[Chronique de Gérard Bérubé] From Norbourg to crypto

When fraud and embezzlement are central… The film norbourg hit the screens against the backdrop of an advertising campaign by the Autorité des marchés financiers (AMF) warning investors about the vulnerability of cryptoassets to fraud. Numerous crypto-related fraud attempts are underway, the AMF writes on its site, publishing a non-exhaustive blacklist of more than 220 names of sites and companies “performing potentially illegal high-risk activities in Quebec.”

We have seen that the pandemic, with its low interest rates and the excess savings it has generated, has stimulated the arrival of a new generation of investors and created a fertile ground for speculation, fueling the allure of cryptoassets and expanding the universe of ” meme” shares are lit.

For cryptocurrencies alone, the AMF has already reminded that creating tokens is easily accessible from a technological point of view. As of Friday, CoinMarketCap listed more than 10,000 cryptocurrencies claiming a market cap of US$1.85 trillion — after surpassing $3 trillion last November — with 60% of that capitalization going to bitcoin and ethereum. “So this situation promotes the distribution on the web of many tokens whose promoters sometimes promise staggering returns from an investment project. These tokens are often available from decentralized platforms and work automatically without human intervention,” the AMF warns.

The craze for the spontaneous acquisition of foamed shares on social networks for the purpose of mimicry, solidarity or even shareholder activism has broadened the scope of action. “Due to the immensity of the web and the use of social networks, especially instant messaging applications that allow the creation of private exchange and discussion groups, it is often impossible for regulators to intervene preemptively,” adds. the authority.

This side effect of the pandemic is accelerating a fundamental change already underway under the influence of technological innovations and the robotization of the trading market. It was supported by a drastic reduction or even elimination of transaction costs, usually without access to advisors or non-robot financial planners.

In its Strategic Plan 2021-2025, submitted in May 2021, the AMF placed digital transformation at the forefront of its strategic orientations, noting that the growing anchoring of electronic platforms in securities trading will be long-term. “De fintechs implement business models that provide their customers with a high level of personalization as well as easy access, often through mobile applications,” she said.

This increase is part of a context of increased consumer confidence in financial products and services in their capabilities. Regulators are therefore concerned about a mismatch between the autonomy and the vulnerability of the small investor. One of the main distortions seen in this family of so-called independent investors stems from the notion of risk, which is said to be highly dilutive. The Financial Conduct Authority has already documented the emergence of a new generation of investors for whom the loss of capital is simply not part of the risk.

Citing a survey conducted by staff at the Bank of Canada, colleague Éric Desrosiers wrote that nearly half of the 5% of Canadians who already had bitcoins between 2018 and 2020 reported having suffered a collapse in the value of their investment. (18%), loss of access to their virtual wallet (14%) or fraud (12%). These investors, mainly composed of young men with university degrees, showed an above-average understanding of how this cryptocurrency works, but a lower level of financial literacy.

definitely enthusiasm

However, the enthusiasm is very real. From private individuals, but also increasingly from companies. The results of a survey commissioned by the consultancy Sage evoke the emergence of a new generation of financial executives more aware of cryptocurrencies and the metaverse. Now that the evolution of digital payment technology is what it is, the global study The redefined CFO adds that while only 17% of SMB financial managers said they are currently accepting cryptocurrency transactions, 33% plan to do so in the near term. At present, the biggest hurdles to the adoption of decentralized currencies are environmental, social and governance factors and the difficulty of finding the talent to manage them.

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