Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Stablecoins, Metaverse, NFTs
Alberta Launches ScamSheild Investor Protection Challenge
Crypto | Sep 9, 2024
Image: Scamshield: Investor protection challenge (Herox page)
Alberta Launches $130K ScamShield Challenge with Local Law Enforcement to Combat Rising Crypto Fraud
The Alberta Securities Commission (ASC), Edmonton Police Foundation (EPF), and Edmonton Police Service (EPS) have teamed up to introduce the ScamShield Investor Protection Challenge to stem the concerning increase in fraud involving cryptocurrencies. The challenge is offering a $130,000 prize to the winners and aims to spur innovation to help battle against online investment fraud in crypto, which is becoming more complicated every day.
The challenge was first introduced as a part of the Community Solutions Accelerator (CSA), which is a first-of-its-kind partnership in North American law enforcement, aiming to safeguard investors and boost Alberta's capital markets.
To date, about 2 teams and 20 participants have registered to participate in the challenge. For those interested, more details, including eligibility and evaluation criteria, can be found on the official ScamShield Challenge page at herox.com/scamshield.
Crypto Fraud on the Rise
In Alberta and right across Canada, bitcoin fraud is growing. According to the Canadian Anti-Fraud Centre, over $309 million in investment fraud was recorded in 2023 of which over 60% of the cases involved crypto investment schemes. Approx 80 victims lost $7 million in Edmonton alone last year. Many investigators suspect the number is much higher due to underreporting. Many victims fall for these scams thinking they are going to solve their financial woes, only to be tricked by con artists who use advanced technology (i.e., deepfakes), emotional manipulation, and psychological blackmail.
See: ASC Sanctions Devon Christopher Edwards & KB Crypto
Cynthia Campbell, Director of Enforcement at the ASC:
“Anyone can be the victim of a scam, and the impact can be devastating. We are partnering with the EPF and EPS and hoping to engage more disciplines so that together we can find new ways to address this significant issue, protect more Alberta investors, and strengthen our capital market.”
A Call for Innovation - November 4 Deadline
Participants in the ScamShield Challenge are encouraged to contribute creative ideas that can help regulators and law enforcement in identifying, stopping, and combating cryptocurrency investment fraud. In order to stop more victimization, this multidisciplinary endeavour will make use of academic knowledge, technical developments, and enforcement tactics.
See: BC Crypto Trading Platform Defrauds Customers of $13M
Deputy Chief Devin Laforce of the EPS Investigations and Support Services Bureau:
“Online crypto investment fraud has become a preferred technique for scammers. As technological developments create new opportunities, criminals continually refine their methods, exploiting the digital economy in increasingly creative ways.”
The deadline for submitting a challenge is November 4, 2024. Interested parties can learn more online at www.herox.com/scamshield.
Outlook
The ScamShield Challenge is a novel way to engage all stakeholders to come together in combating the growing threat of crypto investment fraud. By incentivizing innovation and encouraging collaboration between regulators, innovators, the public, and local law enforcement, new standards are being set to tackle online financial crime. We look forward to the regulatory and crime tech solutions.
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, artificial intelligence, 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
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Regulatory Updates for Crypto Asset Trading Platforms
CTP Regulatory Update | Sep 9, 2024
Insights from the OSC Registrant Report 2023-24 for Crypto Asset Trading Platforms (CTPs)
As noted in OSC Staff Notice 33-756 (published July 26, 2024) and new guidelines from the Canadian Securities Administrators (CSA) and Canadian Investment Regulatory Organization (CIRO), Crypto Asset Trading Platforms (CTPs) are subject to tightening restrictions. The fundamental compliance standards for CTPs are outlined in the 2023–24 OSC report, however to maintain long term compliance its important for CTPs to meet the regulatory expectations for platforms registered as Investment Dealers and to pursue CIRO membership. McCarthy has written a very helpful summary of the staff notice to draw from.
1. Registration and Compliance Obligations
On August 6, 2024, the CSA announced that they intend to no longer offer the time-limited Restricted Dealer registration for CTPs (to be discontinued). Platforms that have not already registered or entered into a pre-registration undertaking (PRU) must now apply for Investment Dealer registration and CIRO membership. Current Restricted Dealers or PRU-holders must diligently work towards full Investment Dealer registration within a two-year window. Tip: Regular internal audits are advised to ensure that compliance frameworks are documented and in line with regulations.
