Critics question plans to unwind Trump-era rules
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 Regulations
Bank of Canada (Aug 13 Deadline): Retail Payment Advisory Committee is Seeking New Members
Bank of Canada | Jul 22, 2021
Retail Payment Advisory Committee
The Retail Payment Advisory Committee is seeking new members. Find out why, who is eligible and how to apply.
In 2020, the Bank of Canada established the Retail Payments Advisory Committee (RPAC) to solicit advice and expertise from industry members of the retail payments ecosystem. The Retail Payment Activities Act received Royal Assent on June 29, 2021, and the Bank of Canada is looking for new members for RPAC.
Read more about RPAC’s mandate and their past meetings.
Responsibilities
Members will attend approximately six meetings over a 12-month period, where they will be able to:
- discuss supervisory topics
- share best practices
- raise organizational or industry concerns
- provide potential solutions
See: Bank of Canada to become new regulator of fintech companies doing payments processing
Eligibility
The Bank will choose RPAC members from a broad spectrum of the payments industry that represents different sizes, maturities and scopes. This will help the Bank gain advice and expertise from a representative selection of industry members. We invite payment service providers to submit an expression of interest to join RPAC for the upcoming term.
Deadline for submissions
Submissions will be accepted until August 13, 2021. The Bank will contact the entities selected for further information.
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, 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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Non-Fungible Tokens in the media and entertainment industry
Herbert Smith Freehills | James Balfour, Ghislaine Nobileau and Vrinda Vinayak | Jul 22, 2021
Non-fungible tokens (“NFTs”) have been dominating technology columns in the media lately. Items that would previously not have been considered traditionally ‘marketable’ or high value are now being sold for eye-watering sums. For example, a digital artwork by Beeple sold for US$69 million, a token of Jack Dorsey’s first tweet sold for US$2.9 million, a token of a GIF of the ‘Nyan Cat’ created a decade ago was auctioned for US$590,000, and a NFT representing Tim Berners-Lee’s original source code for the world wide web was recently sold for US$5.4 million. NFTs have also meandered into the music, sport and fashion industries among others.
See: OpenSea best month ever, NFT Avatars trend continuation, and Web 3.0 tipping point
In this first article in a series of posts, we provide a high level overview to NFTs and some of the key legal issues arising from their unique nature. Subsequent posts will take a closer look at these and a variety of other key legal and regulatory considerations when applying existing concepts and regimes to NFTs and their underlying technology.
Application in the media and entertainment industry
In a move to counter the abundancy and availability of media content on the internet, NFTs have the potential of (i) reintroducing scarcity into an industry where the presence of intermediaries means that creators often take little part in the profit sharing and (ii) generating new revenues from content catalogues owned by media companies or investors.
Musicians have been venturing into NFTs as a way to increase revenue streams after a halt of live music performances due to the pandemic. Kings of Leon was one of the first bands to release a new album as an NFT along with a moving digital album cover and an exclusive physical vinyl, they also enabled fans to purchase a super token which granted them a golden ticket to access VIP seats at concerts. Earlier this year, musician and artist Grimes also sold 10 digital artworks at auction to raise a total of around US$6 million. In addition to authenticity and traceability, NFTs enable artists to cut out expenses of intermediaries which could solve the issue of musicians struggling to profit from their work. As the technology is still in its infancy, fans have complained of the poor user experience when purchasing NFTs which often requires purchasing crypto-currencies on an exchange, creating and accessing different crypto wallets and incurring a host of third party fees along the way, often doubling the purchase price of the token. However, this innovation is seen by some as an opportunity to generate revenue for artists with a smaller yet loyal fan base who receive meagre revenues from streaming services.
See: TechCrunch Founder on Selling His Apartment as an NFT in Groundbreaking Deal
The NBA has been using NFTs to monetise its content by setting up its “Top Shot” marketplace powered by Dapper Labs, where fans can buy packs of NFTs featuring key highlights during games. Like Pokemon cards, the purchasers do not know which moments are included in the pack, but they have the ability to sell the NFTs on a secondary marketplace where the most sought after highlights have sold for up to $200,000 dollars. So there's a tokenization and online casino like element.
