Fintech
Red River Capital Corp and Bitcoin Solutions Announce Proposed Qualifying Transaction
Calgary, Alberta–(Newsfile Corp. – September 14, 2020) – Further to the news release issued June 2, 2020 by Red River Capital Corp. (TSXV: XBT.P) (“Red River” or the “Corporation“), Red River and 1739001 Alberta Ltd. o/a Bitcoin Solutions (“Bitcoin Solutions“) are pleased to announce that they have entered into a share purchase agreement (the “Agreement“) dated September 11, 2020 among the Corporation, Bitcoin Solutions and shareholders of Bitcoin Solutions (the “Bitcoin Solutions Shareholders“) to complete a reverse takeover whereby Red River will acquire all of the issued and outstanding shares of Bitcoin Solutions in consideration for the issuance of common shares of the Corporation (the “Acquisition“).
Red River intends that the Acquisition will constitute its Qualifying Transaction, as such term is defined in the Policy 2.4 – Capital Pool Companies (the “CPC Policy“) of the TSX Venture Exchange (the “Exchange“). The Corporation, upon completion of the Acquisition, expects to change its name to “Bitcoin Well Inc.” or such other name as may be approved by Red River and Bitcoin Solutions and is acceptable to the Exchange (the “Name Change“). Such entity is to be referred to herein as the “Resulting Issuer“.
Trading of the common shares of the Corporation has been halted and will remain halted in accordance with Exchange policies until all required documentation with respect to the Acquisition has been received and the Exchange is otherwise satisfied that the halt should be lifted.
Summary of the Acquisition
Pursuant to provisions of the Agreement, Red River will acquire 100% of the issued and outstanding securities of Bitcoin Solutions in exchange for the issuance of an aggregate of approximately 120,250,000 common shares of Red River (the “Red River Shares“) to the Bitcoin Solutions Shareholders at a deemed price of $0.12 per share, representing an aggregate acquisition price of approximately $14.4 million. Each holder of Bitcoin Solutions Class A Shares or Bitcoin Solutions Class B Shares will receive 8.917 Red River Shares for every Bitcoin Solutions Class A Share or Bitcoin Solutions Class B Share held, and each holder of Bitcoin Solutions Class I Shares or Bitcoin Solutions Class F Preferred Shares will receive 10 Red River Shares for every Bitcoin Solutions Class I Share or Bitcoin Solutions Class F Preferred Share held. The number of Red River Shares to be issued in connection with the Acquisition was determined pursuant to arm’s length negotiations between the management and the board of directors of each of Red River and Bitcoin Solutions. As a result of the Acquisition, Bitcoin Solutions will become a wholly-owned subsidiary of Red River and the Resulting Issuer will carry on the business that was conducted by Bitcoin Solutions prior to the Qualifying Transaction within the cryptocurrency industry. The Agreement also provides that the Name Change will become effective upon the closing of the Acquisition. Completion of the Acquisition and the issuance of the Red River Shares are subject to approval by the Exchange. It is anticipated that the Resulting Issuer will be listed as a Tier 1 Industrial Issuer.
In addition, each issued and outstanding stock option to purchase Bitcoin Solutions Class I Shares (“Bitcoin Solutions Option“) will be exchanged for 10 options of the Resulting Issuer (“Resulting Issuer Options“), having substantially the same terms and condition as the Bitcoin Solutions Option, and will entitle the holder thereof to acquire, upon exercise thereof, and for the consideration payable therefor, one common share of the Resulting Issuer. As of the date of this press release, there are 330,376 Bitcoin Solutions Options outstanding. The number of Resulting Issuer Options that will be issued as a result of the conversion of Bitcoin Solutions Options shall be 3,303,760. Upon closing of the Acquisition, 1,333,332 Resulting Issuer Options to certain directors and officers of the Resulting Issuer shall be issued. It is also anticipated that following closing of the Acquisition, 833,333 Resulting Issuer Shares (as defined herein) will be issued to Adam O’Brien, Chief Executive Officer and a Director of Bitcoin Solutions and the proposed Chief Executive Officer and a proposed director of the Resulting Issuer.
On closing of the Acquisition, the Resulting Issuer is expected to have approximately 125,750,000 common shares outstanding on a non-diluted basis.
