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
Our patent and copyright system isn’t prepared for inventions or designs by AI
Sifted | Andreas Leupold | Mar 25, 2021
What does a chair from furniture manufacturer Kartell have in common with a rocket engine by the software powerhouse Hyperganic? They were both created by generative design — in other words, made by AI.
Our patent and copyright system isn’t prepared for inventions or designs by AI.
The buzzword ‘generative design’ stands for a computer-aided design (CAD) process. But it’s a far cry from simple CAD design, using algorithms created by AI to generate a first set of designs for a product based on certain input parameters. It will then continue to refine these designs with each iteration until the final product materialises.
Combined with industrial 3D printing, the result is a technically superior product that weighs less, has better functional features and is often less prone to wear and tear.
See: Will the Law Keep Up with Smart Contracts in 2021?
And this combination is discovered by more and more industry heavyweights: Airbus is using generative design and 3D printing for aeroplane interiors; US sports equipment company Under Armour is using it for improving the damping properties of its 3D printed running shoes; and German car manufacturer BMW is using it to create automotive parts that are up to 50% lighter than their conventional counterparts.
But generative AI design won’t just disrupt conventional design thinking. It will also change our patent and copyright system, which isn’t prepared for inventions or designs by AI.
Creative machines lose the first legal round
As chance would have it, the same year — 2019 — that Kartell presented its AI chair at Milan’s furniture fair, Stephen Thaler, a pioneer in ‘artificial invention’ claimed that he had triggered “the big bang of machine intelligence with his ‘creativity machine’, the ‘DABUS’.” Dabus was hailed by its creator as the first “true artificial inventor“ — not a physical machine, but a concept that employed artificial neural networks and parallel computing to generate new ideas or even create art.
See: How do intellectual property rights apply to AI?
He applied for patent protection in the US, the UK and Europe based on his ownership of said machine — not for the machine itself, but for the inventions it had made. The patent offices of all three jurisdictions denied Thaler’s petitions on the grounds that only natural persons, not machines, can be inventors and that patent law consequently does not permit a machine like DABUS to be named as the inventor on a patent application.
For the legal community it was a wake-up call that a paradigm shift on inventorship was on its way.
For Thaler this was a defeat. But for the legal community it was a wake-up call that a paradigm shift on inventorship as we know it was on its way and had to be dealt with.
The World Intellectual Property Organisation initiated an ongoing discussion on intellectual property and AI that continued in 2020. It led to well over 80 questions on how the law should deal with the challenges to industrial property rights and copyrights posed by AI.
While it is virtually undisputed that AI inventions are not patentable under the current law in the EU, UK and US, with the number of works and inventions being created by AI increasing, there is growing momentum around the idea that they need some kind of legal protection.
See: Sophia the robot set to auction NFT digital artwork
Just what the right vehicle might be is still controversial, however. Patent protection was initially devised to help motivate human inventors to innovate and share the results. But unlike human inventors, AI cannot be motivated to innovate by the prospect of obtaining patent protection but only be instructed to innovate regardless of patent protection.
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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 has an active and ongoing investigation on Softbank ‘Nasdaq whale’
ComplianceX | Mar 25, 2021
On Wednesday, short seller research site PlainSite posted a letter from the Securities and Exchange Commission on Twitter revealing that the agency is investigating SoftBank, the Japanese telecommunications company and investing giant notorious for financing various unprofitable “technology” companies like WeWork, Uber, Compass, and Oyo.
Aaron Greenspan, founder of the Think Computer Foundation that runs Plainsite, filed a FOIA request in December 2020 for “any investigative materials [from January 1, 2018 to the present] pertaining to the various SoftBank companies controlled by Masayoshi Son, specifically relating to SoftBank’s trading of stocks and derivatives on those stocks.”
This request was filed in response to the revelation last fall that SoftBank was the “Nasdaq whale.”
SoftBank was responsible for stoking a huge rally in tech stocks, the Financial Times reported, because around August it began buying billions of dollars worth of call options in a shift for the company, fueling a rally that pushed up the share prices of tech companies it held billions of dollars of equity in.
Thanks in large part to a rally sparked by SoftBank’s high-risk market plays, firms like Tesla and Apple were up 74 and 21 percent, respectively, in the month of August alone. Executed through a small desk of traders and chief executive Masayoshi Son himself, the trading unit―named SB Northstar―and its bets won the company some $4 billion in gains at the beginning of September, before quickly melting away into nearly $3 billion in losses by the end of the month.
See: High tech meets high finance: The real revolution on Wall Street
In a January letter responding to Greenspan’s initial request, and months after the reporting on Softbank became public, the SEC said that its search did not turn up any relevant records. Greenspan appealed the decision on March 9 and two weeks later received a letter saying that responsive records were identified, but they could not be released under legal provisions that cover ongoing investigations.