2. Asset Custody and Delivery Requirements
The report emphasizes the importance of immediate asset delivery to clients to avoid triggering regulatory infractions. The OSC describes rapid delivery of cryptocurrency assets as a platform giving the user complete ownership, control, and possession without requiring them to rely on the platform or any of its affiliates going forward. Platforms that provide wallet features or payment services that exchange cryptocurrency for fiat money may not adhere to this requirement if they maintain control over users or put them at unnecessary danger. While determining whether a transaction complies with the immediate delivery criterion, variables like asset control and time are critical to manage.
See: Resurgence of Cryptoassets in Canada’s Investment Landscape
Tip: Develop an effective asset transfer procedure immediately, and notify users of the status of their assets.
3. Client-Focused Reforms and Marketing Compliance
CTPs must adhere to Client-Focused Reforms (CFRs), which include Know Your Client (KYC) and Know Your Product (KYP) requirements. The OSC expressed concerns about CTPs using the OSC's logo improperly, making deceptive marketing claims, and running 'gambling style' incentives that promote quick trading. These actions could lead to further responsibilities including suitability evaluations. The OSC urges CTPs to avoid utilizing regulator logos and to make sure all marketing are truthful and well supported. CTPs should also stay away from promotions that encourage excessive trading and obtain permission before utilizing the identities of other registrants in marketing materials. Tip: Review all client processes and marketing efforts to ensure they meet the latest regulatory standards.
4. Conflict of Interest Management
The OSC found many instances in which Crypto Asset Trading Platforms (CTPs) failed to properly identify, disclose, and manage material conflicts of interest, including partnerships with crypto issuers, staff trading activity, referral agreements, and crypto asset transaction fees. To avoid these risks, the OSC suggests that CTPs adopt policies to resolve conflicts in the best interests of their clients, keep proper records, provide employee training, and ensure that conflicts are clearly and timely disclosed to clients.
See: OSC: 2023 Canadian Crypto Survey Insights
Tip: Update your conflict of interest policy regularly and ensure clear communication with clients regarding potential conflicts.
5. Cybersecurity and Business Continuity
Given the OSC's focus on cybersecurity, CTPs are required to ensure strong client data protection and business continuity strategies to manage any operational interruptions. Tip: To protect operations against unanticipated disruptions, prioritize cybersecurity measures and develop a thorough business continuity strategy.
Outlook
As detailed in the 77 page PDF OSC Staff Notice 33-756 and new guidelines from the CSA and CIRO, the regulatory landscape for CTPs is still changing quickly. In order to maintain compliance, platforms must switch to Investment Dealer registration and CIRO participation, as highlighted by the end of the Restricted Dealer regime. Crucial regulatory guidance on asset custody, marketing compliance, managing conflicts of interest, and cybersecurity must be addressed by CTPs to comply with regulations.
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, artificial intelligence, 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
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Russia Pivot’s on Crypto as BRICS Momentum Builds
Crypto | Aug 28, 2024
Image: Freepik/wirestock
BRICS alternative payment system and Russia's transition to crypto signal's global finance pressure on US dollar
As reported by Bloomberg, Russia will formally start testing cryptocurrency exchanges on September 1, 2024, in an effort to promote international trade and avoid US sanctions. These experiments will use the National Payment Card System (NPCS) to convert rubles to cryptocurrency. Concurrently, the BRICS countries (Brazil, Russia, India, China, and South Africa) are looking at trade alternatives to the US dollar, and talks about using a single currency are growing. These changes could have a profound impact to cross border payments, and provide new options for countries seeking to sever ties with the banking system dominated by the West.
Alternative Financial Networks
Russia hopes to provide a quick fix through the NPCS for Russian companies that are having trouble doing business abroad given the growing limitations of its access to international financial networks such as SWIFT.
See:
BRICS Announces Launch of Blockchain Payment System
SWIFT Launching CBDC Solution Within 2 Years (to Compete with BRICS)
At the same time, BRICS nations are discussing the possibility of establishing a single currency for commerce payments within their bloc. According to Cryptopolitan, On August 14, Russia's Finance Minister Anton Siluanov said that the administration is still working out the details of legalizing cryptocurrency exchanges, stating:
"As of yet, we have not discovered a way to accomplish this."
While creating a BRICS currency is still a long ways off, Russia is looking to support cross-border payments with crypto as a stopgap measure. As BRICS momentum grows, it highlights how international economies are looking for alternatives to reliance on the US dollar and those that control it.
Why It Matters
Russia's decision to proceed with crypto trials is a direct response to economic sanctions and aligned with BRICS' discussions on alternative financial systems. If these initiatives are successful, they may quicken adoption of crypto for cross border payments and transform trade between BRICS countries and the rest of the world.