In connection with the Acquisition, the Resulting Issuer will apply to list its common shares (the “Resulting Issuer Shares“) on the Exchange.
Arm’s Length Transaction
The Acquisition is arm’s length and is therefore not a Non-Arm’s Length Qualifying Transaction under the CPC Policy. Accordingly, the CPC Policy does not require Red River to obtain shareholder approval for the Acquisition.
Bitcoin Solutions Overview
Bitcoin Solutions, a private company incorporated under the Business Corporations Act (Alberta), is currently profitable and offers convenient, secure and reliable ways to buy and sell Bitcoin and other cryptocurrencies through its network of trusted Bitcoin automated teller machines (“ATM“) and web-based transaction services. Specifically, Bitcoin Solutions carries on the business of:
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facilitating the purchase and sale of Bitcoin and other cryptocurrencies in Canada;
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owning and operating Bitcoin ATMs, related ATM equipment, and all associated services including, without limitation, selling, distributing, leasing, financing, installing and servicing ATMs and associated ATM equipment;
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providing electronic processing services relating to transactions requested or carried out using ATMs (for equipment owned by Bitcoin Solutions or third parties);
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offering bill payment solutions;
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providing merchant solutions; and,
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sale of gift cards for Bitcoin.
Bitcoin Solutions currently owns and operates over 60 cryptocurrency ATMs across Canada, and facilitates/performs transactions across the country with multiple payment methods on its website.
History and Background
Since inception, Bitcoin Solutions has been focused on placing and acquiring profitable cryptocurrency ATMs throughout Canada and became the first company to deploy cryptocurrency ATMs in Alberta and Saskatchewan in 2014. Since that time, strong relationships have been developed with payment processors, armoured car vehicle companies, Bitcoin professionals, and other vendors that are integral to the success of Bitcoin Solutions, while its current team has been built to succeed with low turnover. Future expansion plans are facilitated by partnerships with strategic software groups, which provides Bitcoin Solutions with a competitive advantage, along with the ability to acquire up to 100 additional ATMs without significant capital outlay.
In addition to physical ATMs, Bitcoin Solutions offers expanded services through its website, enabling support for paying bills with Bitcoin and other cryptocurrencies online, accepting in-person payments at Canada Post, buying gift cards with Bitcoin and other cryptocurrencies, and allowing merchants to accept Bitcoin.
The following table sets out a summary of selected audited financial information for Bitcoin Solutions for the years ended December 31, 2019 and December 31, 2018 and the unaudited financial information for the six-month period ended June 30, 2020. The selected information was prepared in accordance with International Financial Reporting Standards. All figures are in Canadian dollars.
Fiscal year ended December 31, 2019 |
Fiscal year ended December 31, 2018 |
Six months ended June 30, 2020 |
|
Summary Operating Results | |||
Net sales or total revenues | $14,539,490 | $11,964,363 | $14,489,332 |
Income (loss) from continuing operations | $117,415 | ($492,795) | ($145,511) |
Net income (loss) | $117,415 | ($492,795) | ($145,511) |
Balance Sheet Data | |||
Total assets | $2,267,460 | $1,866,994 | $5,491,656 |
Total long term financial liabilities | $1,410,203 | $1,315,425 | $1,026,694 |
Shareholders’ equity (deficit) | $(181,469) | ($149,086) | ($335,538) |
Completion of the Acquisition
Completion of the Acquisition will be subject to certain conditions, including but not limited to: (a) receipt of all necessary approvals of the boards of directors of Red River and Bitcoin Solutions; (b) receipt of all necessary third party consents; (c) approval of the Acquisition by the Exchange as the Corporation’s Qualifying Transaction; and (d) the Exchange approving the listing of the common shares of the Resulting Issuer.
Sponsorship
Under the policies of the Exchange, the parties to the Acquisition will be required to engage a sponsor for the Acquisition unless an exemption or waiver from this requirement can be obtained. Red River intends to apply to the Exchange for a waiver of the Exchange’s sponsorship requirements on the basis that it is not a foreign issuer, the management of Red River upon completion of the Qualifying Transaction will possess appropriate experience and qualifications and the granting of a sponsorship waiver by the Exchange would not be contrary to the public interest and that it would be appropriate in these circumstances that the Exchange exercise its discretion to waive the sponsorship requirement. However, there is no assurance that this waiver will be granted.
