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
SEC’s Escalating Crypto Enforcement
Crypto Report | Jan 24, 2024
Image: Cornerstone Research
SEC Intensifies Crypto and Digital Asset Oversight in 2023
As highlighted in a comprehensive report by Cornerstone Research (view release), in 2023, the U.S. Securities and Exchange Commission (SEC) intensified its regulatory oversight and enforcement of crypto reflecting a strategic prioritization of digital asset market regulation under the leadership of Chair Gary Gensler.
See: CSA Consultation on Public Investment Funds and Crypto Assets
- The SEC executed 46 enforcement actions against various digital asset market participants in 2023, a 53% increase from the previous year and the highest number since 2013.
- These actions comprised 26 litigations in U.S. federal courts and 20 administrative proceedings, indicating a broad scope of regulatory reach.
- Of the 46 enforcement actions, 26 cases (57% of the total) involved allegations of fraud.
- 28 of these actions (61% of the total) were related to claims of violations concerning unregistered securities offerings.
- The SEC levied a cumulative total of approximately $2.89 billion in fines and penalties against participants in the digital asset market.
Outlook
Gary Gensler's enforcement trend is likely to continue as the SEC maintains its focus on investor protection and market integrity. Crypto entities and investors must adapt to the emerging regulatory landscape to mitigate risks and ensure compliance.
Download the 29 page PDF --> here
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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CSA Consultation on Public Investment Funds and Crypto Assets
Crypto Consultation | Jan 22, 2024
Image by macrovector on Freepik
Canadian Securities Regulators Open Consultation for Second Phase of Feedback on Public Crypto Asset Fund Regulations
The CSA is focusing on how to effectively regulate public investment funds interested in crypto assets. This is part of the second phase of establishing a regulatory framework for such funds (Proposed Amendments to National Instrument 81-102 Investment Funds
Pertaining to Crypto Assets) Last year, the CSA published guidance to help fund managers understand and comply with securities law requirements for public investment funds holding crypto assets (view CSA notice). The CSA's initiative is not just about setting boundaries; it's about fostering a safe and vibrant market for crypto assets. By inviting feedback from the public, the CSA is ensuring that a wide range of perspectives and expertise are considered in the formulation of these rules.
The CSA's announcement is a response to the burgeoning interest in cryptocurrencies and their increasing adoption by investment funds. The proposed rules aim to provide a clear regulatory framework, ensuring that public investment funds engaging in crypto assets do so in a manner that is consistent with the principles of investor protection and market integrity.
Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission:
“We recognize the current regulatory framework for public investment funds needs to be adapted to address the unique aspects and risks of crypto assets. Formalizing these fundamental requirements will provide fund managers with greater clarity while we continue to assess whether a more comprehensive regime is required.”
See: Canada to Require Pension Funds to Report Cryptocurrency Investments
Key aspects of the proposed rules include:
- Restrictions on Fund Types: Only alternative mutual funds and non-redeemable investment funds would be allowed to invest directly or indirectly in crypto assets.
- Eligibility of Crypto Assets: Investments would be limited to crypto assets that are fungible and trade on a recognized exchange or are the underlying interest of a specified derivative that trades on a recognized exchange.
- Custodian Obligations: Custodians and sub-custodians of crypto assets would need to keep private keys in offline storage, maintain insurance, and obtain an annual assurance report on their internal controls and policies.
- Acceptance of Crypto Assets as Payment: Mutual funds could accept crypto assets as payment for their securities, subject to conditions like consistency with the fund's investment objectives and acceptability to the fund’s portfolio advisor.
What Additional Changes Are Being Proposed?
The guidance on crypto asset investment funds by the Canadian Securities Administrators (CSA) as of July 6, 2023, and the proposed changes as of January 18, 2024, exhibit several key differences:
Existing CSA Guidance (July 2023)
- The guidance discusses key findings from reviews of Public Crypto Asset Funds, including liquidity, ETF structural matters, and custody.
