting Apple Pay and  Samsung Pay right like sooner or later. It's just again like you said we're on definitely the right track just doing it payments through crypto.

Charlene Cieslik: Sometimes I leave the house without my purse  and  without my wallet. But I never leave it without my phone. Like I don't think I go to the bathroom without my phone and I think most people are like that nowadays so if you can have it all sort of at your fingertips that way it makes it easier.

Manseeb Khan : Me and my buddies that we joked about like yeah if we ever get robbed,  I'm like hey dude take my wallet, take my cards. You can have it, don't take my phone though. Like I got a meeting next weekend like you know all that.

Charlene Cieslik: Did I back up? When was the last time I backed up?  Oh, I haven’t backed up in months. And I did I put on2FA does my two 2FA just go to my phone? And then he gets my phone, and that won't help me. We joke about it but it's you know like reality.

Manseeb Khan : You know it really the stark reality, right? The phones are going to become the one stop shop when it comes to anything and everything. And it slowly is. For sure.

Charlene Cieslik: And I think that's like a great fit for cryptocurrency right. I mean it's so high tech it's so hard for me to even explain to my parents what I do for a living at Coinsquare. The concepts are similar though and I think that sometimes when I'm able to sort of win back people into understanding what Coinsquare’s trying to do is that. Whether we're selling dogecoin or nickels you know there's safety and security and safeguards that we want in place and we want our customers to feel like they can come to us and not have to worry about losing their money or you know be able to freely access what they want to with a little bit less maybe intervention than a traditional financial institution. I think one of the bigger problems that a lot of people have are not just based in crypto is that financial institutions have become almost like a defacto police force. Enforcing rules not only of regulators on to businesses but of criminal code violations onto a customer's. Now I  always joke and I'm sure if anyone's heard me talked before you may have heard me say, so I apologize for repeating my shtick, but like I don't have a gun or a badge. I don't have access to police record databases. I don't know any more than you know if somebody is committing a crime. And I don't really think that it's fair on bankers or on cryptocurrency companies to say that we're expected to know every second that something is possibly breaking the law. If I had that power, I think I would go like be a superhero or something. You know wear a cape. Help people in trouble.

Manseeb Khan : Heck I would too.

Charlene Cieslik: I mean that sounds like It's way funner than sitting in a meeting saying I don't think we can take this because their risk is too high, and you try to quantify the risk. Or we could just go cape shopping?

Charlene Cieslik: Exactly. Exactly. Let's go  cape shopping.

Manseeb Khan : I'm super down to go cape shopping.

Charlene Cieslik: And I think that's where it goes to it - just try to get a decent sense of who you're dealing with. And like most people's activity is fairly normal like let's be honest here - I think there's a lot of people in the AML space and I think they do a disservice to compliance people overall when they try to put themselves out there like super-cops or something. I think, and I'm a pessimist by nature, but I do tend to believe the best in people. The whole idea of risk management is that you let people go about their daily business fairly unscathed and fairly untouched and you spend your time and resources on things that are truly significant and truly questionable. Like the cream that rises to the top maybe the rotten cream rises to the top. But  you're not questioning someone on every little dollar movement  they're doing, because not everything is a criminal hiding in the shadows. And if you operate from that mindset, I think a lot of regulators and a lot of banks operate from that mindset that everything,everything is bad. And I can see how you can get into that,being in the field as long as I have. I can't say I haven't been victim to behaving that way periodically in my lifetime, but I think being in this space and it does allow me the time to step back a little bit and be like OK what are we really looking at here, and where we can have a touch point with a customer that we're being respectful, and doing the “right thing” and  we do spend our time appropriately. Don't get me wrong - there's things to be found. But if everything is high risk then nothing is high risk.

Manseeb Khan : You're exactly right. If everything's high risk, then nothing is high risk and  it's again like it's understanding. Like everything we talked about, today right? It's KYC know your customer. Everything's not funding terrorist. Not everybody's a bad guy. Not everybody a criminal. I'm just trying to pay my phone bill.