Filing Statement
In connection with the Acquisition and pursuant to Exchange requirements, Red River will file a filing statement on SEDAR (www.sedar.com), which will contain details regarding the Acquisition, Bitcoin Solutions, Red River and the Resulting Issuer.
The Resulting Issuer’s Management, Board of Directors and Insiders
In connection with the Acquisition, it is expected that there will be changes to the Corporation’s management and board of directors. Brief biographies for the anticipated members of management and the board of directors of the Resulting Issuer are set out below:
Adam O’Brien, President, Chief Executive Officer, Director, Control Person and Promoter
As Founder and Chief Executive Officer of Bitcoin Solutions, Adam O’Brien is a leading advocate for education, consumer protection and the decentralization of financial services. Adam was first exposed to Bitcoin in 2013. After witnessing success buying and selling person to person he founded Bitcoin Solutions with the objective to make Bitcoin accessible and understood. Adam serves as Co-chair of the Fintech Committee for the Canadian Blockchain Consortium, Canada’s largest non-profit network of blockchain companies and influencers. He is recognized as a first mover in the Bitcoin ATM field strives to bring Bitcoin and other cryptocurrencies to the mainstream making them easy, approachable and accessible for all.
Mandy Johnston, Chief Financial Officer
Mandy Johnston has successfully built and led finance and business operations teams for the past twenty years in multiple industries across North America, including automotive, building materials, oil and gas, and professional sports. She was previously the VP of Finance and Business Administration for the EE Football Club of the CFL, based in Edmonton. Mandy holds a CPA (US-CO), CMA (US) and earned an MBA in Strategic Management and a Bachelor of Science in Business Administration, Accounting from The University of Alabama. She also volunteers as a Global Director on the Institute of Management Accountants (IMA) Board and is a member of the IMA’s Performance Oversight & Audit Committee.
Heather Barnhouse, Corporate Secretary
Heather Barnhouse is a partner in the Corporate/Commercial practice group of Dentons’ Edmonton office. Her practice is focused on a combination of merger and acquisition activity, as well as on helping entrepreneurs scale their companies, often through a technology play. She also regularly advises companies on the best practices of governance, and assists companies with establishing policies and practices to effect good governance. She has her Director designation from the Institute of Corporate Directors, and has experience chairing boards, and serving in the role of Corporate Secretary, with private companies, not for profits and Crown corporations.
Julian Klymochko, Director
Julian is the Chief Executive Officer and Chief Investment Officer of Accelerate Financial Technologies Inc., an alternative investment management firm. Prior to founding Accelerate in February 2018, Julian was the Chief Investment Officer of Ross Smith Asset Management where he managed a number of alternative investment strategies for nearly a decade. He founded and managed Canada’s first cryptocurrency investment fund. Julian also managed a 6-time award winning market neutral hedge fund and founded an award-winning event-driven arbitrage fund. Prior to Ross Smith Asset Management, he was an Analyst at BMO Capital Markets. He attended the University of Manitoba where he graduated with a Bachelors of Science (Engineering) and a Bachelors of Commerce (Finance). Julian is a Chartered Financial Analyst (CFA) charterholder.
David Bradley, Director of Strategy and Director
Dave Bradley is a prominent figure in the Bitcoin industry and is widely considered one of the leading experts in Canada on bitcoin, cryptocurrency and blockchain technology. Prior to his current role as the Director of Strategy at Bitcoin Well, Dave founded the world’s first bricks-and-mortar Bitcoin store and co-founded the successful company, Bull Bitcoin, which is Canada’s longest-serving bitcoin brokerage. He also serves as a Vice President for the Canadian Blockchain Consortium, Canada’s largest non-profit network of blockchain companies and influencers.