“We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing,” the SEC letter stated.
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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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Hester Peirce on personal liberty, crypto regs and retail investor particiation
Investment News | Mark Schoeff Jr. | Mar 22, 2021
During her first three years on the commission, Peirce was part of a Republican majority. With the likely confirmation of Gary Gensler as SEC chair, Democrats will have the edge.
Securities and Exchange Commission member Hester Peirce will soon have a new experience on the five-person panel. During her first three years, she was part of the Republican majority. Following the likely Senate confirmation of Gary Gensler as chair, Democrats will have a 3-2 edge.
Peirce, a former senior counsel for an SEC commissioner and a former attorney in the Division of Investment Management, is poised to be a colorful voice of dissent who champions personal liberty over extensive regulation. Her speeches and statements at SEC open meetings often are peppered with rhetorical flourishes, such as relating regulatory action to a proverb about a nail and a horseshoe.
See: Hester Peirce Says SEC Enforcement is Not the Way to Provide Crypto Clarity
IN: Some have said the SEC has become too political. Do you share that view?
HP: There is pressure from a lot of people outside of the agency, because we built this really wonderful system of disclosure by issuers, that then informs investors as they make their long-term financial decisions about where to put their money … And people say, ‘Well, let me think about how … to use it for some other kinds of objectives, other than objectives related to investments and capital formation.’ That’s where the problems arise. But I think to the extent that we can really keep focused, we can have a really productive upcoming set of years … under Chairman Gensler.
IN: How does your emphasis on personal liberty inform your approach to rulemaking and enforcement?
HP: I’m looking forward to convincing my fellow commissioners that personal liberty is something we need to be taking into account every time we make a regulatory decision. So, there’s a tension there, right? We have this job of protecting investors. But we’re not the parent of the investor, we’re a regulator. We let people spend money as they choose, if they earn it. And so I think we should be careful on the financial side not to overstep our bounds and tell people, ‘Well, this is how you should invest, or must invest.’
IN: Regulation of cryptocurrencies is one of your priorities. What would you like to see in that area?
HP: I think there are several areas where we need clarity. One is, I’ve set forth a framework for token distribution events that would allow people to do token distribution events under the cover of the safe harbor, which would require them to make certain disclosures to token purchasers, and would subject them to the anti-fraud parts of the securities laws, but … other parts of the securities laws wouldn’t apply for three years.
See: GameStop Testimony: When Short Sellers, Social Media, and Retail Investors Collide
Another area I think we need to provide clarity is for broker-dealers and investment advisers looking to engage with this asset class, either for themselves, or more likely for their customers and clients. We really do need to provide them a framework within which they can do that … consistent with the securities laws.
And then a third area, and I get asked about this all the time, about when an exchange-traded product for Bitcoin will get approved. I think we’ve seen … that Canada has an exchange-traded fund that’s up and running. But I think it’s a reminder to us that there’s a lot of demand in the marketplace — and not only that, but there are other ways that retail investors and institutional investors are getting access to this asset class, and so at some point you’ve got to ask the question whether we need to rethink the approach that we’ve taken with respect to these exchange-traded product applications.
IN: To what extent should ordinary investors be allowed into the private markets?
HP: People come to me all the time and they say, ‘Hester, why is it that in the United States you have to be rich to get rich?’
Even if we open the doors and said anyone can participate in the private markets, I would be cautioning people: Make sure you know what you’re buying, don’t ever rush into a decision, make sure that you ask a ton of questions. If you don’t get answers to those questions, you should turn the other way, run away.
But I do think that people should be able to spend their money as they want, as long as it’s clear to people, yes, here you’re within this category of investments that doesn’t get the same kind of disclosure oversight [as] public company investments do. And so I do think that we need to expand the doors, open the doors wider.
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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 Chair Jerome Powell has outdated views on Bitcoin: cryptocurrencies are not just a substitute for gold
Kitco | Christina of CoinPayments | Mar 26, 2021
Federal Reserve Chair Jerome Powell is making waves in the cryptocurrency market after he threw some shade at bitcoin and other digital currencies, calling them simply speculative assets.
"Crypto assets are highly volatile and therefore not useful as a store of value. It is a speculative asset that is essentially a substitute for gold rather than for the dollar," Powell said on Monday in a panel discussion organized by the Bank for International Settlements (BIS).
Bitcoin and other cryptocurrencies can be volatile, but that is just a simple argument used to dismiss them. Unfortunately, Powell's opinions are incredibly outdated views of the cryptocurrency space.