The film industry has also been buying into the NFT craze as some filmmakers intend on seizing the opportunity to raise money for new productions by selling digital collectibles (such as artwork or sections of the film’s score), to publicise the release of a movie or to boost awareness of an issue. For example, in March 2021, Adam Benzine released 10 limited edition copies of his 2015 documentary “Claude Lanzmann: Spectres of the Shoah” on Rarible for an initial selling price of 100 ETH (approx. $260,000) – to this day 9 copies have yet to receive bids. Around the same time, Nick Box, a filmmaker, released a unique edition of his feature length art horror film called “Elevator to Insanity” on Mintable, he also attached the VOD distribution rights to the token – however it did not receive bids. While NFTs may create new revenue streams for filmmakers, potentially bypassing studios and distribution companies for financial contributions, these have yet to appeal to NFT purchasers and attract as much enthusiasm as other NFT use cases previously described. It is thought that this lack of success may be a direct result of an issue with low storage space on the blockchain. Until recently, the blockchain could only accommodate smaller files resulting in shorter video clips such as NBA sporting highlights mentioned above. However, a collaboration between companies VideoCoin and Filecoin has resulted in a recent announcement that they have managed to solve this storage issue by creating enough file capacity to store 725 million 1080p high resolution film NFT files. With news of this technological development, it will be interesting to see whether NFTs in the film industry gain more traction.
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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, 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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Ethereum co-founder says safety concern has him quitting crypto
Bloomberg | | Jul 16, 2021
Anthony Di Iorio, a co-founder of the Ethereum network, says he’s done with the cryptocurrency world, partially because of personal safety concerns.
Di Iorio, 48, has had a security team since 2017, with someone traveling with or meeting him wherever he goes. In coming weeks, he plans to sell Decentral Inc., and refocus on philanthropy and other ventures not related to crypto. The Canadian expects to sever ties in time with other startups he is involved with, and doesn’t plan on funding any more blockchain projects.
See: Middle-aged crypto-king Anthony Di Iorio wants people to create something positive
“It’s got a risk profile that I am not too enthused about,” said Di Iorio, who declined to disclose his cryptocurrency holdings or net worth. “I don’t feel necessarily safe in this space. If I was focused on larger problems, I think I’d be safer.”
Back in 2013, Di Iorio co-founded Ethereum, which has become the home of many of the hottest crypto projects, particularly in decentralized finance -- which lets people borrow, lend and trade with each other without intermediaries like banks. Ether, the native token of the network, has a market value of about US$225 billion.
He made a splash in 2018 when buying the largest and one of the most expensive condos in Canada, paying for it partly with digital money. Di Iorio purchased the three-story penthouse for CUS$28 million (US$22 million) at the St. Regis Residences Toronto, the former Trump International Hotel & Tower in the downtown business district.
In recent years, Di Iorio jumped into venture-capital investing and startup advising. He was also for a time chief digital officer of the Toronto Stock Exchange. In February 2018, Forbes estimated his net worth was as high as US$1 billion. Ether’s price has more than doubled since then.
Read: Crypto Pioneer Buys Penthouse in Former Toronto Trump Tower
“I want to diversify to not being a crypto guy, but being a guy tackling complex problems,” Di Iorio said. He is involved in Project Arrow, run by a high-school friend that’s building a zero-emission vehicle. He is also consulting a senator from Paraguay.
Decentral is a Toronto-based innovation hub and software development company focused on decentralized technologies, and the maker of Jaxx, a digital asset wallet that garnered about 1 million customers this year.
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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, 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 Consultation on Prudential Treatment of Cryptoasset Exposures
McCarthy Tetrault | Ana Badour | Jul 6, 2021
On June 10, 2021, the Basel Committee on Banking Supervision (the “Basel Committee”) released a public consultation paper on the prudential treatment of cryptoasset exposures (the “Report”), which we previously discussed in a separate blog post. In the Report, the Basel Committee proposed a framework for the prudential treatment of cryptoassets and requested feedback on the proposal.
On July 5, 2021, the Office of the Superintendent of Financial Institutions (“OSFI”) published a letter (the “Letter”) highlighting the Report to Canadian federally regulated financial institutions (“FRFIs”) and requesting feedback from FRFIs on the consultation questions raised in the Report and additional related questions. Comments on the Letter are due to OSFI September 30, 2021. In addition, OSFI also encouraged Canadian FRFIs to provide comments directly to the Basel Committee on the Report, which are due September 10, 2021.
In brief, the Report proposes that cryptoassets be classified into groups 1 and 2. Group 1 cryptoassets must meet a series of conditions intended to identify “stablecoins” and tokenised traditional cryptoassets. Group 2 is a residual category that captures all cryptoassets not in Group 1 (including bitcoin). Assets in Group 1 would be subject to less conservative minimum risk-based capital requirements than Group 2 assets (which would be subject to a 1250% risk weighting). The Report also provided guidance for banks and supervisors on mitigating cryptoasset-specific risks.
See: Snapshot: the regulatory framework for financial services compliance in Canada
OSFI is now considering how to structure its own prudential regulation framework for cryptoassets, and accordingly, requests feedback from FRFIs on the consultation questions highlighted in the Report and the following additional questions noted in the Letter:
- How would the proposed capital treatment for crypto assets in the Report interact with the FRFI’s current or contemplated business models in this space?
