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
Inside Federal Securities Laws and Crypto’s Tightrope
Regulation | Jul 11, 2024
Image: Gurbir S. Grewal Director Enforcement Division, SEC
Insights from SEC's Director of Enforcement: Federal Securities Laws in the Age of Crypto
in a recent speech titled "What's Past is Prologue: Enforcing the Federal Securities Laws in the Age of Crypto", Gurbir S. Grewal, Director of the SEC's Division of Enforcement, delivered an overview of the present legal environment for crypto assets at the Third Annual Symposium of the William & Mary Business Law Review.
See: Challenges in Global Crypto Regulations – Lessons from Dubai
He highlighted the importance of strong enforcement, the continuous applicability of federal securities laws, and the delicate balancing act between innovation and compliance. Below are select quotes across five themes from the depths of the SEC's securities enforcement division that shine light on the implications for the cryptocurrency industry.
1. Historical Continuity of Securities Regulation
Grewal emphasizes the continued applicability of the basic principles that informed the development of US securities laws.
“The history of our securities laws makes clear that Congress always intended the definition of what is a security to be principles-based and flexible to cover the many kinds of schemes where promoters seek others’ money and promise profits in return. Whether something is a security depends on the substance of the transaction – not its name, not its form, and not its underlying technology.”
He implies that crypto assets have to live by the same regulatory frameworks as conventional securities, even though blockchain technology is unique. This guarantees strong investor safeguards while preserving market integrity in the face of technological improvements.
2. Investor Harm and Market Integrity
Grewal laments the substantial financial impact that the volatility of the cryptocurrency market has caused to regular investors.
“The current turmoil in the crypto markets is taking a real toll on everyday Americans. According to one survey, approximately 16% of U.S. adults have invested, traded, or used crypto, and among that group approximately 46% report their investments have done worse than they expected. In the end, investors, large and small, defrauded, and billions in customer assets misused or stolen.”
To stop further exploitation and rebuild investor confidence, there needs to be more governmental oversight of the cryptocurrency markets due to the massive losses and fraudulent activities that have occurred there. These comments highlight how important it is to follow securities rules strictly in order to protect investors.
3. Compatibility of Innovation and Compliance
A key theme in Grewal’s speech is the compatibility of technological innovation and regulatory compliance.
“Innovation and compliance with the securities laws are not mutually exclusive. The quarrel, therefore, is with noncompliant actors, not the technology or its promises.”
See: SEC Enforcement Director Grewal On Crypto Regulation
Grewal argues for a moderate strategy that promotes innovation while guaranteeing investor protection by differentiating between non-compliant behaviour and the promise of blockchain technology.
4. Public Trust and Regulatory Enforcement
Grewal is talking about the critical role of public trust in financial markets, which is reinforced by strict securities laws.
“Public trust requires robust enforcement of the securities laws. We must act with all the tools at our disposal to protect investors and enhance public trust and confidence in our markets."
This means that for the cryptocurrency industry, following regulatory guidelines is crucial for both legal compliance and preserving investor confidence and market participation. Strong enforcement measures reassure investors about the integrity of the market and function as a deterrent against unwanted behaviour.
5. Socioeconomic and Racial Disparities
Grewal brings attention to the disproportionate impact that crypto market volatility has on minority and marginalized communities.
“Crypto assets are the only major financial products that Black Americans are more likely to own than white Americans. And there is some evidence that Black and brown investors have now been disproportionately harmed during the downturn of crypto markets."
See: Canada’s Proposed Mutual Fund Crypto Regulations 2024
He also critiques:
“Predatory inclusion tactics of crypto entities directed at Black, brown, and other marginalized communities.”
Market participants and authorities have moral obligations to make sure that financial progress does not take advantage of vulnerable populations. In order to achieve equitable financial inclusion and protect all investors from predatory activities, gaps must be addressed.