Data compiled by CoinPayments, the world's largest crypto payment processor, shows that a growing tidal wave of merchants and consumers are embracing digital currencies as a form of payment, as an investment, and as a means of exchange. From the first quarter of 2019 to the fourth quarter of 2020, the North American cryptocurrency market saw a 300% increase in transactions as more businesses and merchants embraced digital currencies.
See: Global cryptocurrency spending grows 300% in two years
The reality is that current government and central bank policies have created a need for new currencies that protect people's wealth and preserve their purchasing power.
Central banks worldwide have embarked on ultra-loose monetary policies that aren't expected to end anytime soon. The reality is that we have no idea how these policies are going to impact the global economy. Still, many experts see the only outcome from all this money printing -- and added debt -- is inflation.
It's not just consumers that are embracing digital currencies as a new global currency. Last month, Tesla shocked the financial world after it announced that it was investing in bitcoin and accepting bitcoin as payment for its vehicles. The company said that it is looking at alternative assets as a hedge against growing currency risks in the marketplace.
"We transact business globally in multiple currencies and have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar," the company said in its filing. "If we do not have fully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase and our margins will suffer."
If companies are worried about a potentially weaker U.S. dollar, then the threat is genuine. With some companies sitting on trillions of dollars, it is not surprising they are going to start diversifying into cryptocurrencies. Unfortunately, the Federal Reserve will be left trying to catch up to the rest of the market.
See: Has COVID-19 made cryptocurrency more attractive for digital payment and investment?
It is challenging to dispute Tesla's outlook on the U.S. dollar. In the last 12 months the value of the U.S dollar against a basket of global currencies has lost 8%. During the same time bitcoin, the leading cryptocurrency, has rallied more than 800%
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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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Coinsquare Finalizes Agreement With CRA: Protects Majority of Client Data
Coinsquare | March 23, 2021
Coinsquare has today announced the outcome of proceedings resulting from the Canada Revenue Agency’s (CRA) September 2020 application in Federal Court seeking an order to compel Coinsquare to provide information pertaining to all of Coinsquare clients’ account history and trading data.
Coinsquare negotiated to protect its clients’ privacy, and limit any disclosure to only what was absolutely required by the CRA under Canadian tax law. Instead of providing the CRA with all client data dating back to 2013 as was initially requested, Coinsquare and the CRA have agreed that information relating to 90-95% of Coinsquare’s clients will not be disclosed.
See: CRA goes after client details of major Canadian cryptocurrency marketplace in battle against ‘underground economy’
This agreement is a partial but significant victory for Coinsquare and the digital asset industry in Canada.
The full announcement can be found here.
How do I report cryptocurrency transactions to the CRA?
For your reference, the CRA has published a Guide for Cryptocurrency Users and Tax Professionals to assist Canadians with cryptocurrency tax filings.
There are a variety of cryptocurrency tax softwares available (Koinly, TokenTax, CoinTracker) to help calculate your potential gains and losses. We would also encourage you to read our summary on filing cryptocurrency taxes in Canada and to consult with a professional tax advisor.
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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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‘A cop on the beat again’: Biden looks to reassert consumer watchdog agency sidelined by Trump
Compliancex | March 23, 2021
The Biden administration is working to reassert the government’s top consumer watchdog, which was sidelined by President Donald Trump, just as the U.S. economy is showing signs of revving up.
The Consumer Financial Protection Bureau, or CFPB, hollowed out and politicized under Trump after his administration failed to eliminate it outright, is a regulatory agency created by former President Barack Obama in response to the last economic crisis. Democratic lawmakers, consumer finance experts and former CFPB employees say the groundwork is being laid for it to re-emerge as the aggressive enforcement entity it was originally envisioned to be, at a time when millions of Americans face unprecedented financial hurdles resulting from the pandemic.
The stakes are high for President Joe Biden, too: His administration has pinpointed the agency as a key weapon in his arsenal to address racial disparities in access to loans, capital and credit, part of major campaign promises to Black Americans and other people of color who have also been disproportionately affected by the Covid-19 crisis.
See: Why a Biden win could be good for fintech
Experts said a fully staffed, enforcement-focused CFPB gives Biden a crucial tool to advocate for lower- and middle-class Americans who have in recent years, and during the pandemic in particular, been preyed on by financial institutions and subjected to dubious lending and debt collection practices.
“There is going to be a cop on the beat again,” said Sen. Elizabeth Warren, D-Mass., who helped create the agency. “The Trump team, they tried to make clear they were there to help big banks and big money lenders, not families. But the Biden administration is focused on using it to level the playing field.”
The approach would be in line with the agency’s original mission, and it would mark a notable change from its direction under Trump.