- Are there further regulatory capital or other prudential perspectives, beyond those contemplated in the Report, which OSFI should consider in more detail with respect to indirect crypto asset exposures, such as through crypto asset Exchange Traded Funds (ETFs)?
- Are there additional risks from hedging a cash-settled exposure with a direct exposure (and vice versa) that should be considered, such as basis, operational, or technology risks?
- Are there additional considerations relevant to non-bank FRFIs that OSFI should be mindful of when developing a prudential framework for crypto assets?
- Can the FRFI identify any existing crypto assets that it believes should qualify for Group 1 treatment that do not based on the proposed classification conditions? What modifications to the classification conditions would be necessary to allow these crypto assets to qualify for Group 1 treatment?
- For Group 2 crypto assets, the Report does not provide any recognition to the netting of long and short positions, while it notes there are additional risks to speculative short positions. Is this a prudent capital treatment with appropriate incentives?
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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, 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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Fed officials express skepticism about a U.S. central bank digital currency
Reuters | Jonnelle Marte | Jun 28, 2021
June 28 (Reuters) - Two Federal Reserve officials on Monday expressed strong skepticism about the need for the central bank to issue a digital currency, saying that many dollar transactions are already virtual and some of the potential benefits of an official digital currency may be accomplished through other means.
The remarks, made at two separate events on Monday afternoon, suggest policymakers could face intense discussions as they explore the potential benefits, costs and logistics of creating a central bank digital currency, or CBDC.
Fed Vice Chair for Supervision Randal Quarles said any proposals to create a U.S. CBDC must clear a "high bar," and that he needs to be convinced the potential benefits would outweigh the risks.
See: BIS Research: CBDCs beyond borders: results from a survey of central banks
"Before we get carried away with the novelty, I think we need to subject the promises of a CBDC to a careful critical analysis," Quarles said in remarks delivered in person during the annual Utah Bankers Association Convention.
The Fed official said the U.S. dollar is already "highly digitized" and expressed skepticism that a CBDC would help to improve financial inclusion or lower financial costs. Some of those issues may be better addressed with other solutions, such as improving access to low-cost bank accounts, Quarles said.
Richmond Fed Bank President Thomas Barkin expressed similar skepticism when speaking to the Rotary Club of Atlanta. "We already have a digital currency in this country, it’s called the dollar," he said.
Barkin said many transactions are already completed virtually through services such as Venmo and online bill pay. "We ought to have a sense of what are we trying to accomplish when we do it," Barkin said.
The policymakers' remarks come as the U.S. central bank is ramping up its efforts to explore the potential launch of a digital currency.
See: Canadian researchers develop CBDC digital currency proposal for Bank of Canada
The Fed will release a discussion paper this summer about the benefits and costs of a CBDC and the Boston regional arm of the Fed is doing research with the Massachusetts Institute of Technology on the technology that could be used for a digital currency. That paper, along with open-source code, will be released in the third quarter.
Fed Chair Jerome Powell has made it clear that the central bank would not be able to launch a digital currency without congressional action, a point Quarles reiterated on Monday.
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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, 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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3 Key Takeaways: FATF’s Latest 12-Month Virtual Assets Review
Elliptic | David Carlisle | Jul 5, 2021
Today the Financial Action Task Force (FATF), the global standard-setter for anti-money laundering and countering the financing of terrorism (AML/CFT), released its second 12-month review on virtual assets (You can read our summary of its first report from July 2020 report here).
The FATF’s report provides an overview of progress that governments around the world, and virtual asset service providers (VASPs) in the private sector, are making in implementing the FATF’s guidance on virtual assets like Bitcoin.
See: Analysis: Proposed FATF Guidance for Virtual Assets and VASPs
The report also features a landmark market metrics study of key trends in virtual asset transactions based on blockchain analytics. Elliptic was privileged to have contributed our data and analysis to the FATF’s study, along with several of our peers.
Here’s our summary of three key lessons from the FATF’s review, which is a must-read for anyone in the AML/CFT compliance space.
1. Blockchain analytics shows that changing the FATF standards to cover peer-to-peer transactions (P2P) is currently unnecessary. However, VASPs still need to be alert to risks associated with P2P transfers.
A key question facing the FATF is whether it should fundamentally change its Standards to address specific features of virtual assets.
In particular, the FATF has asked whether its Standards, which place the focus of AML/CFT control measures on regulated intermediaries such as VASPs, need to be altered to account for the P2P nature of virtual assets. Because virtual assets allow counterparties to transact P2P without a regulated entity present, the FATF has suggested that it may need to amend its Standards to enable direct regulatory oversight of P2P activity in virtual assets.