Carman McNary, Director
Carman commenced his law practice in Edmonton in 1981, and since 1999 has been with Dentons Canada LLP (formerly FMC), most recently as Counsel. He practices tax and corporate law and provides strategic advice to organizations and boards. He was previously Managing Partner (Edmonton office) and National Tax Lead (Canada). Beyond law, Carman is a director of a number of private companies, and has chaired and served on a wide variety of community and non-profit entities and organizations. Carman completed the Director Education Program in 2013. He also served as an officer in the Royal Canadian Navy, Canadian Armed Forces, from 1975 – 2008, retiring with the rank of Captain (Navy) after appointments in command at sea and ashore as well as international appointments. Carman was appointed a Queen’s Counsel in 2010, and awarded an honorary Doctor of Laws by the University of Alberta in June, 2019. His community service and leadership have also been recognized with the award of both the Queen’s Golden and Diamond Jubilee Medals.
Eric Sauze, Director
Mr. Sauze is the Chief Financial Officer of JAG Flocomponents Ltd., a manufacturer and distributor of valves to the North American oil & gas industry. Eric has also held the roles of Chief Financial Officer and Chief Operating Officer with the industrial distribution companies Commercial Solutions Inc. (a TSX listed company) and CFE Industries Ltd. (a TSX Venture Exchange listed company). While working with the international accounting firm KPMG, he received his CPA designation (Chartered Accountant) in 1992. In addition, he earned his Chartered Financial Analyst designation in 2001. Mr. Sauze is currently a director and the Audit Committee Chair for Bri-Chem Corp., a distributor of drilling fluids listed on the TSX.
Richard Gauthier, Insider, Control Person
Mr. Gauthier was an original shareholder and seed capital investor of Bitcoin Solutions. Mr. Gauthier has no active role with Bitcoin Solutions and will have no active role with the Resulting Issuer. Mr. Gauthier is an insider and control person (as such term is defined by the policies of the Exchange), due to his shareholdings. Following the Acquisition, it is anticipated that Mr. Gauthier will hold approximately 21% of the issued and outstanding shares of the Resulting Issuer.
About Red River Capital Corp.
Red River is a CPC that completed its initial public offering and obtained a listing on the Exchange in July 2018 (trading symbol: “XBT.P”). It does not own any assets, other than cash or cash equivalents and its rights under the Agreement. The principal business of Red River is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the Exchange so as to complete a qualifying transaction in accordance with the policies of the Exchange.
For further information please contact:
Red River Capital Corp.
Julian Klymochko, Director and Chief Executive Officer
Phone: 403-801-2445
1739001 Alberta Ltd. o/a Bitcoin Solutions
Adam O’Brien, Director and President
Phone: 1-888-711-3866
Cautionary Statement
Statements in this press release regarding Red River and Bitcoin Solutions which are not historical facts are “forward-looking statements” that involve risks and uncertainties, such as the completion of the proposed Qualifying Transaction. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties such as the risk that the closing may not occur for any reason. In this news release, forward-looking statements relate, among other things, to: the terms and conditions of the Acquisition, the completion of the Acquisition, as presently proposed or at all, the Name Change and the completion thereof, the Red River shareholder meeting, the business and operations of Bitcoin Solutions and the Resulting Issuer, go-forward management of the Resulting Issuer, the trading of the Resulting Issuer Shares, the listing of the Resulting Issuer as a Tier 1 Industrial Issuer and the number of Resulting Issuer Shares issued and outstanding at the time of closing. Actual results in each case could differ materially from those currently anticipated in such statements due to factors including but note limited to: the decision to not close the Qualifying Transaction for any reason, including adverse due diligence results and Exchange refusal of the Qualifying Transaction, adverse market conditions, the need for additional financing, general business, economic, competitive, political and social uncertainties, the delay or failure to receive board, shareholder, court or regulatory approvals. Except as required by law, Red River and Bitcoin Solutions do not intend to update any changes to such statements,
Completion of the Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Acquisition cannot close until the require shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and has neither approved nor disapproved the contents of this press release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Not for distribution in the U.S. or to U.S. newswire services
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/63790
Fintech
Fintech Pulse: A Daily Dive into Industry Innovations and Developments
The financial technology sector continues to evolve at a rapid pace, offering innovations that disrupt traditional paradigms. Today’s briefing underscores fintech’s diverse growth avenues: from substantial venture capital plays and strategic partnerships to groundbreaking implementations in lending. Here’s a closer look at recent developments shaping the landscape.
