Fintech Crypto and DeFi Glossary
eData Financial Glossary
DeFi or Decentralized Finance. A form of finance that does not rely on central financial intermediaries such as exchanges, or banks. DeFi platforms are generally built on top of smart contract-enriched blockchains to fulfill specific financial functioned determined by the smart contracts' underlying code.
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WHAT DOES IT STAND FOR?
|ACAMS||Association of Certified Anti-Money Laundering Specialists.||ACAMS is the largest international membership organization dedicated to enhancing the knowledge and expertise of financial crime detection and prevention professionals, from a wide range of industries.|
|ACH||Automated Clearing House||
Acquiring bank settles the value of the transaction amount, less fees, to the merchant via ACH. This happens when merchant sells good or service to consumer.
Canadian equivalent is “PAD”
|ACID Transactions||Atomicity, Consistency, Isolation, Durability||A set of properties of database transactions intended to guarantee validity even in the event of errors, power failures, etc.|
|AMF||Autorite des Marchés Financieres||The Autorité des marchés financiers is the organisation responsible for financial regulation in the Canadian province of Québec.|
|AML||Anti Money Laundering|
|AML-CFT||Anti Money Laundering and Counter-Financing of Terrorism|
|APA||Asset Purchase Agreement|
|API||Application Programming Interface||An application programming interface is a computing interface which defines interactions between multiple software intermediaries. It defines the kinds of calls or requests that can be made, how to make them, the data formats that should be used, the conventions to follow, etc.|
|ATF||Anti Terrorist Financing|
|Black Swan Event||Impossible to predict events with catastrophic ramifications|
|Bitcoin||Bitcoin was the first successful blockchain network to launch. Since Bitcoin is not able to store smart contracts, its DeFi presence is limited.|
|Blockchain||Ethereum is the most popular blockchain network for DeFi.||Blockchain is a digital ledger that is distributed across all participants in a network. Blockchain has many advantages over traditional ledgers, such as being immutable, public, decentralized, and secure. Every transaction on a blockchain is public, and they have to be confirmed by a network of computers called miners, which are rewarded with cryptocurrency for their work.|
|BSA-AML||Bank Secrecy Act (USA)
Anti Money Laundering
|Congress passed the Bank Secrecy Act (BSA), also known as the Anti-Money Laundering (AML) law, in 1970 to combat money laundering in the United States. The Bank Secrecy Act (BSA) is sometimes referred to as an anti-money laundering law (AML) or jointly as BSA/AML.|
|C&D||Cease and Desist||Denoting a legally enforceable order from a court or government agency directing someone to stop engaging in a particular activity.|
|CAMLO||Chief Anti-Money Laundering Officer|
|CDP||Collaterized Debt Positions|
|CFPB||Consumer Financial Protection Bureau||The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB’s jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.|
|CFTC||U.S. Commodity Futures Trading Commission||U.S. Commodity Futures Trading Commission is an independent agency of the US government created in 1974, that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options. Jurisdiction: USA|
|Chattel||Personal property, other than real estate|
|Closing Agenda||A Closing Agenda is a document that is often used in order to structure a transaction. It works as a checklist to determine what steps and documents are required in order to close the transaction|
|Counterparty risk||Risk in a contract that the other party will not live up to its obligations|
|crypto wallet||Crypto wallets can be either custodial wallets or self-custody wallets.||
A crypto wallet, also known as a digital wallet, is a software program, hardware device, or a simple sheet of paper that stores a user’s private keys.
Crypto wallets enable users to securely store, manage, and transact with digital assets, DeFi, and non-fungible tokens (NFTs).
|CTF||Counter Terrorism Financing|
|CUNA||Credit Union National Association||MBSA Newsletter spoke about them recently|
|CVC||Convertible Virtual Currency||Convertible Virtual Currency (aka open virtual currency or OVC) is an unregulated digital currency that can be used as a substitute for real and legally recognized currency. Convertible virtual currency usually has a measurable value in real money, but what makes it convertible lies in its ability to be exchangeable. Not all virtual currency can be exchanged for legal tender though, therefore, not all virtual currency is convertible. Ex: Bitcoin.|
|DAO||Decentralized Autonomous Organization||An organization that is run through rules encoded as computer programs called smart contracts
Or: Decentralized apps and organizations
|DApp||Decentralized Application||Computer application that runs on a distributed computing system|
|DFPI (fka DBO)||Department of Financial Protection and Innovation||
California banking and payments regulator.