Charlene Cieslik: I know, and you know what the thing is - we don't even actually know about terrorist financing until after it happens and then it's in the news and then maybe you can look back and be like “oh OK” but like nobody walks into a financial institution of any kind it announces themselves as a terrorist. Nobody on a sanction list opens an account in their own name anymore. They're even smart enough not to open shell companies to which they can be traced back in the beneficial ownership anymore. Like the cloak has been revealed (should have said LIFTED) but the criminals who have the time and energy know what it is that governments want us  to look for now, and they're finding new ways we haven't even figured out yet. And the pressure on someone in my position to try to be that “super cop” that can sense something before it occurs. I do find very unfair and I don't like to play into that kind of mindset. But I do like the idea of having a truly risk based compliance program that allows you some time and energy to focus on,w again, the real risks not the made-up ones. Not the ghosts that people think are in the machine. But I think the challenge being is that banks just have a lot more years of data to kind of look back on and go “oh we should have seen that.” Where as in crypto we're just we are still building it and there's a lot of good players in the industry working on software to help. Help, not solve, but help in for lack of a better word, “decrypt” the block chain and see sort of the flow of funds and where things are going.

Manseeb Khan : You've definitely coined the term of the old wine in new bottles. Right.

Charlene Cieslik: So, it's I can't take full credit for it. I know I learned this and when I was doing my Master's in Criminology and never have I used it more than working in this field. At the time it rang a bit hollow, I was young and ignorant probably arrogant too. Now that I'm a bit older and in a bit more humble, I'm like I really, really see what this expression means. And there's going to be, by the time I get older, and there's going to be something new and while the government is trying to regulate what is currently the cryptocurrency space right now, it's taken them about four years to get to a draft. It's taking another year to get it out in publication. They're going to give another year for implementation which is something they normally don't do. You know we're still so new and I hope that my work with Coinsquare can allow me to contribute to this conversation, not hinder it. I hope that none of the work I'm doing is ever something that's seen as a hindrance to business. AndI really don't want to ever be part of a grand money laundering case that was so obvious it should have smacked me in the face. And I think that's what I bring from working in theformer traditional spaces is that something should jump out at you whether it's crypto or Fiat other things. It's a lot of gray areas so determining where you're comfortable.

Manseeb Khan : I think the work that you guys are doing it's incredible. The work that you're doing personally just like advocating, speaking out on this and just  like shedding a little bit more light to this ride because like we need people like you in industry that have trained eyes no more or less what to look for in this new space and kind of like you can kind of call bullshit on a lot of things. Or not. Right.

Charlene Cieslik: I've had a humbling learning here too. I will never ever put myself up on a panel and call myself a cryptocurrency expert,I wouldn't even call myself an AML expert. I just happen to have a lot of years at it, and I every day I'm still surprised there's something new and I think just having that training and having that background if you apply it right and apply it for good. And I don't think I'm the kind of compliance officer, and I think some people here Coinsquare would agree - I don't try to run away from a challenge. Although some people require that we run away from a challenge in order to maintain our good name and standing. But you know let's dig into it if we have one. If we let the people do their regular transactions relatively unscathed and relatively untouched then it does give us the time to dig into some of the more challenging things and say “Is this something that should be reported to the government?”. I know not everybody is a fan of regulation in this space and some of the purists might not agree with it, but I'll say the same party line that a lot of other people in this space in my position might say is that  - there's got to be a bit of a tradeoff if we want mass adoption, if we want these use cases to come true. If we want to have those positive relationships with banks, we want to raise money in a in a somewhat hybrid type security-regulated-almost area that we have to do some of the things and some of them I think are good things to do.

Manseeb Khan : To wrap this up. I'm sure what will be some of the takeaways that you'd like to drive home because I know we definitely we talked about a lot today, so feel free to list them all.