- It emphasizes the CSA staff’s expectations for stakeholders concerning investment in crypto assets other than Bitcoin and Ether, which are the only accepted investments for Public Crypto Asset Funds at that time.
- The notice outlines expectations for custodians of crypto assets to meet the standard of care obligations under NI 81-102.
- It addresses issues related to the staking of crypto assets or other similar yield-generating activities within Public Crypto Asset Funds.
- The guidance also covers know-your-product (KYP), know-your-client (KYC), and suitability obligation issues with respect to Public Crypto Asset Funds.
- As of April 30, 2023, there were 22 Public Crypto Asset Funds in Canada with approximately $2.86 billion in net assets, primarily investing in Bitcoin and/or Ether directly or through fund structures.
Proposed Changes (January 2024)
- The proposed amendments aim to provide greater regulatory clarity regarding key operational matters such as the types of crypto assets that Public Crypto Asset Funds are permitted to purchase, use, or hold.
- They introduce restrictions on investing in crypto assets by Public Crypto Asset Funds or other types of reporting issuer investment funds.
- The amendments propose requirements concerning the custody of crypto assets held on behalf of a Public Crypto Asset Fund.
- These changes intend to codify practices of existing Public Crypto Asset Funds developed mainly through the prospectus review process, as well as codifying exemptive relief previously granted to these funds.
- The proposed amendments include changes such as:
- Amending the definition of "alternative mutual fund" to include mutual funds that invest in crypto assets.
- Limiting the types of crypto assets that alternative mutual funds and non-redeemable investment funds can invest in to those listed for trading on, or as underlying interests for specified derivatives that trade on, an exchange recognized by a Canadian securities regulatory authority.
- "We are proposing to add section 3.3.01 which will provide guidance clarifying that the proposed requirement that funds only invest in crypto assets that are either listed for trading, or are the underlying interest in specified derivatives that are listed for trading, on a “recognized exchange” is not intended to restrict funds to only acquire crypto assets through a recognized exchange. In other words, funds can continue to acquire crypto assets from sources such as crypto asset trading platforms so long as the crypto asset the fund invests in meets the necessary criteria set out in subsection 2.3(1.3) of NI 81-102."
- Prohibiting the use of crypto assets in securities lending, repurchase transactions, or reverse transactions.
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"We are proposing to prohibit the use of crypto assets in securities lending, repurchase transactions or reverse transactions, asthe loaned securities, transferred securities or collateral posted in connection with these transactions, as applicable. While webelieve that the market characteristics of most crypto assets make them impractical for these types of transactions in an investmentfund, we think it is important to remove any regulatory ambiguity."
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- Clarifying that "money market funds" cannot buy or hold crypto assets.
- Adding guidance related to what is generally considered to be crypto assets for investment funds regulation.
See: Consultation: OSFI Unveils Guidelines for Robust Financial System
The proposed changes reflect an evolution in the regulatory approach, seeking to integrate crypto asset investment into the existing regulatory framework with a focus on investor protection and market integrity. National Instrument 81-102 Investment Funds: In effect in all CSA members: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, Yukon
Consultation
NCFA Canada encourages its members and the wider financial community to participate in this consultation process. Your insights and feedback are vital in shaping a regulatory environment that is both progressive and protective. Stakeholders can submit their comments in writing on or before April 17, 2024 (90 day comment period).
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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ASC Sanctions Devon Christopher Edwards & KB Crypto
Crypto Enforcement | Jan 22, 2024
Image by DilokaStudio on Freepik
ASC Sanctions Devon Christopher Edwards and KB Crypto Inc. for Securities Misconduct
CALGARY, AB, Jan. 16, 2024 - The Alberta Securities Commission (ASC) has recently taken decisive action against Devon Christopher Edwards and KB Crypto Inc. for violating Alberta's securities laws. The case, which has drawn significant attention in the financial community, highlights the ongoing efforts of regulatory bodies to maintain the integrity of the capital markets.
