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
Consultation Paper for Comment: Hong Kong SFC Sets the Stage for Retail Access to Crypto Platforms
Herbert Smith Freehills | March 1, 2023
A major virtual asset (VA) regulatory milestone occurred last week when the Hong Kong Securities and Futures Commission (SFC) published its much anticipated Consultation Paper on the proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the Securities and Futures Commission (Consultation Paper).
- Among other things, the SFC proposes to allow all types of investors, including retail, to access VA trading platforms (VATP) provided the VATP comply with a range of robust investor protection measures.
- The Hong Kong Financial Secretary also announced in his 2023-24 Budget speech that he will establish and lead a task force on VA development to provide recommendations on the sustainable and responsible development of the sector. With the Consultation Paper and proposed guidelines (see below), which run to over 350 pages, the SFC is seeking to strike a balance between investor protection and market development.
FFOCN23: VIP Lunch & Learn: Meet King Leung, Head of Fintech, Invest Hong Kong on March 7 in Toronto
- VASP licensing regime and draft VATP guidelines
- The new licensing regime for virtual asset service providers (VASPs) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) will come into effect on 1 June 2023 (VASP Licensing Regime). As a result, all centralised VATP carrying on business in Hong Kong, or actively marketing their services to Hong Kong investors, will need to be licensed by the SFC.
- The Consultation Paper sets out the proposed regulatory requirements for VATP operators, including draft Guidelines for Virtual Asset Trading Platform Operators (VATP Guidelines) that cover both licensing and conduct requirements and are based on the existing regulatory requirements applicable to VATP operators licensed under the Securities and Futures Ordinance (SFO) and the Terms and Conditions for VA Trading Platform Operators (VATP Terms and Conditions). However, certain modifications have been made to take into account feedback received from the industry.
- Further details on the VASP Licensing Regime are provided here.
- From 1 June 2023, all VATP operators, whether licensed under the SFO and/or the AMLO, will be subject to the VATP Guidelines.
- A few key takeaways (lots more in full article):
- Allowing retail access to eligible large-cap VAs – Licensed VATP operators may provide trading services to retail investors, provided that the VAs offered are “eligible large-cap VAs” (ie, VAs which are included in at least two “acceptable indices” issued by at least two independent index providers). Licensed VATP operators must seek the SFC’s advance approval before admitting VAs which would be made available to retail clients.
- Token due diligence and admission criteria – Before admitting VAs for trading, licensed VATP operators must ensure that the VAs comply with the general token admission criteria.
- Governance – Licensed VATP operators should set up a token admission and review committee to govern the criteria for VA to be admitted for trading, and to make final decisions as to whether to admit, halt, suspend and withdraw a VA for client trading. Where VAs are made available to professional investors only, SFC approval will not be required where a decision is made to add or remove such VAs, and only advance notification will be required.
See: Hong Kong’s Finance Regulator Says ‘Blocks are Ready’ to Grow Digital Asset Ecosystem
- Respond to Consultation Paper: The Consultation Paper forms part of the Hong Kong Government’s policy towards developing a vibrant VA sector and ecosystem in Hong Kong. For additional information, please refer to our December, November and June 2022 briefings.
- Interested parties should respond to the Consultation Paper by 31 March 2023.
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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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Canadian Securities Regulators Publish Enhanced Investor Protection Expectations of Crypto Trading Platforms
BCSC | Release | Feb 22, 2023
Further to its update on December 12, 2022, the Canadian Securities Administrators (CSA) today published a notice describing enhanced investor protection commitments it expects from crypto asset trading platforms (CTPs) operating in Canada.
- Unregistered CTPs that continue to operate in Canada while pursuing registration are expected to provide an enhanced pre-registration undertaking to their principal regulator within 30 days of publication of this notice.
- These commitments are made in the form of an enhanced pre-registration undertaking, which CTPs must provide to continue operating in Canada while pursuing their applications for registration with Canadian securities regulators.
- These pre-registration undertakings will include, among other things, enhanced expectations regarding the custody and segregation of crypto assets held on behalf of Canadian clients and a prohibition on offering margin, credit, or other forms of leverage to any Canadian client.
- They will also prohibit CTPs from permitting clients to purchase or deposit value-referenced crypto assets (commonly referred to as stablecoins) and proprietary tokens without the prior written consent of the CSA.
See: Canadian Federal Regulators Issue Joint Statement on Crypto Assets | OSFI Publishes Digital Asset Roadmap
- Can't comply? If a CTP is unable or unwilling to provide an enhanced pre-registration undertaking, the CSA expects it will take appropriate action to off-board existing Canadian users and impose restrictions to prevent Canadian users from accessing its products or services.
- Download: CSA Staff Notice 21-332 Crypto Asset Trading Platforms: Pre-Registration Undertakings Changes to Enhance Canadian Investor Protection is available on CSA members’ websites.