Charlene Cieslik: Sure. I think one of the things I'd love for the listeners to hear is that when you're talking about KYC and AML there really are two different things entirely. And the onus remains on you to be sure that the KYC that you're doing, and then your overall AML program and the obligations of that program, are truly in as close compliance to the law, the existing law, the proposed law wherever you fall in that spectrum as is possible, that works for your business. You have to be able to clearly articulate that, if you've hired someone else to do this for you, there's lots of vendors that do these kinds of things that sell them out as vendor as “We can do this for you.” You still have to know exactly what they're doing and what you're getting from them. It is something I see a lot working at Coinsquare and even just at conferences I speak at when I talk to a lot of startups like they want to hire a third party to do something like that. Great. There's a lot of great third parties out there. But make sure that they're doing the right thing for you and you're holding them accountable and you're getting your value for money because you can pay someone to do something for you and then find out when you get audited that they didn't actually do everything that they promised. I hate to see someone fall into that kind of trap.

Secondly, I guess is just defining yourself as to what you are. Even if you don't have a lawyer, although, I do always recommend getting a lawyer. I know it's not always feasible for some startups to spend at he rates that are required, but there are some very affordable and reputable good guys working in crypto as lawyers doing advisory in some sandbox type of things with law firms. But  that are able to  articulate for yourself. On paper yes, the old-fashioned paper. You don't have to print it out, but put it down on some form of written format and define what you are and say “look, we since we do this (describe what  you do), we think that we are this” and have an articulated way to defend yourself around that definition. You don't want someone else coming in and telling you “you're this and you didn't think about that.” And I mean people, other financial institutions you might want to deal with. Even investors that might want to look into your business like they might not want to get caught up in something that is uncertain or unclear. You can call yourself a utility token, but you better have a good rationale for determining yourself to be that. We are a trading platform here at Coinsquare we have a very long and articulated backing to say how we are what we say we are. We are registered with several regulators here in Canada, and where we launched in Europe today it's a very exciting day here at Coinsquare as we launched our Europe offering n in the European Union. If have any listeners in that space, we'd be happy to have you!! Andif you know what you are, and you know what people are doing for you... I just want everybody to have the same opportunity to understand what we're doing here and how Coinsquare can maybe help them too. I love it. I love it. I love this support. Thank you so much.

Manseeb Khan : Absolutely. So, Charlene thank you so much for sitting down me today. This was an amazing whirlwind of information. I've learned a lot more of just regulatory arbitrage, and just  uncertainty and now I have more or less more fear but also a lot of optimism when it comes to a space that I don't even know of.

Charlene Cieslik: Awesome. You know what. I'll help you quell that fear. Oh, I can only bring my best.

Manseeb Khan :  I can't wait. So, Charlene thank you so much for sitting down today. I can't wait to have you on the show again.

Charlene Cieslik: Ok awesome. Thanks again.

Manseeb Khan :  No problem. All right. So, on the behalf of NCFA Canada's leading fintech and crowdfunding association. I wish you an amazing Fintech Friday.

Outro : you've been listening to fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and FinTech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit and see if a Canada dot org. Oh yea.

End of Podcast

Subscribe and Listen to more Fintech Fridays podcasts here

Join NCFA's weekly Podcast series 'FINTECH FRIDAY$' where we sit down with the incredible people in the Fintech community and talk about leading fintech products innovations developments and challenges!