Conclusion
Gurbir S. Grewal presents a case for a strict yet flexible regulatory framework that would safeguard investors while upholding the integrity of the market, and encourage innovation in the crypto sector. Grewal describes a regulatory approach that takes into account the historical background, investor harm, compliance, public trust, and socioeconomic inequality.
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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Balance Invests $10M to Launch Trust Company in Canada
Balance | Release | Jul 3, 2024
Image: Balance
Balance Commits $10 Million to Register Balance Trust Company
Balance, the biggest and oldest custodian of digital assets in Canada, has announced the incorporation of Balance Trust Company as a special purpose trust under the Loan and Trust Corporations Act (Alberta). The company has committed $10 million in regulatory capital into a wholly-owned subsidiary. By offering fiat custody, digital asset custody, collateral management, and escrow services, this new subsidiary hopes to qualify as a custodian in both the US and Canadian markets.
See: Balance Commits to Alberta, Relocates to Calgary
This milestone follows over a year of meticulous preparation, including financial audits, SOC 2 Type 2 certification, and system penetration tests. Balance has also strengthened its insurance programs and added key leadership positions, including a CFO and Chief Compliance and Risk Officer.
Leadership and Governance
The board of directors of Balance Trust Company comprises industry veterans:
- George Bordianu: Co-founder, President, and CEO of Balance.
- Alex McDougall: Co-founder and CIO of Bicameral Ventures, President and CEO of Stablecorp.
- James Slazas: Founding partner and CEO of DARMA Capital.
- Colin Pyle: EVP of Strategy and Corporate Development at RFA Capital Holdings.
- Jean Desgagné: Former President and CEO of the Canadian Depository for Securities (CDS).
Significance of Milestone
Setting up the Balance Trust Company is an important milestone for several reasons:
See: 2023 BIS Survey: CBDC and Crypto Trends Revealed
- Balance is now in a position to provide really localized services in the Canadian market, reducing the dependency on the US for tech and custodians.
- At the moment, Balance uses its digital asset custody solutions to safeguard assets valued at over $2.5 billion. Once the Balance Trust Company is registered, Balance will expand to offer fiat custody, collateral management, and escrow services.
- By becoming a qualified custodian in both the US and Canada, balance will surely expand it's footprint in regulated North American markets.
George Bordianu, co-founder and CEO of Balance:
“Canadian regulated entities are still forced to this day to use US custodians or Canadian custodians leveraging US-based technology. We’re laser-focused on bringing a truly local solution to the ecosystem and are grateful to the team at the ATBF for their help and guidance in achieving this mission and for granting us this letters patent."
See: Canada’s Proposed Mutual Fund Crypto Regulations 2024
Conclusion
Balance Trust Company will be able to assist investment broker-dealers, advisers, and issuers of public ETFs and mutual funds after it is registered and qualified as a custodian.
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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New US Crypto Tax Reporting Rules Starting 2025
Crypto | Jul 2, 2024
Image: Freepik/rawpixel.com
US Treasury Finalizes New Crypto Tax Reporting Rules for Exchanges and Payment Processors Starting in 2025
The US Treasury Department has finalized a comprehensive set of new cryptocurrency tax reporting guidelines that will take effect in 2025 (2026 tax filing season). These laws, aimed at increasing transparency and compliance, will have a substantial influence on cryptocurrency brokers, exchanges, and investors. They are also estimated to generate $28 billion in tax revenue over a decade.
See: CRA Pursues $54 million in Unpaid Crypto Taxes
Starting in 2025, bitcoin brokers, including exchanges and payment processors, will have to record user transactions to the IRS. A new tax form, Form 1099-DA, will be used to report gross profits, purchase dates, and sales prices. Furthermore, any transactions involving digital assets that exceed $10,000 must be recorded. Regulations for non-custodial brokers and decentralized exchanges have been deferred, with further information due later this year.