In its new report, the FATF asks whether it should undertake such a fundamental revision of its Standards now. To assist in answering that question, the FATF commissioned a market metrics study to evaluate the scale of P2P activity in virtual assets, and to assess the associated risks.
See: WEF Insight Report: Digital Assets, Distributed Ledger Technology, and the Future of Capital Markets
Elliptic contributed data to the study, as did six other blockchain analytics firms. The study examined five years’ worth of transactions in Bitcoin, Ethereum, and Tether - three of the largest virtual assets.
The FATF’s conclusion based on the study is clear and direct: there is not sufficient evidence at present to suggest that the FATF needs to revise its standards to address P2P transactions directly.
First, there is no clear evidence that P2P transactions are becoming more important than before. VASPs continue to remain an essential part of virtual asset ecosystems, which suggests that placing regulation on intermediaries remains the optimal approach for now.
Second, there is no clear evidence that criminals are relying more heavily on P2P transactions than in the past. While blockchain analytics data used in the study suggests that fully-P2P transactions involve a slightly higher proportion of illicit activity than transactions involving VASPs, there is no indication that this is becoming more severe over time.
As Elliptic has demonstrated separately, even where criminals use intermediary unhosted wallets, they cash out their illicit Bitcoin proceeds through VASPs more than 80% of the time. Policy measures aimed at P2P transactions are therefore misplaced, since VASPs can ultimately file suspicious activity reports on funds they handle that have passed through intermediary wallets.
See: ‘Last year we saw about a 300% increase in transactions just using cryptocurrency’: Coinpayments CEO
The FATF’s use of blockchain analytics to inform its decision-making on key matters of policy is also an important sign that policymakers are realizing the potential of blockchain data as a source of important information on virtual assets. While the FATF makes clear in its report that it could still revise its Standards in the future to directly cover P2P activity, its decision not to do so at present is a welcome and innovation-friendly one.
However, the FATF’s report does raise concerns about the use of unhosted wallets for illicit purposes that VASPs and FIs should take into account. The report highlights that the proceeds of ransomware are often moved through unhosted wallets, including privacy wallets, which Elliptic’s research has shown are growing rapidly in popularity with criminals.
According to the FATF, these risks are significant, and could become more severe over time, so “jurisdictions and the private sectors need to consider ways to identify and mitigate risks posed by P2P in advance.”
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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, 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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SEC faces backlash as it lays out regulatory agenda
Investment Executive | James Langton | Jun 14, 2021
Critics question plans to unwind Trump-era rules
Following a surge in retail trading this year, the U.S. Securities and Exchange Commission (SEC) is considering rules to address the “gamification” of trading on mobile apps, yet critics say it’s missing the mark by seeking to undo work carried out under former U.S. president Donald Trump.
In its latest regulatory agenda, which sets out an array of short- and long-term actions the regulator is planning, the SEC said it’s considering measures to enhance retail investor protection. For instance, the commission is considering potential rules to address “gamification, behavioural prompts, predictive analytics, and differential marketing.”
Whether the SEC addresses the issue remains to be seen — work in this area is still at the “pre-rule” stage.
Other areas that are facing possible scrutiny include tougher investor protection in the exempt market; a possible consultation on the role of index providers and other third-party firms, and their implications for the asset management industry; and possible rules to combat fraud and manipulation in the security-based swaps market.
See: US financial regulator warns against strict cryptocurrency rules
These potential new areas for SEC action are in addition to its existing rule making efforts in an array of areas, including climate risk disclosure, board and workforce diversity, market structure modernization, and enhancing shareholder democracy.
However, the proposed agenda is coming under fire from a couple of the SEC’s conservative commissioners —
Hester Peirce and Elad Roisman — who issued a joint statement saying
"the agenda is missing some important priorities including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing.”
These omissions may reflect the fact that the SEC is also looking to scrap some of the work done under the previous administration, they suggested.
“As far as we can tell, the agency has received no new information which would warrant opening up any of these rules for further changes at this time. We are disappointed that the commission would dedicate our scarce resources to rehashing newly completed rules,” they said.
See:
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SEC v. Ripple: Implications of Ripple’s Fair Notice Defense
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FFCON21 On-Demand Video: Digitally Connected Retail Investors and IPO Innovations
“We hope chair Gensler will reconsider the need to revisit freshly minted rules, but we look forward to working with him and our fellow commissioners on other rulemaking initiatives reflected on the agenda and on addressing issues of perennial importance such as elder investor fraud and small business capital formation,” they concluded.
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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, 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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