Interested in getting involved as a partner or participant? info@ncfacanada.org

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

Support NCFA by Following us on Twitter! Follow @NCFACanada

IRS Crypto Rollback Raises Questions for Canada

April 15, 2025

Crypto Regulation | April 15, 2025 Trump Repeals IRS Crypto Reporting Rule. Here's Why Fintechs in Canada Should Pay Attention On April 10, 2025, U.S. President Trump signed a bill cancelling a key IRS crypto reporting rule that would have required decentralized finance (DeFi) platforms to report customer transactions to the tax agency. See:  UK FCA Plans Full Crypto Licensing Regime by 2026 The IRS' rule was called "Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales", which expanded the scope of traditional broker definitions to include DeFi apps like Uniswap and Metamask, and had an effective date of February 28, 2025.  However, the IRS provided a transition period given the reporting complexities involved, so the rule was set to apply to digital asset sales occurring after January 1, 2027.  But with Trump's bill nullifying the IRS rule, the implementation is now cancelled and the rule is officially gone. What does this mean for fintechs, crypto startups, and regulators in Canada? What Changed? The IRS crypto reporting rule was part of a broader push to increase tax compliance among crypto users but industry argued that it wasn't manageable because DeFi platforms don't control their user's data.  ...

Read More

Insights from Jamie Dimon’s 2024 Letter to Shareholders

April 15, 2025

Markets and Economy | April 15, 2025 Jamie Dimon’s 2024 Letter Outlines Global Risks and Advice for Leaders On April 7 2025, CEO Jamie Dimon of JPMorgan Chase published his annual 2024 letter to shareholders (58 page PDF), which is widely read by business and policy leaders around the globe.  This year's edition, his messages are especially urgent.  He describes a world of rising risks, and big decisions ahead with profound implications that stretch beyond simply Wall Street.  Below are 5 insights that fintech founders, investors and Canadian decision makers need to know: 1. The U.S. Dollar’s Strength is At Risk “History has shown that as countries become weaker, their currency loses reserve currency status.” Dimon issued a clear warning that's rarely said out loud by execs of America’s biggest banks.  That is the U.S. dollar’s global dominance is fading because it's strength relies on TRUST in U.S. institutions, alliances, and policy, BUT that trust is now eroding. Last week, the U.S. dollar dropped significantly reaching a 3 year low against major global currencies.  The decline is largely due to the Trump administration's escalating tariffs and trade tensions on imports from several countries, such as China, Canada and European nations.  ...

Read More

Plaid Raises $575M to Scale Fintech Infrastructure

April 14, 2025

Financing | April 14, 2025 Plaid’s $575 Million Series D Signals a Deeper Strategy in Fintech Data and Embedded AI Financial infrastructure provider, Plaid, announced on April 3 2025, that they raised $575 million Series D at a valuation of $6.1 billion valuation led by Frank Templeton, BlackRock, Fidelity, and others including existing investors such as NEA and Ribbit Capital.  While the valuation is significantly lower than it's 2021 peak of $13.4 billion, Plaid's latest round is a story of consolidation of it's role at the heart of embedded finance, and not of decline. Plaid is a backbone of embedded finance with a footprint that spans more than 8,000 apps, including many widely used fintech tools and providers in Canada and the U.S.  For Canadian fintech companies, this raise hints at where industry is heading and who will control its most critical pipes. A Profitable Platform in a Tough Market Unlike most fintech firms still chasing break-even, Plaid finished off 2024 with positive operating margins, strong ash flows and a 25% yoy revenue increase.  In Plaid's letter to shareholders, 2025, CEO and Cofounder Zach Perret explained that it has a usage based billing model where Plaid earns revenue when an ...

Read More

Strengthening Resilience and Leading Through Uncertainty

April 14, 2025

Leadership | April 14, 2025 Why Embracing Uncertainty Can Help Founders Gain Insight (During Chaos) In an economic climate where geopolitical tensions are high and markets volatile with inflation spikes and policy u-turns, founders and innovators that embrace uncertainty can gain an edge.  Uncertainty isn't a side effect of innovation, it's the starting line.  Inspired from Deepak Chopra's recent article on the power of uncertainty, this article looks at the impact of embracing the unknown and how it can sharpen decision-making, unlock creativity, and help build resilience during times of rapid change and uncertainty. Key Actionable Insights 1. Uncertainty Isn't the Enemy...It's the Edge Chopra argues that trying to eliminate uncertainty kills creativity.  When everything is 'the exact same', it breeds complacency.  We've all experienced this.  During some routine periods, a founder may feel that time is passing by very quickly.  Yet during times of great change, novelty, innovation, a founder may feel that time is going by slowly.  Fintech leaders who stay agile during times of ambiguity can separate themselves from those who stall in the face of uncertainty.  Put differently, successful founders don't just survive during chaos, they scan for signals of change/chaos that others can miss, often ...