DFPI, Department of Financial Protection and Innovation, 2020
|DeFi||Decentralized Finance||Form of peer-to-peer finance running on cryptocurrency blockchains, most commonly Ethereum|
|Dunning letters||Reminder notice for unpaid debt in Europe|
|EFT||Electronic Funds Transfer||Electronic funds transfer is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems.|
|ERC-20 Token||One of the most significant tokens is called ERC-20, which has emerged as the technical standard used for all smart contracts on the Ethereum blockchain for token implementation.
Plenty of well-known digital currencies use the ERC-20 standard, including Maker (MKR), Basic Attention Token (BAT), Augur (REP), and OmiseGO (OMG).
|Escheat||Reversion of property to the state on owner’s death without a legal heir|
|ESMA||European Security and Markets Authority|
|FATCA||Foreign Account Tax Compliance Act||A 2010 United States federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report the assets and identities of such persons to the U.S. Department of the Treasury|
|FATF||The Financial Action Task Force||The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog.|
|Fiat Currency||Legal tender whose value is backed by the government that issued it
|FinCEN||Financial crimes enforcement network (US dept of treasury)|
|FOA||Funding on Authorization|
|FSA||Federal savings association (also called “federal thrifts” or “federal Savings Banks”)||Institutions chartered by the Office of Thrift Supervision which is now administered by Office of the Comptroller of the Currency, regulated according to the rules and regulations of Federal Savings Banks. Although the activities of federal thrifts were once confined primarily to taking deposits from consumers and making residential mortgage loans, federal thrifts are now authorized to offer a wide range of financial products and services.
Although the differences between federal thrifts and national banks have diminished as the authorized activities of federal thrifts have expanded to include virtually all traditional banking activities, they are still distinct institutions subject to different regulatory schemes and supervised by different regulators.
|Full portability||The right of an ISO to cause its processor and acquiring bank to assign their rights in a merchant agreement. This is granted in exchange for substantial revenue commitments by the ISO.|
|Gateway IP||Refers to a device on a network which sends local network traffic to other networks.|
|Gateway Services Provider||A provider of the services of securely transmitting card transaction data among cardholders, merchant processors, acquiring banks and payment networks.|
|GDPR||General Data Protection Regulation (EU)|
|Hard credit check||Checking true credit score CRA credit reporting agency|
|Hash||Math algorithm that maps data of arbitrary size to a bit string of fixed size (hash) and is a one way function that is infeasible to invert|
|Hash Tree/Merkle Tree||A “tree” (think family tree drawing) with every “leaf” is labeled with the hash of a data block and every non-leaf is labelled with the cryptographic hash of the labels of its child nodes|
|HIO||Head of International Organizations|
|ICO||Initial Coin Offering|
|IPO||Initial public offering||Initial public offering or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail investors. An IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges.|
|ISO – MSP||Independent Sales Organization or Member Service Provider||Independent Sales Organization or member service provider that solicits merchants to provide merchant services of acquiring bank and a processor as well. Bank or processor pays ISO a portion of fees it gets. Typically ISO or MSP is registered with Visa or Mastercard.|
|ISO agreement||Independent Sales Organization agreement||Agreement bw acquiring bank and processor and ISO, pursuant to which ISO solicits merchants.|
|Issuing bank||Financial institution that issues cards to individuals or other entities. (A bank can be issuing bank and acquiring bank but in merchant services industry, these two concepts are separate.) They make $ from interest charges, processing fees charged to merchants, etc. This is how they give cardholders things like miles and points.|
|ITC||Input Tax Credit|
|KYC||Know your customer. KYC refers to ‘know your customer’. KYC is popular in traditional finance but has yet to be implemented in DeFi and self-custody products.||The know your customer or know your client guidelines in financial services requires that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a bank’s Anti-Money Laundering policy.|