- Edwards and KB Crypto Inc. admitted to distributing securities without a prospectus and operating as a dealer without registration, contravening the Securities Act.
- From February 2021 to November 2022, they raised nearly US$450,000 from 75 investors through investment contracts. These contracts involved using investors' funds to purchase and trade in contracts for difference (CFDs), without filing a prospectus or relying on any exemptions.
See: Canadian Regulators Set Expectations for Crypto Asset Investment Funds: A Comprehensive Overview
- The ASC panel ordered Edwards to pay a $40,000 administrative penalty and $10,000 in costs. He is also required to resign from any director or officer positions in any issuer. For five years or until the penalty is fully paid, Edwards is barred from acting as a director or officer in any issuer, advising in securities and derivatives, and from trading or purchasing any security or derivative (with limited exceptions).
- The company is permanently prohibited from trading, purchasing, or advising in securities or derivatives. All trading or purchasing of its securities or derivatives must cease.
Conclusion
The Alberta Securities Commission's decisive action against Devon Christopher Edwards and KB Crypto Inc. underscores the importance of adhering to securities laws and the serious consequences of non-compliance. This case highlights the regulatory body's commitment to protecting investors and maintaining the integrity of the financial markets.
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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Peirce Laments, SEC ‘Squandered A Decade’
Regulation | Jan 15, 2024
Commissioner Hester M. Peirce
Commissioner Peirce's Critique of the SEC's Long Road to Bitcoin ETF Approval
The U.S. Securities and Exchange Commission (SEC) has finally approved the trading of spot Bitcoin exchange-traded funds (ETFs), marking the end of a decade-long saga filled with regulatory hesitance and missed opportunities.
Commissioner Hester Peirce, often referred to as "Crypto Mom" for her advocacy of cryptocurrency, has been vocal in her criticism of the SEC's prolonged resistance to Bitcoin ETFs. In her statement titled "Out, Damned Spot! Out, I Say!" (a Shakespearean Quote by Lady MacBeth indicating 'metaphorically indicating the guilt she feels for her part in his murder), Peirce expressed frustration over the SEC's inconsistent treatment of Bitcoin-related ETP applications compared to other ETPs. She emphasized that "ETPs are an important innovation" allowing investors to gain exposure to various assets, including cryptocurrencies, in a convenient vehicle.
Peirce pointed out the perplexing nature of the SEC's long string of denials, noting that "predicting approval timelines for spot Bitcoin ETPs was impossible" due to the shifting goalposts set by the Commission.
See: SEC Greenlights Bitcoin ETFs. Is Ethereum Next?
She criticized the SEC for driving retail investors to less efficient means of attaining Bitcoin exposure and for squandering a decade of opportunities by not applying the standard used for other commodity-based ETPs.
Peirce's Persistent Advocacy and the Impact of the SECs Delay
Commissioner Peirce has been a consistent advocate for a more open approach to cryptocurrency regulation. Her recent statements reflect a long-standing concern that the SEC's hesitance has not only stifled innovation but also potentially harmed investors by limiting their access to Bitcoin through more regulated and potentially safer channels.
The decade-long delay in approving Bitcoin ETFs, according to Peirce, has had several consequences:
- The arbitrary treatment of Bitcoin ETF applications may continue to harm the SEC's reputation beyond the crypto space, potentially affecting its ability to regulate markets effectively.
- Peirce criticized the SEC for diverting significant resources to block these applications, which could have been used for other critical regulatory work.
See: Hester Peirce Reaffirms That the SEC’s Current Approach to Crypto Is ‘Not a Good Way of Regulating’
- The actions over the past decade have muddled public understanding of the SEC's role, with the Commission appearing to overstep its mandate by withholding investments it disfavored.
- The SEC's approach has created unnecessary hype and speculation around Bitcoin ETFs, which could have been avoided with a more straightforward approval process.