Synapse’s Comeback and Andreessen Horowitz’s Strategic Bet
Source: Axios
Synapse, a financial infrastructure company previously embattled by controversy, is staging a remarkable comeback, backed by none other than venture capital heavyweight Andreessen Horowitz (a16z). With this new infusion of funds, Synapse aims to consolidate its position as a premier platform for building financial services tools.
This resurgence demonstrates the resilience of the fintech ecosystem, where innovation often prevails over turbulence. Synapse’s renewed vigor also signals that top-tier investors remain bullish on infrastructural solutions pivotal to the future of digital finance. Andreessen Horowitz’s participation not only validates Synapse’s model but also underscores the VC giant’s enduring interest in fintech infrastructure, even amid global economic uncertainties.
Analysis:
This partnership exemplifies the dynamism within fintech, highlighting the interplay of innovation, capital, and resilience. It also raises questions about the broader implications of giving second chances to firms with turbulent histories. While Synapse’s evolution could inspire others, it also places a spotlight on governance and accountability in high-growth sectors.
Israel’s Fintech Scene Gets a Boost with Investment in Finova Capital
Source: Calcalistech
Israeli fintech startup Finova Capital has raised an impressive $20 million in a funding round led by prominent institutional investors. This marks a significant milestone for the company as it seeks to expand its suite of financial solutions aimed at underserved markets.
Israel’s fintech ecosystem has long been recognized as a hub of innovation, and this latest investment only reinforces its global standing. Finova Capital’s focus on empowering smaller businesses and fostering financial inclusivity aligns with emerging trends where tech-driven solutions bridge critical gaps in financial services.
Analysis:
With this funding, Finova is poised to enhance its technological offerings while contributing to economic inclusion. However, the broader fintech industry will watch closely to see how the company leverages this capital amid increasing competition from regional and global players.
India’s Yubi Plans a Fundraising Push
Source: Bloomberg
Yubi, a prominent Indian fintech platform backed by Insight Partners, is reportedly preparing for a new fundraising round. Having already established itself as a leader in credit infrastructure, Yubi aims to bolster its offerings and expand its market footprint.
India’s fintech landscape is witnessing explosive growth, with platforms like Yubi playing a critical role in the credit ecosystem. Yubi’s planned fundraising reflects the broader appetite for scaling solutions that streamline credit access, particularly in emerging markets where traditional lending models often fall short.
Analysis:
This development highlights two key trends: the increasing reliance on credit platforms in high-growth economies and the strategic role of international investors like Insight Partners in driving fintech innovation. Yubi’s expansion plans could set a precedent for other regional fintech players seeking to scale amid global economic headwinds.
Provenir and Hastings Financial Services Win Global Recognition
Source: Business Wire
In a testament to the transformative power of digital lending solutions, Provenir and Hastings Financial Services have been jointly recognized for the Best Digital Lending Implementation at the IBSi Global Fintech Innovation Awards. This accolade underscores the success of their collaboration in modernizing the lending process through cutting-edge technology.
Provenir’s advanced decision-making platform and Hastings Financial Services’ lending expertise have delivered a solution that significantly enhances user experience, operational efficiency, and risk management. Such innovations highlight the increasing role of partnerships in advancing fintech’s digital transformation.
Analysis:
This recognition not only validates the efficacy of digital lending but also emphasizes the importance of partnerships in driving innovation. It signals to the industry that collaboration can be a powerful tool for staying ahead in a rapidly evolving marketplace.
Microf and Quantum Financial Technologies Forge New Alliances
Source: PR Newswire
Microf, a financial solutions provider, has announced a strategic partnership with Quantum Financial Technologies. This collaboration aims to expand lending solutions for contractors, providing streamlined access to capital for businesses in need of flexible financing options.
This partnership is a timely response to the growing demand for specialized financial products in niche markets. By leveraging Quantum’s technology, Microf can now offer more tailored solutions, particularly to contractors navigating complex financial requirements.
Analysis:
This development reflects a growing trend: the diversification of fintech offerings to serve specific market segments. As competition in mainstream fintech intensifies, targeting underserved niches could become a defining strategy for success.
Key Takeaways for the Fintech Ecosystem
- Resilience in Fintech Funding: Despite economic uncertainties, venture capital continues to fuel innovative fintech players like Synapse and Finova Capital.