|LEI||Legal Entity Identifier||20 digit alphanumeric code based on ISO 17442 standard|
|Liquidity Crunch||A time period when cash resources are in short supply and demand is high|
|LLC||Limited Liability Company||A limited liability company is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation|
|LOI||Letter of Intent|
|Merchant services / Acquiring services / Merchant account services / Processing||Services delivered to merchants enabling them to get payment via card. The Acquiring bank and processor delivers the “merchant service” to the merchant.|
|Metadata||A set of data that describes and gives information about other data|
|MLS||Merchant Level Salesperson||Individual who solicits merchants to offer them merchant services, usually on behalf of an ISO.|
|Money transmitting service||The term “money transmitting service” includes accepting currency or funds denominated in the currency of any country and transmitting the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal reserve bank or other facility of the Board of Governors of the Federal Reserve System, or an electronic funds transfer network|
|MOU||Memorandum of Understanding|
|MSA||Master Services Agreement||A master service agreement, sometimes known as a framework agreement, is a contract reached between parties, in which the parties agree to most of the terms that will govern future transactions or future agreements.
We had to write the Canada addendum of this for one of our clients.
|MSB||Money Services Business||A legal term used by financial regulators to describe businesses that transmit or convert money. The definition was created to encompass more than just banks which normally provide these services to include non-bank financial institutions. An MSB has specific meanings in different jurisdictions, but generally includes any business that transmits money or representatives of money, provides foreign currency exchange such as Bureaux de change, or cashes cheques or other money related instruments. It is often used in the context of Anti Money Laundering (AML) legislation and rules. Governed by local regulators and have to adhere with requirements to conduct customer due diligence if customers request for an amount of foreign currency that exceeds a certain threshold. An MSB often provides an essential financial service to underdeveloped regions with limited or no banking services and may be a small organisation with outlets like grocery stores, drugstores, pharmacies or convenience stores|
|MSBA||Association of MSB’s/transmitters|
|NFC||Near Field Communication||Think payment device like apple pay|
|NFT||Non Fungible Token||
Ex: $20 bill is fungible. Gold necklace with initials is not fungible property.
A non-fungible token (NFT) represents a unique digital asset, such as digital art. Most NFTs reside on the Ethereum blockchain. Ethereum NFTs are called ERC-721 tokens.
|OCC||Office of the Comptroller of the Currency||A bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federally licensed branches and agencies of foreign banks in the United States.
The acting Comptroller of the Currency is Brian P. Brooks, who took office in May 2020.
|OFC||An Offshore Financial Centre||(OFC) is defined as a country or jurisdiction that provides a ton of financial services to non-residents. “Offshore” does not refer to the location of the OFC, but to the fact that the largest users of the OFC are non-resident|
|P2P Lending||Peer to peer lending||P2P lending is a method of debt financing enabling individuals and companies to lend and borrow money through an online platform instead of making use of a traditional bank as an intermediary. Because the loans are split up in minor parts, many different agents can finance the loan.|
|PAD||Pre Authorized Debits||Pre-authorized debits (PADs) are a convenient way to pay bills and make payments automatically. Instead of waiting for its customer to send a payment, a company or financial institution is given permission to debit a customer’s bank account when the payment is due. It’s a great way to pay bills like a mortgage, utilities, and insurance premiums.
This is a type of electronic funds transfer (EFT). For example: “I authorize FCJA to take $20 from my account every month as a donation.”
|Pari passu||at the same rate, on equal footing|
|Payment gateway||merchant service provided by an e-commerce application service provider that authorizes credit card or direct payment|
In cryptocurrency, a private key is a long string of digits that gives owners direct access to their cryptocurrency on a blockchain.
