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ARK Disrupt Issue 88: August 21st, 2017 https://ark-invest.com/research/ark-disrupt-issue-88

This week, the Australian government proposed new regulations to address the recent proliferation of fintech startups.  The surge in bitcoin trading, as shown in the chart below, has generated particular interest.

Chart of Bitcoin volumes March 9, 2013-Jul, 29, 2017 in Australian dollars

First, to strengthen the Anti-Money Laundering and Counter-Terrorism Financing Act, and to bolster the authority of the Australian Transactions and Reporting Analysis Centre (AUSTRAC), the Australian government is introducing reforms to regulate digital currency exchanges.  AUSTRAC’s mandate is to reduce the threat of organized crime and terrorism financing. It conducts audits to ensure that exchanges comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations. Interestingly, while not deeming them currencies or commodities explicitly, this legislation does recognize and validate cyrptoassets implicitly.

Second, the Australian Prudential Regulation Authority (APRA) has proposed changes to bank licensing procedures to accommodate fintech start-ups.  Specifically, APRA has proposed phased-in licensing for new entrants with unique business models and advanced technology solutions. Its objective is to foster innovation and competition in the banking sector, to the benefit of consumers and businesses in Australia.

These regulatory proposals will add to fintech’s momentum in Australia and elsewhere. Governments around the world seem to understand the need to accommodate fintech, including cryptoassets, to stimulate innovation and remain competitive.

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ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.

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Fred Pye

Frederick T. Pye

CHAIRMAN, CHIEF EXECUTIVE OFFICER & DIRECTOR

Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.