- Regional Growth Stories: From Israel to India, fintech ecosystems are thriving, attracting global attention and investment.
- Collaboration as a Catalyst: The success of partnerships like Provenir-Hastings and Microf-Quantum underscores the importance of strategic alliances.
- The Power of Recognition: Awards like the IBSi Fintech Innovation Awards validate industry achievements, inspiring others to push the envelope.
- Focus on Inclusion: Whether through credit platforms or lending solutions, fintech is playing a pivotal role in fostering financial inclusivity worldwide.
Looking Ahead: Challenges and Opportunities
The fintech sector’s journey is far from linear. Regulatory complexities, technological disruptions, and market volatility remain persistent challenges. However, as seen in today’s developments, the opportunities far outweigh the risks. By prioritizing innovation, collaboration, and inclusivity, fintech players can navigate the complexities of the global financial landscape.
This moment in fintech history is pivotal. It’s a time for bold decisions, strategic partnerships, and a commitment to bridging financial divides. As industry players rise to the occasion, the road ahead promises a future where technology and finance intertwine to empower individuals and businesses alike.
The post Fintech Pulse: A Daily Dive into Industry Innovations and Developments appeared first on News, Events, Advertising Options.
Fintech
Fintech Latvia Association Releases Fintech Pulse 2024: A Guide to Latvia’s Growing Fintech Hub
The Fintech Latvia Association has launched the latest edition of its annual publication, Fintech Pulse 2024, unveiling insights and resources that position Latvia as a thriving hub for European fintech.
Announced at this year’s Fintech Forum, the magazine is now available in digital format, offering a comprehensive guide for fintech professionals and entrepreneurs navigating the Latvian market and exploring its advantages.
This issue covers essential topics, from support tools provided by Latvijas Banka and newcomer roadmaps to Riga’s investor resources and fintech education opportunities. Readers will find the latest fintech news from Latvia, coverage of this year’s key industry events, and member insights on the future of fintech. The Fintech Landscape section provides a comprehensive overview of the Latvian fintech ecosystem.
Tina Lūse, Managing Director of Fintech Latvia Association, expressed excitement about the ecosystem’s growth: “We are excited to unveil the third annual edition of Fintech Pulse. This year has been pivotal for our ecosystem, and together with public sector stakeholders, we are enhancing financial inclusion, democratizing investments, and driving innovation throughout the sector. This is a testament to Latvia’s emergence as a fintech hub, establishing itself as an equal partner in innovation and support within the Baltic region.”
Minister of Finance Arvils Ašeradens highlighted Latvia’s fintech potential in the magazine, stating: “Latvia has already made strides in adapting its regulatory framework to support a stable financial system. Now, we encourage financial market players to invest in modern technologies to meet the growing demand for inclusive financial services and solidify Latvia’s position in the fintech landscape. We are confident that with the combined offer of the government, Latvijas Banka and Riga city, we are a great place to start your next scalable European FinTech!”
Minister of Economics Viktors Valainis expressed Latvia’s ambition in the magazine, stating: “Latvia wants to become a WEB 3.0. innovation hub and solidify itself as one of the leaders of a newly regulated EU crypto-asset market. We welcome international companies to choose Latvia, a flexible and fast-paced country, where you can obtain a MICA license in just 3 months. Open your office in Latvia, receive a MICA license and serve the whole EU market!”
The Fintech Latvia Association brings together fintech and non-banking financial service providers to represent their interests at both the national and international levels. It promotes sustainable development in Latvia’s financial sector by fostering reliable, responsible, and long-term industry practices that earn trust from consumers and regulatory authorities. The association is committed to supporting innovation and growth opportunities within the fintech landscape.
The post Fintech Latvia Association Releases Fintech Pulse 2024: A Guide to Latvia’s Growing Fintech Hub appeared first on News, Events, Advertising Options.
Fintech
Quantum Security and the Financial Sector: Paving the Way for a Resilient Future
The World Economic Forum (WEF) has released a pivotal white paper in collaboration with the Financial Conduct Authority (FCA), titled “Quantum Security for the Financial Sector: Informing Global Regulatory Approaches”. This January 2024 publication underscores the urgent need for global cooperation as the financial sector transitions from a digital economy to a quantum economy, highlighting both the immense opportunities and cybersecurity challenges posed by quantum computing.