Read More

Navigating SEO for Effective Crowdfunding

April 14, 2025

April 14, 2025 If you’re running a crowdfunding campaign, visibility is key. Without the right SEO strategy, potential backers may never find your project. Below is a practical, research-backed guide to improving your campaign’s visibility through SEO. 1. Understand Your Audience First Start by knowing who you’re targeting. This helps shape your keywords, content, and messaging. Build a profile of your ideal backer Use keyword research tools like Google Trends or Ahrefs Read forum discussions and questions from your audience The more specific your understanding, the more relevant your content becomes. 2. Focus on Search Intent, Not Just Keywords Group your keywords based on what users are looking to do: Informational: “how to launch a crowdfunding campaign” Transactional: “support [campaign name]” Navigational: “[brand name] Kickstarter page” Use these keywords naturally in: Headings and subheadings Meta descriptions Blog updates and campaign FAQs Image alt text Write for people first, then optimise for search engines. For more insight into how keyword strategy aligns with intent and structure, consider following this website, which outlines foundational SEO practices that support long-term visibility. 3. Build a High-Converting, SEO-Friendly Landing Page Don’t treat your landing page as just a pitch. Make it SEO-ready: Clear, keyword-rich headline ...

Read More

OneVest Closes $20M Series B to Lead Wealthtech

April 11, 2025

Financing | April 11, 2025 OneVest Secures $20M in Series B to Build the Future of WealthTech in North America On January 29, 2025, Calgary and Toronto-based fintech firm OneVest announced the close of a $20 million Series B round, led by Salesforce Ventures and joined by Allianz Life Ventures, TIAA Ventures, and returning backers like OMERS Ventures, Deloitte Ventures, Fin Capital, Luge Capital, and Pivot Investment Partners. See:  OneVest’s Rapid Expansion Powered by a $17M Funding Round led by OMERS Ventures OneVest estimates that $84 trillion of wealth will be passed down from Baby Boomers to Gen X and Millennials over the coming decades, creating a massive opportunity and challenge for financial institutions. OneVest's platform is positioned to offer financial institutions, such as banks, insurers, asset managers and RIAs, a module tech platform to build or upgrade their wealth management services.  Companies ca upgrade outdated infrastructure by plugging in only the components they need, reducing time and cost to market. Amar Ahluwalia, CEO of OneVest: “We are tackling massive challenges in an industry that’s been traditionally slow to adopt new technologies. Having such esteemed investors solidifies our position to reimagine wealth management technology for enterprises across the U.S. and ...

Read More

SEC Issues Covered Stablecoin Statement, Risks Remain

April 10, 2025

Regulation | April 10, 2025 SEC Says Some Fully Backed, Payment-Only 'Covered Stablecoins' Aren’t Securities On April 4, 2025, the U.S. Securities and Exchange Commission (SEC) issued a statement that clarified some U.S. dollar-backed stablecoins may not be considered securities.  While the statement was welcomed and creates some breathing room for crypto and fintech projects, the announcement ignited an internal debate at the SEC and many are wondering what's next. Covered Stablecoins The SEC said certain U.S. dollar-backed stablecoins (referred to as 'Covered Stablecoins') are not considered securities if they have all of the following characteristics: Stablecoin must maintain a 1:1 fixed value equal to the U.S. dollar, without fluctuations Each stablecoin must be fully backed by an equivalent amount of high quality assets such as U.S. Treasury bills, cash, or cash equivalents that can be redeemed on demand. These assets must be held in custody and verified regularly No expectation of profit - cannot be promoted as an investment or marketed in a way that leads buyers to expect profit from simply holding the token See:  U.S. Senate Moves to Regulate Stablecoins No voting rights, control over the issuer, or shares in any profit or management decisions (no governance) ...