Treasury Makes Adjustments Based on Industry Concerns
The crypto industry has expressed concerns about the broad definition of 'brokers' triggering potential privacy issues, as well as the high compliance costs. This included nearly 44,000 comments made to reduce excessive restrictions on the impacted organizations. As a result of this feedback, the Treasury department altered the definition of broker such that "The final regulations require reporting by brokers who take possession of the digital assets being sold by their customers."
Danny Werfel, IRS Commissioner:
“These regulations are an important part of the larger effort on high-income individual tax compliance. We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets. Our research and experience demonstrate that third-party reporting improves compliance. In addition, these regulations will provide taxpayers with much needed information, which will reduce burden and simplify the process of reporting their digital asset activity.”
See: Canada’s Proposed Mutual Fund Crypto Regulations 2024
Compared to Canada?
In Canada, bitcoin transactions are classified as capital gains or business income, and taxpayers must disclose all crypto transactions on standard tax forms. Unlike the United States, Canada does not require particular tax forms for bitcoin transactions, with a focus on individual taxpayer reporting rather than broker duties. For more information on Canadian regulations, visit the CRA Crypto Guidelines.
Closing
These improvements are intended to streamline the tax reporting process for cryptocurrency users and enable the IRS enforce tax compliance more efficiently. As the industry evolves, expect additional rules to change the landscape of digital asset taxes.
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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Swiss Digital Franc Tokenized Bond Pilot Deemed a Success
Tokenization | Jun 28, 2024
Image: Freepik/flatart
Pilot Program with Swiss Digital Franc Sees Major Success
The Swiss National Bank's (SNB), in conjunction with SIX Digital Exchange (SDX) and numerous commercial banks, launched a pilot project from December 2023 to June 2024 for settling digital bond transactions with a wholesale Central Bank Digital Currency (wCBDC) that has been a huge success, indicating tremendous possibilities for the future of digital financial infrastructure. The pilot sought to investigate the viability and benefits of digital currency in financial markets.
See: SWIFT Launching CBDC Solution Within 2 Years (to Compete with BRICS)
Key Achievements
- The pilot has been extended for at least two years due to its performance, suggesting high confidence in its benefits and possibilities for the future.
- The World Bank successfully issued a 200 million CHF digital bond as part of the pilot, which is the first from an international issuer to be settled utilizing the wCBDC, a significant milestone.
- The pilot featured large Swiss banks such as UBS, Commerzbank, and Zürcher Kantonalbank, resulting in the issuance of over 750 million CHF in digital bonds via SDX.
- The pilot successfully connected traditional financial systems with blockchain technology, enabling seamless transactions across several central securities depositories (CSDs) including Clearstream and Euroclear.
See: Federal Reserve on U.S. CBDC and Global Comparison
Switzerland has long been considered as a global leader in financial innovation, and the success of the SNB's digital franc trial doubles down on this position. The Swiss approach to integrating blockchain technology with existing finance systems exemplifies a realistic and innovative technique. The Swiss financial sector has a strong regulatory framework, a healthy financial ecosystem, and an innovative culture, making it an ideal place to launch such initiatives.
Comparison with Other Financial Centers
Switzerland's progress with financial asset tokenization can be contrasted with other major financial centres, each investigating their own approaches toward incorporating digital currencies and blockchain technology.
- The United States has seen initiatives such as JPMorgan's JPM Coin, which intends to facilitate fast payments between institutional clients via blockchain. However, regulatory ambiguity remains a substantial barrier to the widespread deployment of such technology.
- The European Union has taken a proactive approach, which includes the groundbreaking Markets in Crypto-Assets (MiCA) law to establish a clear regulatory framework for digital assets. The European Investment Bank's digital bond issuance on Ethereum demonstrates the region's commitment to digital finance.