Quantum: A Double-Edged Sword for Finance
Quantum computing offers transformative benefits for the financial sector, such as accelerated portfolio optimization, enhanced fraud detection, and improved risk management. Yet, it simultaneously threatens the very foundation of cybersecurity. With quantum’s ability to break traditional encryption methods, sensitive data and financial transactions face significant risks. The white paper warns that such vulnerabilities could erode trust in the financial system and destabilize global markets.
The urgency to prepare is evident, with some quantum threats, such as “Harvest Now, Decrypt Later” attacks, already emerging. Governments and regulators, including the United States with its National Security Memorandum on Quantum (2022), have begun advocating for quantum security readiness by 2035. However, as noted in the paper, transitioning to a quantum-secure infrastructure is a monumental task requiring unprecedented coordination between regulators, industry leaders, and technology providers.
A Collaborative Framework: Four Guiding Principles
To address the complex challenges posed by quantum technologies, the WEF and FCA have proposed four guiding principles to inform global regulatory and industry approaches:
- Reuse and Repurpose: Leverage existing regulatory frameworks and tools to address quantum risks, rather than creating entirely new systems.
- Establish Non-Negotiables: Define baseline requirements for quantum security, ensuring consistency and interoperability across organizations and jurisdictions.
- Increase Transparency: Foster open communication between regulators and industry players to share best practices, strategies, and knowledge.
- Avoid Fragmentation: Prioritize global collaboration to harmonize regulatory efforts and avoid inconsistencies that could burden multinational organizations.
These principles aim to create a unified, forward-looking strategy that balances innovation with security.
A Four-Phase Roadmap for Quantum Security
The white paper introduces a phased roadmap to help the financial sector transition toward quantum security:
- Prepare: Raise awareness of quantum risks, assess cryptographic infrastructure, and build internal capabilities.
- Clarify: Formalize engagement between stakeholders, map current regulations, and model the cost and complexities of transitioning to quantum-safe systems.
- Guide: Address regulatory gaps, translate technical standards into actionable frameworks, and develop industry-wide best practices.
- Transition and Monitor: Implement cryptographic management modernization and adopt iterative, adaptable regulatory approaches to remain resilient in the quantum economy.
This roadmap emphasizes adaptability, encouraging stakeholders to continuously refine their strategies as quantum technologies evolve.
The Path Forward: Collaboration as a Catalyst
The transition to a quantum-secure financial sector is not merely a technological shift but a comprehensive rethinking of how industries and regulators approach cybersecurity. The interconnected nature of global finance means that collaboration between mature and emerging markets is crucial to avoid vulnerabilities that could undermine the entire system.
Regulators and financial institutions must act with urgency. As Sebastian Buckup, Head of Network and Partnerships at the World Economic Forum, notes in the report:
“The quantum economy era is fast approaching, and we need a global public-private approach to address the complexities it will introduce. We welcome this opportunity to collaborate with the FCA to chart the roadmap for a seamless and secure transition for the financial services sector.”
Similarly, Suman Ziaullah, Head of Technology, Resilience, and Cyber at the FCA, emphasizes:
“Quantum computing presents considerable opportunities but also threats. The financial sector relies heavily on encryption to protect sensitive information, the exposure of which could cause significant harm to consumers and markets. Addressing this requires a truly collaborative effort to transition to a quantum-secure future.”
Global Impact: Ensuring Resilience in an Evolving Landscape
As quantum technologies mature, they will redefine the landscape of cybersecurity. The financial sector, as one of the most sensitive and interconnected industries, must prioritize preparedness to ensure stability, protect consumers, and maintain trust.
The Quantum Security for the Financial Sector: Informing Global Regulatory Approaches white paper offers an essential foundation for continued dialogue and action. By adhering to the guiding principles and roadmap outlined in the report, stakeholders can navigate this transformation with foresight and cooperation.
The full report, published by the World Economic Forum, highlights the need for a unified global approach to quantum security, serving as a rallying call for industry and regulatory leaders alike.
Source: World Economic Forum, “Quantum Security for the Financial Sector: Informing Global Regulatory Approaches”, January 2024.
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