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, artificial intelligence, 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
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Kraken’s Legal Battle with the SEC Continues
Regulation | Aug 26, 2024
Image: AI Freepik
Kraken's Request to Dismiss SEC Case Denied, Judge Allows Case to Go To Court
Judge William Orrick recently dismissed Kraken's request to have the case dismissed, allowing the SEC's lawsuit against the company to proceed. The SEC claims that by allowing the trading of tokens like Cardano (ADA) and Solana (SOL) that the SEC in fact deems as securities, Kraken has been operating as an unregistered securities exchange. This case is prominent and could impact the future laws governing crypto in the US, especially given that Kraken is one of the largest centralized digital asset exchanges in the world.
Key Takeaways
1. The SEC's Authority and the Howey Test
According to the judge, the SEC has made credible claims that some crypto transactions made possible by Kraken would meet the criteria for "investment contracts" under the Howey Test and be regarded as securities. Although the court has not yet made a decision, it made clear that Kraken's operations may be subject to SEC regulatory monitoring and warrants more investigation as to whether or not operations qualify as securities trading.
See: SEC Files Lawsuit and Accuses Kraken of Commingling
Also of interest, the court stated that an 'investment contract' does not require a formal agreement under the Howey Test. Conversely, it's focused more on the wider context of the transaction such as the investor's 'reasonable expectations' and how the deal was presented.
3. No Major Questions Doctrine
Legal counsel for Payward Inc., the parent company of Kraken Exchange, had submitted a motion that the case triggered a "major questions doctrine," which restricts the power of regulatory bodies to make significant judgments in the absence of the approval of congress. However, the judge dismissed this claim stating that crypto's impact on the economy would have to be much larger than it currently is (think large enough to affect the financial stability of the economy) to apply this rule.
4. Implications and Reactions
The decision to proceed to court is consistent with prior SEC measures taken against Coinbase and Binance, indicating that the SEC will keep advocating for further regulation of the crypto sector. The SEC's efforts to regulate digital assets may be strengthened even more by the court's decision to allow the case to proceed, particularly if it is shown that Kraken broke any securities laws.
See: Kraken’s Strategy for Canadian Market Growth
Marco Santori, Kraken's Chief Legal Officer, stated that Kraken doesn't think the tokens that are exchanged on its platform qualify as securities. He emphasized that Kraken intends to contest the Howey Test requirements in court, and the SEC will have to demonstrate that each transaction satisfies them.
Closing Outlook
Following the ruling, market reactions have been mixed.If the court sides with the SEC, it will lead to stricter requirements for all cryptocurrency exchanges.
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, artificial intelligence, 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
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Privacy and Crypto Shaken as Telegram’s CEO Arrested
Crypto and Privacy | Aug 26, 2024
Image: Freepik
Pavel Durov’s arrest raises privacy concerns and crashes Toncoin
Over one of the last summer weekends before kids go back to school, the Founder and CEO of popular texting platform Telegram, Pavel Durov, was arrested by the French police on August 24, 2024 at Le Bourget Airport near Paris. Authorities detained Durov claiming that the Telegram platform is being used for illicit operations, such as money laundering, drug trafficking, and the distribution of illegal content including images of sexual abuse of children.
See: Meta Agrees to Pay $14B to Texas for Data Privacy Settlement
This high profile arrest has shaken the IT community, especially supporters and those around Durov's Telegram crypto project The Open Network (for everyone) or Toncoin (TON) which sank 20% when the news broke and is still trying to recover currently trading at $5.61.
Implications and Reactions
The Telegram platform strongly defended its moderation practices despite all the accusations and arrest of their founder, claiming that the platform follows the Digital Services Act in the European Union, and expressed confidence in their leaders innocence. They have 'nothing to hide'.
Statement from the TON Community
Following the recent news related to the Telegram’s founder Pavel Durov, we want to assure everyone that the TON community remains strong and fully operational.
As a community committed to freedom of speech and decentralization, we stand firmly…
— TON 💎 (@ton_blockchain) August 24, 2024
The news quickly reverberated with high profile industry leaders from Vitalik Buterin voicing concerns of software communication platforms in Europe to Elon Musk demanding Durov's release, setting up a future showdown of Western governments who are trying to crack down on illegal activity on digital networks versus encryption, privacy, free speech and decentralized philosophy.
I've criticized Telegram before for not being serious with encryption.