See: 2023 BIS Survey: CBDC and Crypto Trends Revealed
- The People's Bank of China is leading the Digital Currency Electronic Payment (DCEP) initiative, which is one of the most sophisticated in the world. The DCEP focuses on retail and wholesale applications, establishing China as a market leader in government-backed digital currencies. China's quick growth in digital finance, including retail and wholesale applications, is seen in its widespread adoption and thorough testing phases, highlighting the country's leadership in digital currency innovation.
Conclusion
The success of this pilot propels Switzerland to the forefront of digital financial innovation. With the pilot extended and more institutions likely to participate, the breadth of transactions will expand, possibly altering the global financial system through increased efficiency, security, and transparency.
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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Unlocking Solana: 3iQ and VanEck Apply for Solana ETP/ETFs
Crypto | Jun 27, 2024
Image: Solana price action on Jun 27, 2024 (Coingecko)
In Focus: Solana ETPs in the Spotlight
Solana, a high-speed blockchain platform noted for its low transaction costs and scalability, making it an appealing platform for both developers and users. The network's TVL has increased by more than 160% in recent months, reaching about $860 million, but it remains lower than its peak of $10 billion in November 2021. The latest developments involve 3iQ in Canada and VanEck in the United States, who have applied for approval of Solana-focused Exchange-Traded Products (ETP) and Exchange-Traded Funds (ETF), respectively, aim to broaden the use and adoption of Solana (SOL) among mainstream investors.
See: SEC Approves 19b-4 Forms of First Batch Ethereum ETFs
The introduction of Solana ETP/ETFs comes at a time when the U.S. Securities and Exchange Commission (SEC) has shown increasing openness towards cryptocurrency ETFs. Recent approvals for Bitcoin and Ethereum spot ETFs have set a precedent that could pave the way for other cryptocurrencies, including Solana, to receive similar approvals. Major asset managers like BlackRock and others have already signalled interest in applying for a Solana ETF with BlackRock reportedly submitting their application next month in July.
3iQ's Solana Fund ETP
On June 20, 2024, 3iQ, a Canadian digital asset investment fund manager, announced the introduction of North America's first Solana Exchange-Traded Product (ETP). The Solana Fund (QSOL) has filed a preliminary prospectus with the securities regulatory authorities in all Canadian provinces and territories (except Quebec). The Fund's goal is to give unitholders exposure to the digital currency SOL while also providing the prospect for long-term wealth appreciation via staking. The Fund's Class A units are expected to be listed on the TSX under the symbol "QSOL".
- Type: Exchange-Traded Product (ETP)
- Location: Filed for approval in Canada
- Details: The Solana Fund (QSOL) by 3iQ aims to provide exposure to Solana and its price movements. The Fund plans to list its Class A units on the Toronto Stock Exchange (TSX) under the ticker "QSOL".
- Objective: In addition to providing exposure to Solana's price movements, 3iQ's ETP also seeks to stake the SOL held in its portfolio to earn rewards, which will be reinvested into the Fund
VanEck's Solana ETF
VanEck, a well-known investment management firm in the United States, has been a leader in advocating for Solana ETFs. In 2021, VanEck listed a Solana exchange-traded note (ETN) on the German stock exchange Deutsche Börse, expressing its belief in the company's long-term potential. Building on this, today June 27, 2024, VanEck has filed for a Solana Spot ETF in the United States.
See: Dapper Labs Settles NFT Lawsuit, Signs of Regulation?
If approved, the proposed ETF will be traded on the Cboe BZX Exchange. It aims to replicate Solana's performance by directly backing it with SOL tokens. Analysts at VanEck estimate that Solana will become a top-three blockchain in terms of market capitalization, total value locked (TVL), and active users over the next two years.
- Type: Exchange-Traded Fund (ETF)
- Location: Filed for approval in the United States
- Details: The VanEck Solana ETF seeks to reflect the price performance of Solana by holding SOL tokens. If approved, it will be listed on the Cboe BZX Exchange.
- Objective: To provide direct exposure to the performance of Solana's price movements without generating income from staking
What's the Difference between an ETP and ETF?