- Elevated investor risks: The CSA reminds Canadians that trading in crypto assets comes with elevated levels of risk and may not be suitable for many investors, particularly retail investors. Generally speaking, trading crypto assets is a speculative activity, and the value and liquidity of crypto assets are highly volatile. Investors should consult the list of platforms that are registered with the CSA and learn the fundamentals of crypto assets before investing. While regulatory oversight plays an important role in investor protection, these measures cannot eliminate all risks associated with trading in crypto assets.
See: Canadian Bitcoin Mining 2022 Recap and Outlook
Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission:
Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada.
View the original release --> here
Download the 14 page PDF staff notice 21-332
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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NBA Top Shot NFT Case: Judge Says May Have to Register with Regulators
The Defiant | Samuel Haig | Feb 23, 2023
Image: Pexels/Markus Winkler
Judge Says It’s ‘Plausible’ NBA Top Shot Moments NFTs May Have to Be Registered With Regulators
- On Wednesday, U.S. District Judge Victor Marrero ruled a lawsuit against Dapper Labs may move forward and rejected the company’s request to dismiss the action after concluding it is “plausible” that its tokenized collectibles may prove to be securities.
- The plaintiffs are a group of collectors of NBA Top Shot Moments, videos of professional basketball stars making famous plays. The videos are made unique by effectively watermarking them with NFT technology. The plaintiffs have accused Dapper Labs, NBA Top Shot’s creator, of earning hundreds of millions of dollars by selling unregistered securities.
- They claim Dapper also abused its position by propping up the market for Moments and restricting users from withdrawing their money from the platform.
- While Top Shot opened its doors to the public in October 2020, it did not start allowing users to withdraw funds from the platform until May 2021. The plaintiffs say that Dapper Labs frequently flaunted high-priced Moment sales at users while they were unable to remove their funds from the platform in a bid to entice further trading activity.
See: Landmark Legal NFT Decision Favours Intellectual Property Owners
- Investors will closely watch this case as the SEC continues to press cryptocurrency issuers to register their tokens. This month, the regulator defined staking-as-a-service as a registrable security in a settlement with Kraken, the No. 3 cryptocurrency exchange. The SEC also broadened its definition of cryptocurrencies as securities in a lawsuit filed against Do Kwon and Terraform Labs last week for alleged fraud.
- Dapper’s lawyers refuted the suggestion Top Shot NFTs are securities.
- “Basketball cards are not securities,” they said. “Pokémon cards are not securities. Baseball cards are not securities. Common sense says so. The law says so. And, courts say so.”
- Dapper’s lawyers argue that securities must be linked to capital fundraising efforts, and cannot be “formed products” like the Top Shot Moments the company sold. “This was not a capital investment drive, not an appeal to passive investors, but the sale of cards to collectors,” they said.
- Judge Marrero also said that the case should not be seen as establishing a precedent for NFT litigation broadly. “Not all NFTs offered or sold by any company will constitute a security, and each scheme must be assessed on a case-by-case basis,” he said.
Continue to the full --> 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, 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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Landmark Legal NFT Decision Favours Intellectual Property Owners
Herbert Smith Freehills | Sue Gilchrist, Aaron Hayward, Byron Turner and Joshua Sanchez-Lawson | Feb 10, 2023
Image: Freepik/vectorjuice
The Manhattan federal jury's decision suggests registered brands can be protected against NFT infringements
- Hermès has succeeded in its case of trade mark infringement against non-fungible token (NFT) artist Mason Rothschild. This was the first US trial considering the enforceability of intellectual property rights against the creator of NFTs. The outcome represents a win for IP owners in the fight for protection of their brand, and offers a cautionary tale for creators of NFTs.
See: NFT Use Cases are Establishing New Legal Frontiers
- In late 2021, digital designer Mason Rothschild created 100 'MetaBirkins'. These were NFTs featuring stylised digital depictions of the Birkin bag. The first MetaBirkin to be auctioned sold for $40,000.
- Birkins are highly exclusive handbags, valued in the tens-to-hundreds of thousands of dollars
- Hermès filed a complaint against Rothschild in New York, alleging various causes of action including registered trademark infringement and other claims such as trademark dilution, common law trademark infringement and cybersquatting on ‘metabirkin’ domain names.
- Rothschild claimed in defence that the MetaBirkins were works of art – artistic commentary on the cultural status of the iconic handbag and constituted a lawful use of Hermès’ IP under protections in the US for artistic expression.
- Decision: A Manhattan federal jury found in favour of Hermès, awarding damages. Hermès had sought damages to (in part) compensate for losses resulting from the impact on its plans to enter the NFT market itself.
See: A Litmus Test for the Future of Branded NFTs: Starbucks new Web3 Loyalty Program
- Going forward: Brand owners should use this decision as an opportunity to reconsider their trademarks and the protection they offer over the digital aspects of their business. This is particularly important for brands that want to use NFTs or other digital assets to engage consumers, or simply prevent third parties using their brands to do the same.