- The SEC's stance has potentially alienated a generation of product innovators, signaling that regulatory prejudice can lead to unreasonable delays in product launches.
Outlook
Commissioner Peirce emphasizes the importance of American investors' right to express their views on Bitcoin through buying and selling spot Bitcoin ETPs. She also commends the perseverance of market participants who have been persistent in the face of the Commission's obstruction. Her critique of the SEC's hesitance aligns with the growing mainstream acceptance of cryptocurrencies but also paves the way for future crypto-related products.
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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SEC Greenlights Bitcoin ETFs. Is Ethereum Next?
Investing News | Jan 11, 2024
Image by Upl56 on Freepik
The U.S. Securities and Exchange Commission (SEC) has approved the launch of various spot Bitcoin Exchange-Traded Funds (ETFs) applications
As widely reported, the SEC has approved applications for 11 issuers, including major players like BlackRock and Grayscale. The approval of spot Bitcoin ETFs, a process that began in 2013 which tracks the current price of Bitcoin, is expected to open new flows of investment from wealth managers and everyday traders.
See: SEC Hack and Bitcoin ETF Approval Insights
Previously, the SEC had rejected applications for spot Bitcoin ETFs, citing market immaturity and potential manipulation risks. However, the recent approval indicates a change in perception, acknowledging the growing maturity and stability of the crypto market. A watershed moment for crypto.
“Order granting accelerated approval” it’s over. Thank God. pic.twitter.com/qCozlxzSBX
— Eric Balchunas (@EricBalchunas) January 10, 2024
SEC Chair, Gary Gensler, Releases Statement
Outlook
Following the SEC's approval of Bitcoin ETFs, the price of Ether, the cryptocurrency linked to Ethereum, spiked to its highest level since May 2022. This surge is driven by investor optimism that an ETF for Ether might also be approved.
See: OSC: 2023 Canadian Crypto Survey Insights
However, SEC Chair Gary Gensler has cautioned that the approval of Bitcoin ETFs does not necessarily indicate a similar readiness for other crypto asset securities. Commentators are divided over whether an Ether ETF will be approved in 2024, with some expressing skepticism due to the ongoing debate over whether cryptocurrencies like Ethereum are classified as securities or commodities. As the market responds to this development, it remains to be seen how other cryptocurrencies like Ether will be impacted and whether they too will see similar ETF approvals 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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Celsius Creditors to Return Funds Withdrawn Pre-Bankruptcy
Crypto News | Jan 10, 2024
Celsius Asks Creditors to Return Funds Withdrawn Within 90 Days Pre-Bankruptcy
Celsius, a cryptocurrency lending platform, is in the midst of a major financial restructuring following its bankruptcy declaration. The company is now requesting certain creditors who withdrew large sums in the months leading up to the bankruptcy to return a portion of their funds. This move is part of a broader effort to manage the company's financial crisis and ensure equitable treatment of all creditors.
See: CDPQ Posts $33.6 Billion Loss (H1 2022) After Writing Off US$150 Million in Celsius Network
- Celsius is focusing on account holders who withdrew over $100,000 in the 90 days before their bankruptcy declaration on July 13, 2022. These individuals are being asked to return 27.5% of their withdrawn amount.
- Those who fail to comply with the request may face legal action. The initiative aims to recover funds for equitable distribution among all creditors. Compliance with the fund return request makes creditors eligible for future distributions under Celsius's reorganization plan.
- Account holders who withdrew less than $100,000 are not required to return funds but must participate in the voting process regarding the reorganization plan.
- The company, along with its founder and CEO Alex Mashinsky, faces lawsuits from regulatory bodies like the SEC, FTC, and CFTC for allegedly misleading customers. Mashinsky is charged with fraud, and Celsius has agreed to a $4.7 billion settlement with the FTC.
Read: Bank of Canada Publishes Analytical Notes on DeFi
The outcome of this situation could set a precedent for how similar cases are handled in the future, impacting investor confidence and the stability of the cryptocurrency market.