Exchange-Traded Products (ETPs)
- Broad Category: Includes a variety of pooled investments traded on exchanges.
- Types: Encompasses Exchange-Traded Funds (ETFs), Exchange-Traded Notes (ETNs), and Exchange-Traded Commodities (ETCs).
- Structure: Can include debt securities (ETNs) or commodity-backed securities (ETCs). ETNs/ETCs can carry credit risk and may have unique fee structures.
See: BlackRock Launches New Fund on Ethereum, Bullish on Tokenization
Exchange-Traded Funds (ETFs)
- Subset of ETPs: Specifically tracks indexes or commodities.
- Structure: Holds a basket of assets like stocks or bonds.
- Trading: Offers intraday trading with continuous pricing. Typically has lower fees, direct asset ownership, and high liquidity.
Outlook
With VanEck's Solana ETF in the United States and 3iQ's Solana ETP in Canada, investors will have easier access to Solana, a blockchain noted for its fast speed and cheap transaction costs. As regulators such as the SEC become more open to crypto ETFs, the approval of these products may create a precedent for future crypto investments, potentially strengthening Solana's market position and adoption.
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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OSC Charges Liquid Marketplace Executives with Fraud
Regulatory Enforcement | Jun 25, 2024
Image: Liquid Marketplace logo
The OSC accuses Logan Paul's Liquid Marketplace executives of misappropriating investor funds.
The Ontario Securities Commission (OSC) has charged leadership at Liquid Marketplace, including co-founders Logan Paul, Ryan Bahadori, and Amin Nikdel, with misappropriating investor cash. This enforcement case uncovers a potential multi-layered fraud in the cryptocurrency business. Liquid Marketplace, which opened in April 2022, provided fractional ownership of rare collectibles via tokenization. The platform, co-founded by Logan Paul, gained prominence for its novel approach to collectibles trade.
OSC's Allegations
The OSC's investigations highlights serious issues:
- According to the OSC, the executives misappropriated about $3 million of the more than $10 million raised through the sale of common shares and promissory notes for personal gain. Hidden payments were made to shell businesses controlled by executives, and interest-free loans were acquired from investor funds but never repaid.
See: BlackRock Launches New Fund on Ethereum, Bullish on Tokenization
- The OSC determined that the LMP Tokens sold, which reportedly represented fractional ownership of items, misled token purchasers as they did not convey legal ownership, and the items were neither authenticated nor insured, as represented. Token sales conducted under false pretences yielded around $2.7 million.
- The platform failed to comply with registration and prospectus requirements, depriving investors of critical protections.
- Additionally, deceptive comments were provided to the OSC during its inquiry, exacerbating the regulatory violations.
- The OSC Stated: (view application for enforcement proceedings doc)
The Respondents misappropriated approximately $3 million, including through hidden payments to shell companies, for the personal enrichment of the LMP Principals... LMP, Bahadori and Nikdel made false and misleading statements to Token Purchasers including that LMP Tokens represent legal ownership in underlying collectibles, and that the collectibles themselves had been authenticated, appraised and insured... LMP sold and facilitated the trading of LMP Tokens without complying with the prospectus and registration requirements of the Act, thus depriving investors of important safeguards to protect them from unscrupulous and fraudulent conduct.
Introducing my next company, Liquid Marketplace (@LiquidMarketpl) — you can now own a piece of the rarest collectibles in the world.
By fractionalizing expensive assets, we’ve essentially made it possible for ANYONE to own ANYTHINGhttps://t.co/qIa62dmQg0 pic.twitter.com/SbFnL8zIAV
— Logan Paul (@LoganPaul) April 5, 2022
Investors who were attracted to the site by its high-profile endorsements, are now facing enormous financial losses and a breach of trust. The charges have raised concerns and disillusionment among users, who believe the platform's promises were misleading.