Private keys are used in tandem with public keys via encryption and decryption to help maintain the secrecy of the private key.
|Payment network||network that establishes rules pursuant to which Issuing banks issue cards (for Acquiring banks to process transactions). Ex: Visa or Mastercard.|
|Payments Canada||Payments Canada is an organization that operates a payment clearing and settlement system in Canada. The Canadian Payments Association was established by the Canadian Payments Act in 1980. Among other responsibilities, it regulates and maintains directories of bank routing numbers in Canada.
They regulate EFTs (electronic funds transfers).
It was formerly called Canadian Payments Association.
|PCI / PCI DDS Compliance||Payment Card Industry||Payment card industry (PCI) compliance is mandated by credit card companies to help ensure the security of credit card transactions in the payments industry. PCI standards for compliance are developed and managed by the PCI Security Standards Council. PCI standards are essentially a set of guidelines that all issuing banks, acquiring banks, processors and merchants agree to adhere to.|
|PCI compliance supplier||An entity that helps you improve your PCI compliance|
|PEP List||Politically Exposed Persons List||People on this list because of their prominence are more suspect to bribery/corruption because of their position|
|PKI||Public Key Infrastructure|
|POS||Point of Sale||Ex: the depanneur|
|Processor||A business that the acquiring bank has outsourced some of its merchant services work to.|
|Residuals||Monthly compensation paid by processor to ISO.|
|RTO||Reverse Take Over|
|Sanctions Screening||Checks sanctions list to see if the investor/borrower is invlolved in financing crime/terrorism/money laundering|
|Sandbox Program||Software virtualization that lets programs run in its isolated virtual environment. These programs have limited access to the systems and files can make no permanent changes|
|SAR||Suspicious Activity Reports|
|SEC||U.S. Securities and Exchange Commission||The SEC holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, which is the nation’s stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.|
|Small merchant||Merchant processes less then 20K transactions per year. Known as level 4 according to PCI standard.|
|Smart Contract||Computer protocol intended to digitally facilitate, verify or enforce the negotiation or performance of a contract. They allow the performance of credible transactions without third parties|
|SOA||Statement of account|
|Soft credit check||Involves who the person is and other basic info|
|SoR||System of Record|
Source code is the list of human-readable instructions that a programmer writes—often in a word processing program—when he is developing a program. The source code is run through a compiler to turn it into machine code, also called object code, that a computer can understand and execute.
“Open source” source code is when this is distributed for free ~
|Stablecoin||Stablecoins are an intricate component of the DeFi ecosystem as they allow for a low volatility haven.||
A stablecoin is a cryptocurrency that pegs its price to that of another asset on a 1×1 basis. Most stablecoins peg their price to the US dollar. Many, but not all stablecoins, are backed by reserves.
· Algorithmic stablecoins
|SRA||Solicitors Regulation Authority||The Solicitors Regulation Authority (SRA) is the regulatory body for solicitors in England and Wales. It is responsible for regulating the professional conduct of more than 125,000 solicitors and other authorised individuals at more than 11,000 firms, as well as those working in-house at private and public sector organisations.|
|STO||Security Token offering|
|Syscoin||Syscoin is a global network, a distributed ledger, a decentralized database, and a blockchain. It is also a cryptocurrency, an altcoin, a digital currency, and a tradable token.
To facilitate near-zero fee transactions, you can use its native cryptocurrency, Syscoin (SYS), to pay for goods on the marketplace
|US PATRIOT Act||Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism||The Patriot Act was written following the September 11 attacks in an effort to dramatically tighten U.S. national security, particularly as it related to foreign terrorism.|
|VAN||Virtual Account Number|
|USDT vs. USDC vs. DAI||stablecoins backed by physical reserves of US Dollars||USDT (Tether), USDC (USD Coin), and DAI are all stablecoins which peg their price to the US dollar. USDT and USDC are centralized stablecoins backed by physical reserves of US Dollars; DAI is a decentralized stablecoin that is over-collateralized by various cryptocurrencies.|
|VAT||Value Added Tax|
|VCB||Virtual Currency Business|
|Wildcat Bank||Bank that prints banknotes that are not backed|
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