Read More

Data Shows Tariffs Are Threatening Early Stage Innovation

April 10, 2025

Funding | April 10, 2025 Regulation Crowdfunding Markets Show Tariffs Straining Innovation Economy Regulation Crowdfunding (RegCF) has proven to be a resilient market for early stage entrepreneurs and investors alike.  When uncertainty strikes, it's often traditional venture capital that pulls back, while the community-driven model continues to offer early stage start-ups access to capital allowing them to innovate.  However, just in from Sherwood (Woodie) Neiss, NCFA Advisor and Principal at Crowdfund Capital Advisors, data shows that tariffs are starting to strain RegCF markets - from March 10 to April 9, 2025: RegCF investment volumes declined by 24% (yoy) to just $57.48 million New campaign launches dropped over 40% Number of investor checks also declined by 15% Average capital raise size dropped to $720,000 (from $1.2 million) Sherwood Neiss, Principal at Crowdfund Capital Advisors: “We’re seeing the first real signs of pullback in what has otherwise been a resilient funding ecosystem.  The numbers tell a story not of panic, but of pause. Investors and issuers alike are waiting for clarity—on costs, on policy, and on risk.” Tariffs Introduce New Risks for Early-Stage Companies In a volatile environment where U.S. tariffs are levied one day, and then paused the next, founders must now face ...

Read More

Trump’s Tariff Pause Leaves Canada in the Cold

April 10, 2025

Economy | April 10, 2025 Trump Temporarily Halts Tariffs for Most Countries But Keeps Pressure on Canada, Mexico, and China On April 10, 2025, President Trump announced a 90-day pause on most of the newly implemented global trade tariffs after market backlash and political pressure.  The break was extended to countries in Europe, Asia, and parts of South America, but Canada, Mexico, and China are still under tariff pressure. Strategic Pause, Not for Everyone While Trump paused the most recent tariffs for over 75 countries, U.S. tariffs still apply to Canada and Mexico primarily on cars and auto parts (25%), steel (25%), aluminum (10%), and some agricultural products like dairy, grains, and processed foods, and continue to affect cross border trade in manufacturing and farming sectors. Trump's pause also didn't apply to China  In fact, Tariffs on Chinese good were raised to 125%, as China hit back with an 84% tariff on U.S. goods and filed new complaints with the World Trade Organization. See:  Klarna Delays IPO As Markets React to Trump’s Tariffs After the tariff pause was announced, markets surged with the S&P 500 exploding 9.5%, the largest one day gain since World War II, according to Business Insider ...

Read More

Tailscale Raises $230M to Power Identity-First Networking

April 9, 2025

Funding | April 9, 2025 Toronto’s Tailscale Secures $230M and $2B Valuation for Identity-First Networking On April 8 2025, Toronto-based Tailscale announced that they raised $230 million CAD Series C (about $160 million USD), valuing the company at approx $2 billion CAD.  The round was made up of U.S. investors, led by Accel, CRV, Insight Partners, Heavybit, and Uncork Capital, along with some prominent individual investors notably George Kurtz CEO of CrowdStrike (returning investor) and Anthony Casalena CEO of Squarespace.  New funds will be used to grow product and engineering teams, expand globally, and improved support for fast scaling customers. Tailscale - A Shift from IP Addresses to Identity Tailscale was founded in 2019 by former Google engineers Avery Pennarun, David Crawshaw, David Carney, and Brad Fitzpatrick, and officially launched in April 2020 to help users connect devices and apps securely without relying on traditional VPNs, IP rules, or firewalls. Tailscale uses a technology called WireGuard which is easy to setup and lets devices connect directly to each other, safely and privately.  What's unique about Tailscale is its approach to solving networking challenges.  Instead of relying on where a device is located (IP address), it focuses on who or what is connecting. This ...

Read More