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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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Hong Kong Publishes Virtual Asset Trading Platform Rules for Comment
CoinDesk | Sandali Handagama, Lavender Au | Feb 20, 2023
Image: Pixabay
Hong Kong's Securities and Futures Commission (SFC) on Monday published its proposed rules for virtual asset trading platforms and is seeking public comment.
- Comply or close: Under the new regime, all crypto trading platforms planning to apply for a license – including pre-existing platforms – "should begin to review and revise their systems and controls to prepare for the new regime," the notice said.
- "Those which do not plan to apply for a license should start preparing for an orderly closure of their business in Hong Kong," it added.
- Seeking feedback: Aside from setting up a licensing regime for crypto service providers, the regulator is also seeking views on whether to allow licensed platforms to serve retail investors, and under what investor protection measures these services should be offered, an official notice said.
See: Hong Kong’s Finance Regulator Says ‘Blocks are Ready’ to Grow Digital Asset Ecosystem
- Under the proposed measures, it will be up to operators to do due diligence on tokens, and monitor them. That includes assessing the regulatory status of the asset in each jurisdiction in which the operator provides trading services. It also proposes checks on the operator’s liquidity and whether its holdings are concentrated or controlled by a small number of individuals or entities.
- Eligible tokens: Operators can only offer tokens which satisfy the SFC's criteria for an "eligible large-cap virtual asset," listed on two "acceptable indices."
- The proposed measures also state that operators should not offer virtual assets which fall within the definition of "securities" if it would breach Hong Kong's Securities and Futures Ordinance.
- They must do smart contract audits on tokens to check for security flaws.
- The SFC proposes operators provide a compensation arrangement which it must approve to cover for risks, in place of a hard limit for assets held in cold storage. Operators will have to monitor daily the amount of customer assets held and adjust the arrangement accordingly.
- Eligible tokens: Operators can only offer tokens which satisfy the SFC's criteria for an "eligible large-cap virtual asset," listed on two "acceptable indices."
- Hong Kong is also planning to regulate stablecoins starting in June this year.
Continue to the full article --> 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, 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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Will Binance Severes U.S. Ties in Face of Crypto Crackdown
Coindesk | Nelson Wang | Feb 17, 2023
Image: Freepik/rawpixel.com
Binance Holdings, the world’s largest crypto exchange by trading volume, is considering severing its ties with U.S. business partners as various government agencies and regulators continue to investigate the company, according to a report from Bloomberg, citing a personal familiar with the issue.
- Severing Ties with the U.S.? Binance founder and CEO Changpeng Zhao is looking to end relationships with U.S. banks and service firms, and is also re-evaluating its U.S. venture capital investments, according to Bloomberg’s source. Binance is also considering delisting tokens issued by U.S.-based projects, including Circle’s USDC stablecoin, Bloomberg wrote.
- CZ's response: Shortly after the report was published on Friday, Zhao denied the exchange was considering delisting tokens attached to U.S.-based projects on Twitter, adding blockchain “has no borders. We pulled back on some potential investments, or bids on bankrupt companies in the U.S. for now. Seek permission first,” Zhao said in another tweet.
See: Binance Temporarily Suspends U.S. Dollar Deposits and Withdrawals
- Paxos to stop minting stablecoins: The New York Department of Financial Services earlier this week took action against Binance-branded stablecoin Binance BUSD, which is issued by Paxos, and Binance has also been scrutinized for its transactions with crypto bank Silvergate. The crypto exchange has been investigated by the U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, Justice Department and the Internal Revenue Service.
- Crackdown continues: U.S. regulators have been taking heavy enforcement action against crypto players in the last couple of weeks, leaving Binance bracing itself for SEC fines after crypto exchange Kraken was forced to shut down its staking service in the U.S. and pay a $30 million fine.
Continue to the full article --> 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, 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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US Regulator Charges ‘Cryptocrash’ Boss with Fraud
BBC | Annabelle Liang | Feb 27, 2023
Terra form Labs Founder: Do Kwon
US financial regulators have charged failed South Korean cryptocurrency boss Do Kwon and his company Terraform Labs with "orchestrating a multi-billion dollar crypto asset securities fraud".
- "We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD," US Securities and Exchange Commission (SEC) chairman Gary Gensler said in a statement.
- According to the SEC, Mr Kwon and his company raised billions of dollars from investors by selling them "an interconnected suite of crypto asset securities" with many transactions being unregistered.
- The SEC also alleged Mr Kwon and Terraform claimed repeatedly that the tokens would increase in value, and misled investors about the stability of TerraUSD.
See: Kraken Agrees to $30 million Settlement with SEC and Stops U.S. Customer Staking Program
- The Singapore-based firm created the Terra Luna and TerraUSD tokens, which collapsed spectacularly last year estimated to have cost investors more than $40bn (£33.5bn).
- The SEC complaint, which included other allegations, did not state where Mr Kwon was located. In December, South Korean authorities, who have issued an arrest warrant for Mr Kwon, said they believed he was in Serbia.
Continue to the full article --> 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, 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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