Trump’s first CFPB chief was Mick Mulvaney, who as a member of Congress had sponsored bills to eliminate the agency. As acting director, Mulvaney froze hiring, ceased investigations and fine collections, suspended most rulemaking and shifted the mission of the agency from enforcement, which helped consumers, to cutting regulations, which experts said helped lenders and other parts of the financial industry.
See: SEC Empowers Enforcement Staff To Take Immediate Actions To Combat Emerging Potential Problems | Hester Pierce Calls For Clear Regulations
He famously submitted a budget request for the agency for zero dollars and created a new line of political appointees in each division of the agency, called policy associate directors, who experts and former employees said were meant to politicize the agency. In 2018, the Trump administration stripped the agency of its powers to enforce discrimination cases in lending, a move that enraged many Democrats and consumer finance advocates.
Experts viewed Mulvaney’s successor, Kathy Kraninger, as a leader who more subtly exercised a conservative vision for the bureau, reshaping its mission as educating consumers so they can look out for themselves.
During Mulvaney’s tenure, a number of enforcement actions were put on hold, but they picked up under Kraninger. Still, the money recovered by actions under both agency chiefs during the Trump administration paled in comparison to the total recovered during the Obama years. Kraminger resigned at Biden’s request, hours after he was sworn in.
The Biden administration has already made moves to help return the agency to its original mission.
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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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Analysis: Proposed FATF Guidance for Virtual Assets and VASPs
CipherTrace | JJ | March 19, 2021
On March 19, 2021, global anti-money laundering watchdog the Financial Action Task Force (FATF) released a public consultation for its updated Draft Guidance on a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers. Key changes in the draft guidance include:
- DEXs and crypto escrow services are considered Virtual Asset Service Providers (VASPs)
- Stablecoins are virtual asset (VAs) and FATF Standards apply to them
- Only NFTs that can facilitate money laundering (ML) and terrorism financing (TF) are VAs
- VASPs should assess and mitigate proliferation financing (PF) risks
- Best practices for counterparty VASP due diligence
- Options for mitigating peer-to-peer transaction risks
- New Travel Rule clarifications and guidance
Proliferation Financing (PF) Risks
- In addition to money laundering and terrorism financing (ML/TF) risks, VASPs should begin to assess and mitigate proliferation financing (PF) risks.
- The FATF is currently developing separate guidance to clarify these requirements.
FATF standards apply to “so-called stablecoins”
- The FATF recommends countries analyze and mitigate the ML/TF risks of before they are launched—especially if the stablecoin is to be used for P2P transactions.
- Risk mitigation could include “limiting the scope of customers’ ability to transact anonymously and/or by ensuring that AML/CFT obligations of obliged entities within the arrangement are fulfilled, e.g. by using software to monitor transactions and detect suspicious activity.”
See:
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With Cyberattacks on the Rise, Revolut Explains why Cyber Insurance is Necessary
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PwC Report: Canadian Digital Trust Insights 2021: Cybersecurity comes of age
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FATF Travel Rule interview with iComply: Cryptocurrency is Meant to be Trustless, Not Anonymous
Risk mitigation options for peer-to-peer transactions
- Transactions to/from non-obliged entities (e.g. unhosted wallets) and transactions where at an earlier stage P2P transactions have occurred should be considered higher-risk.
- The FATF recommends some of the following as possible P2P risk mitigation tactics in high-risk jurisdictions:
- implementation of the VA equivalent of CTRs
- denying licensing of VASPs if they allow transactions to/from non-obliged entities (i.e., private/unhosted wallets)
- enhanced recordkeeping requirements and enhanced due diligence (EDD) requirements
- ongoing enhanced supervision of VASPs
- issuing public guidance and advisories to raise awareness of risks posed by P2P transactions
Specific guidance on the implementation of the “travel rule”
- VASPs that have not implemented the “Travel Rule” should be considered higher-risk.
- A VASP needs to undertake counterparty VASP due diligence before they transmit the required information.
- Regardless of the lack of regulation in the beneficiary jurisdiction (sunrise issue), originating VASPs can require travel rule compliance from beneficiaries by contract or business practice. In general, those business decisions are made by each individual VASP based on their risk-based analysis.
- Originators and beneficiary VASPs should screen transactions to confirm that the counterparty is not a sanctioned name.
- The submission of originator and beneficiary information in batches is acceptable, as long as submission occurs immediately and securely as per the FATF Standards. Post facto submission of the required information should not be permitted (i.e., submission must occur before or when the VA transfer is conducted)
- Where there is not an originator or beneficiary institution (transactions to and from unhosted wallets), the VASP must still collect the required information with respect to their customer. Countries should also consider requiring VASPs to treat such VA transfers as higher risk transactions that require enhanced scrutiny and limitations.
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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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