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
BC Supreme Court Ends $1.2M Bitcoin Loan Dispute
Crypto Law | Sep 16, 2024
Image: Freepik/fabrikasimf
B.C. Supreme Court enforces $1.2M Bitcoin loan in a landmark crypto case
The British Columbia Supreme Court upheld a $1.2 million Bitcoin loan arrangement in "Nguyen v. Tambosso (2024 BCSC 1551)", ruling in favour of the lender, Hung Nguyen. Despite the speculative nature of the transaction, Justice Shelley Fitzpatrick upheld the enforceability of contracts using Bitcoin just like those involving traditional currencies.
- Daniel Tambosso received a loan of 22 Bitcoins from Hung Nguyen in 2021 and was expected to pay it back within 48 hours. Tambosso said that the Bitcoin (valued at approx $1.2M) was required for a "bypass procedure" linked to software supposedly designed by Satoshi Nakamoto to secure his digital wallet. He also said if the transaction was successful that Nguyen would be offered a hefty return of 1,750 Bitcoins. After five months without repayment, Nguyen took legal action.
See: UK Proposes Bill to Recognize Crypto as Personal Property
- It was argued by Tambosso that the loan was an investment risk but Justice Fitzpatrick rejected this claim noting that the agreement clearly outlined the obligation to return the borrowed Bitcoins regardless of the outcome of the bypass procedure. The judge further acknowledged the possibility that Tambosso might have been deceived or involved in a some type of scam but regardless this was not an excuse for him to evade his 22 bitcoin repayment obligation. Justice Fitzpatrick noted, “Any risk associated with the bypass procedure was assumed by Tambosso alone.”
- The decision strengthens the legality of bitcoin as collateral and recognizes Bitcoin loans as legally enforceable under Canadian contract law. It also demonstrates the increased legal scrutiny of cryptocurrency transactions, with the court awarding Nguyen more than $1.24 million in damages based on the value of Bitcoin at the time of the loan.
Justice Shelley Fitzpatrick:
“This case involves a modern twist…Bitcoin, despite its volatility, is not beyond the scope of enforceable legal agreements. Any risk associated with the bypass procedure was assumed by Tambosso alone."
Why It Matters
This ruling is a turning point for loans backed by cryptocurrency in Canada and possibly beyond.
See: Key Takeaways from Bitcoin 2024 Conference
It strengthens Bitcoin's legality as a collateralized asset and signals a growing acceptance of digital currencies in legal and financial frameworks. For lenders, borrowers, and the fintech sector, the ruling establishes a precedent that may influence future crypto-loan agreements in the future.
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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UK Proposes Bill to Recognize Crypto as Personal Property
Crypto Regulation | Release | Sep 13, 2024
Image: Freepik/rawpixel.com
UK Parliament Introduces Bill to Recognize Bitcoin as Personal Property
A new bill called The Property (Digital Assets etc.) Bill was tabled in the UK to recognize Bitcoin, NFTs, and other digital assets as personal property under English and Welsh law. If approved, the bill will provide digital assets legal clarity and provide more legal protection against fraud, theft, and disputes. It will also help judges weigh complex situations involving digital assets like divorce settlements.
Justice Minister Heidi Alexander said:
"It is essential that the law keeps pace with evolving technologies and this legislation will mean that the sector can maintain its position as a global leader in cryptoassets and bring clarity to complex property cases."
Strengthening Legal Protections and UK's Global Competitiveness
In the UK today, digital assets are in a legal gray area making it challenging for owners to prosecute fraudulent claims or theft. One of the main goals of the Property (Digital Assets etc.) Bill is to improve safeguards for crypto owners, offering the same legal rights to traditional property holders, which was one of the UK Law Commission's recommendations, the need for a clear legal handling of digital assets.
The bill's legal framework would also establish clearer guidelines for resolving digital asset disputes. For example, in a divorce proceeding where digital possessions like as Bitcoin are frequently divided, the new legal categorization will make it easier for judges to identify asset ownership and distribution. This will provide more confidence in cases involving digital assets and streamline the legal process.
See: The Complexities of Auditing Digital Assets
The UK hopes to draw more companies and investors to its digital asset industry by being one of the first countries to offer explicit legal status for digital assets. The government views this bill as a way for the country to maintain its competitive edge in the international financial and technology markets.
Conclusion
Lawmakers around the world should take notice of the UK's Property (Digital Assets etc.) Bill. It's passing would provide stronger legal protections, and clearer dispute resolution outcomes that may serve as an example for other countries looking to add clarity and confidence.
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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