But (given the info available so far: the charge seems to be just being "unmoderated" and not giving up people's data), this looks very bad and worrying for the future of software and comms freedom in Europe.
— vitalik.eth (@VitalikButerin) August 25, 2024
See: The Battle for Privacy in the Digital Age
Outlook
Platforms like Telegram with almost a billion users globally are essential for communication, especially in areas like Russia and Ukraine. What might happen if government and industry fail to strike a balance between security, privacy, and content management in a global context? This story and its fallout is developing.
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, artificial intelligence, 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
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OSFI Proposes New Crypto Asset Disclosure Rules for Banks
Regulation | Aug 23, 2024
Image: Freepik/Drazen Zigic
OSFI introduces draft amendments to crypto-asset exposure disclosures for financial institutions to ensure transparency and system stability
On Aug 22, 2024 the Office of the Superintendent of Financial Institutions (OSFI) has published new recommendations for public disclosure of financial institutions' exposure to cryptoassets for comment. These guidelines are the result of a consultation held in 2023 to seek input from Federally Regulated Financial Institutions (FRFIs) regarding materiality, proportionality, and liquidity disclosures.
See: OSFI’s New Security and Integrity Guideline 2024
These additional modifications were developed in response to feedback that indicated a need for more consistent reporting and defined thresholds. The changes will bring banks, insurance providers, and small- and medium-sized deposit-taking institutions (SMSBs) like credit unions into compliance with the Basel Committee's global requirements.
Areas of Consultation Until October 2024
OSFI seeks feedback on four key areas or questions:
- Should exposures to cryptoassets be disclosed using quantitative thresholds or the materiality principle?
- Is it meaningful to report period-end figures coupled with daily average crypto exposures?
- What is the proper degree of detail for liquidity disclosures about crypto-assets, and how relevant are they?
- What is the best way to guarantee proportionality in disclosure obligations for small and medium-sized deposit-taking banks (SMSBs)?
See: CSA Updates on Value-Referenced Crypto Assets Regulation
The new standards are anticipated to be adopted in 2026, and the consultation period is open until October 2024. These changes are meant to improve openness, encourage discipline in the market, and guarantee that financial institutions handle the risks associated with cryptoassets sensibly.
Outlook
It is anticipated that the finalized rules will be introduced in 2025 and implemented in Q1 2026.
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, artificial intelligence, 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
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Trump Family Launches ‘Defiant Ones’ Crypto Platform
Crypto and Politics | Aug 22, 2024
Image: Freepik
Donald Trump Jr. and Family Launch Crypto Platform the Defiant Ones
Today, on Trump's Truth Social platform, it was announced that the Trump family has launched a new crypto platform called the Defiant Ones. Led by Donald Trump Jr., the initiative reflects the family's increasing interest in crypto by promoting less regulation from the government and more freedom for people and companies. It seems the primary audience for the Defiant Ones is those seeking financial independence, which aligns with the Trump family's larger populist appeal.
From Crypto Critic to Advocate
Former U.S. president Donald Trump was once a vocal critical of Bitcoin, "it just seems like a scam. I don't like it because it's another currency competing against the dollar." but has since embraced crypto with his NFT initiatives, and 2024 political campaign around the narrative of loosening financial regulations, and strongly opposing the possibility of a U.S. Central Bank Digital Currency (CBDC) due to privacy and surveillance concerns. With Defiant Ones, the family is now fully engaged in the crypto space, and many conservative voters believe that the Trump family's influence within the sector will expand as Bitcoin's adoption and importance grows.
Kamala Harris and the Democrat's Approach to Crypto
Democratic Presidential Candidate Kamala Harris has signalled that her approach to crypto will be friendlier than Bidens (who has tightened rules in the sector), as senior advisors have communicated that she will be supportive of policies to nurture crypto industry growth.
See: Inside Federal Securities Laws and Crypto’s Tightrope
Organizations like Crypto4Harris, a grassroots network of crypto advocates and fundraisers advocating for a strategy that is more welcoming of innovation and receptive of digital assets, especially given her connections in Silicon Valley. Industry leaders are demanding less enforcement and more clarity in regulations yet it remains to be seen if the Democrats will formally adopt a more moderate stance towards crypto.
Crypto A Divisive 2024 Election Issue
Kamala Harris and the Democrats are under increasing pressure to make their positions clear as the Trump family grows their support among crypto advocates with the launch of the Defiant Ones. With crypto emerging as a key debate in the upcoming election, the way in which each side handles their approach will have a big impact on the way bitcoin legislation develops in the United States.
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, artificial intelligence, 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
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