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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SEC Hack and Bitcoin ETF Approval Insights
Crypto News | Jan 10, 2024
Image by Harryarts on Freepik
The SEC's Twitter account was compromised, leading to a false post about the approval of Bitcoin ETFs.
This incident was not due to a breach of X's systems but was attributed to an unidentified individual gaining control over a phone number associated with the SEC's account. The false post led to a temporary spike in Bitcoin prices, highlighting the market's sensitivity to regulatory news.
"The SEC's recent security breach is a stark reminder of the fragility of digital systems in the face of sophisticated cyber threats. As we move towards the potential approval of a Bitcoin ETF, it's imperative to bolster our cybersecurity measures to safeguard investor interests." Source: CNBC
The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— Gary Gensler (@GaryGensler) January 9, 2024
What to Expect Post-Approval
The approval of a spot Bitcoin ETF by the SEC is a much-anticipated event in the financial world. This move could mark a significant shift in the cryptocurrency market, offering investors a regulated and potentially safer avenue to invest in Bitcoin.
See: Former Citi Executives Launch Bitcoin Securities Startup
- The approval could lead to increased legitimacy and adoption of Bitcoin, potentially driving up its price.
- A regulated Bitcoin ETF could attract a broader range of investors, including those who are cautious about direct cryptocurrency investments.
- The SEC's decision could pave the way for more stringent regulations in the cryptocurrency market.
Comparative Table on Prospective Spot Bitcoin ETF Fees
| ETF Provider | Initial Fee | Fee After Initial Period |
|---|---|---|
| Bitwise (BITB) | 0.0% | 0.2% (after first 6 months) |
| ARK Invest/21Shares (ARKB) | 0.0% | 0.21% (after first 6 months) |
| Invesco Galaxy Bitcoin ETF (BTCO) | 0.0% | 0.39% (after first 6 months) |
| iShares Bitcoin Trust (IBIT) | 0.12% | 0.25% (after first 12 months) |
| VanEck Bitcoin Trust (HODL) | 0.25% | - |
| Franklin Bitcoin ETF (EZBC) | 0.29% | - |
| Fidelity Wise Origin Bitcoin Trust (FBTC) | 0% | 0.25% (after July 31, 2024) |
| WisdomTree Bitcoin Trust (BTCW) | 0.0% | 0.3% (after first 6 months) |
| Valkyrie Bitcoin Fund (BRRR) | 0.80% | - |
| Grayscale Bitcoin Trust (GBTC) | 1.5% | - |
| Hashdex Bitcoin (DEFI) | 0.9% | - |
And What About An Ethereum ETF?
With a spot Bitcoin ETF now imminent, anticipation of an spot Ethereum ETF being approved and the path to an Ether ETF seems more probable than ever. BlackRock, a major player in traditional finance, has already filed an S-1 form with the SEC for its iShares Ethereum Trust, a spot ether ETF. This move indicates a strong interest from institutional investors in Ethereum-based products. Learn more about Ethereum blockchain.
Recently, Ether traded over $2,400, marking a 5% increase within 24 hours. This rise contrasts with Bitcoin's 2.2% decline in the same period, partly due to volatility caused by fake tweets from a hacked U.S. Securities and Exchange Commission account.
See: The Race for Ethereum Futures ETF Applications
The optimism isn't limited to Ether alone. Tokens of applications built on Ethereum, like Lido's LDO and RocketPool's RPL, have also experienced significant gains. Layer 2 networks, which operate atop Ethereum but as independent blockchains, have seen their tokens, such as Mantle's MNT and Optimism's OP, increase in value. This trend reflects a broader market movement, anticipating the potential of an Ether ETF.
In Anticipation
While the financial world debates the anticipation of the SECs approval of various spot Bitcoin ETFs, the SEC's account hack serves as a critical reminder of the importance of cybersecurity in the financial sector. Stay tuned. More to come...
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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