Outlook
This decision establishes a precedent for future regulatory enforcement in the quickly evolving digital asset sector.
See: Real World Implementation of Real Estate Tokenization
As the digital asset market expands, such regulatory steps will be critical to maintaining its integrity and sustainability. Before investing in digital assets, investors should exercise caution and conduct serious research and due diligence before proceeding.
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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2023 BIS Survey: CBDC and Crypto Trends Revealed
2023 BIS Survey Results | Jun 20, 2024
Image: BIS Paper 147
5 Key Trends in CBDCs and Crypto Regulation
The 2023 BIS study on central bank digital currencies (CBDCs) and cryptoassets gives readers a good review of the current trends, innovations, and regulatory initiatives in it's latest report titled, "Embracing Diversity, Advancing Together - Results of the 2023 BIS Survey on Central Bank Digital Currencies and Crypto" (BIS Paper 147).
See: Federal Reserve on U.S. CBDC and Global Comparison
With 94% of surveyed central banks researching CBDCs, the report shows a significant growth in wholesale CBDC research in advanced economies (AE). The results also provide insights into the motives and design elements of mature and emerging markets, increased stakeholder participation, and shifting regulatory frameworks for stablecoins and cryptoassets.
1. Increased Wholesale CBDC Activity
There has been a huge surge in wholesale CBDC trials in advanced economies. For example, the percentage of AE central banks running proofs of concept increased to 81%, while pilots increased to 33% by 2023. Several central banks, like the Swiss National Bank (Project Helvetia Phase III), the Bangko Sentral ng Pilipinas (Project Agila), and the European Central Bank, are actively participating in these trials.
2. Differentiation Between Advanced and Emerging Economies
The survey shows varying motivations and design characteristics between AEs and emerging market and developing economies (EMDEs).
See: Saudi Arabia Joins mBridge CBDC Project, Digital Oil Trade
- 68% of AEs prioritize interoperability with existing domestic payment systems.
- 63% of EMDEs are more inclined to use holding limits to maintain financial stability. Furthermore, EMDEs are more likely to embrace distributed ledger technology, demonstrating their desire to leapfrog legacy systems.
3. Stakeholder Engagements Are Increasing to Inform CBDC Design
- Overall, 88% of central banks are conducting CBDC research, with 54% carrying out pilots.
- In retail CBDCs, 75% of AEs and 78% of EMDEs are consulting with governments and public officials.
- Examples of such involvement include the Bank of Japan's CBDC Forum and the National Bank of Georgia's collaboration with a technology firm on its digital GEL initiative.
4. Developing Regulatory Frameworks for Cryptoassets
- More than 60% of jurisdictions have or are developing regulatory frameworks for stablecoins and other cryptoassets. This includes 48% creating bespoke regulations due to the unique opportunities and risks posed by cryptoassets.
See: The Ripple Effect of CBDCs on Bank Lending and Profitability
- Notable examples are the UK's proposed regulatory regime for stablecoins and the EU's Markets in Crypto-Assets Regulation (MiCA). The main regulatory objectives are investor protection (89%), financial stability (83%), and countering illicit finance (82%).
5. Current Use of Stablecoins
- The report indicates that the use of stablecoins for payments outside the crypto ecosystem remains minimal. More than half of central banks reported that stablecoins are rarely used beyond crypto trading or decentralized finance, mainly for niche use cases like remittances.
- For example, Chainalysis reported that around 5% of remittances to Mexico in 2022 were made using stablecoins or other cryptoassets.
- About 18-25% of central banks are uncertain about the extent of stablecoin usage due to a lack of appropriate data.
Closing Outlook
The 2023 BIS survey highlights active and varied approaches to CBDC exploration and cryptoasset regulation.
See: CBDCs in Canada and Impact Drivers on Banking Choices
Continued collaboration and stakeholder involvement will be critical for any sort of practical rollout and adoption, which has potential for both established and emerging nations.
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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