Fidelity says that 90% of its biggest clients are interested in accessing Bitcoin and other cryptocurrencies. The firm is now planning to open up the digital asset space to retail investors.
The ruling includes investment limits, disclosure rules and regulatory reporting conditions 
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
Fidelity bites on bitcoin
Boston Globe | | Aug 16, 2021
Fidelity says that 90% of its biggest clients are interested in accessing Bitcoin and other cryptocurrencies. The firm is now planning to open up the digital asset space to retail investors.
In 2015, the Boston investment firm started to dabble in bitcoin “mining,” using high-powered computers to produce new digital coins — an activity that continues today. It now offers custodial services to large institutional investors who want a safe place to stash their bitcoin holdings. In March, Fidelity announced its intention to create an exchange-traded fund to give individual investors access to the volatile cryptocurrency. And this summer, Fidelity said it will add about 100 new jobs to its “digital assets” team, on top of a headcount of about 150.
Tom Jessop, president of the digital asset business unit at Fidelity, says the company is making a long-term bet on the emergence of a new kind of financial infrastructure. And he notes that Fideilty chief executive Abigail Johnson often participates in startup demonstrations and educational talks related to cryptocurrency — observing that it’s helpful to have support at the top, especially since his group is operating in uncharted (and mostly unregulated) terrain.
See: Future of Crypto Market Infrastructure: The Role of Custodians and Exchanges
Bitcoin is the key focus now. While the cryptocurrency world sees regular cycles of hype around newly created cryptocurrencies, Fidelity is focused for the moment on bitcoin, which was born in early 2009.
“We’re dealing with the more traditional investors, and the entry vehicle to this space is largely bitcoin,” she says. But she adds that the interest for ethereum, another type of cryptocurrency, “has been escalating in the last few months, but it’s not anything close to what we see in bitcoin.”
The pandemic has sparked new interest. Large institutional investors were learning about cryptocurrency before the pandemic, but may not have actually purchased any prior to last spring, Jessop says.
“What really got people off the fence was the pandemic, because you’ve got this scarce asset class — there will only ever be 21 million bitcoin created — and an environment where our currency is being debased, and there’s a ton of money printing.”
More regulation is coming, and that’s OK. Congress is enacting new rules, as part of the infrastructure bill, around how tax reporting will work for cryptocurrency holdings. SEC chairman Gary Gensler said earlier in August that his agency needs more authority to oversee cryptocurrency exchanges and protect consumers who may use cryptocurrency as an alternative to traditional financial institutions.
“We’re supportive of regulation,” Jessop says. ”For this asset class to grow, and for investors to have trust in what we and others are doing, you need regulations commensurate with other asset classes. We’re not saying that it should be overregulated, but we think that it should be regulated consistent with other financial products that consumers and institutions purchase today.”
See: Fidelity-backed crypto security startup Fireblocks launches ‘Secure Asset Transfer Network’
Fidelity is putting capital into cryptocurrency startups. Through a venture capital division called Devonshire Investors, Fidelity has invested in promising startups like ErisX, Talos, and Boston-based Coin Metrics, which collects and publishes data related to cryptocurrencies. Those kinds of investments, Jessop says, “keep us sharper on what’s actually happening, which is super-important given how fast things are moving.”
Supporting registered investment advisers will be key for Fidelity. Financial advisers who rely on Fidelity for trading and custody services want to see cryptocurrency options integrated into Fidelity’s existing portfolio management technology.
“Advisers want to keep assets on the platform,” says Jessop. “Otherwise, the client wires out X amount of dollars to fund their Coinbase account or their PayPal account,” purchasing cryptocurrency there instead.
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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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Coinberry gets relief from OSC to trade crypto
Investment Executive | James Langton | Aug 20, 2021
The ruling includes investment limits, disclosure rules and regulatory reporting conditions
Crypto-trading platform Coinberry is the latest firm to receive regulatory relief from the Ontario Securities Commission (OSC) while it continues its bid to get approval to operate as a regulated dealer.
The OSC issued a decision granting the firm relief from prospectus and trade reporting requirements for two years, allowing it to trade crypto contracts with investors and operate a crypto-trading platform.
The relief was granted to allow the firm to operate while simultaneously seeking registration as an investment dealer. Coinberry wants to join the Investment Industry Regulatory Organization of Canada (IIROC).
Podcast: Ep30-Apr 12: The Future of Canadian Crypto With Andrei Poliakov
The decision comes as part of the Canadian Securities Administrators’ (CSA) approach to regulating the fledgling crypto space, which includes granting temporary relief designed to “foster innovation and respond to novel circumstances,” while also allowing firms to operate under requirements tailored to their specific circumstances.
“The overall goal of the regulatory framework is to ensure there is a balance between the need to be flexible and facilitate innovation in the Canadian capital markets, while upholding the regulatory mandate of promoting investor protection and fair and efficient capital markets,” the OSC decision noted.
Under the relief granted to Coinberry — which is specific to the firm and doesn’t create a precedent for other crypto firms — the OSC imposed a variety of conditions on the firm, including investment limits for certain clients, disclosure requirements and certain reporting conditions.
According to the decision, the firm’s clients are segmented into “accredited” crypto investors, “eligible” crypto investors and others.
While there are no limits for certain cryptos (Bitcoin, Bitcoin cash, Ether and Litecoin), the decision sets limits for other kinds of crypto such as Dogecoin; and the regulator’s decision explicitly prohibits trading in Tether.
See: Crypto in Canada: Where are we today, and where are we heading?
For all other cryptocurrencies, the firm’s clients that don’t qualify as either “accredited” or “eligible” are limited to buying $30,000-worth.
“Eligible” crypto investors at the firm are limited to acquiring $100,000-worth of non-specified crypto. These investors are defined in the decision as having $400,000 in assets, an income of $75,000 (and $125,000 with a spouse).
There are no investment limits on so-called “accredited” crypto investors, defined as clients with $1 million in financial assets (including crypto), annual pre-tax net income of $200,000 (and $300,000 with a spouse), or $5 million in total assets.
In addition to the investment limits, Coinberry will be required to provide clients with risk statements and educational materials on crypto assets. The firm will also have to assess the suitability of trades and monitor clients’ trading activity for signs of ill-informed trading.
The firm can’t charge commissions on client trading; instead, it can generate revenues on the spread between the prices that it gets for assets from liquidity providers and the prices at which it transacts with its clients.
Separately, the OSC also continues to bring enforcement action against crypto-platforms that aren’t heeding its warning earlier this year to start seeking registration.
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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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Binance: The low-down on the drama-ridden crypto exchange
ComplianceX | | Aug 16, 2021
Thanks to a wave of disgruntled customers and enthusiastic regulators, Binance has been garnering all the wrong types of attention over the past 24 months.
Bloomberg reported in March that the firm was under investigation by the US Commodity Futures Trading Commission, with the regulator seeking to determine whether cryptocurrency derivatives were bought and sold by US citizens on the Binance platform. This was followed by another report in May that the US Justice Department and IRS were also investigating the Group.
Around the same time, German watchdog BaFin issued a warning to the exchange for offering securities-tracking digital tokens without publishing an investor prospectus.
In June the FCA published a warning about doing business with Binance’s UK firm Binance Markets, noting that no entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK. More generally, the warning followed, “be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products.”
See: Binance CEO says he’s willing to step down as world’s biggest crypto exchange welcomes regulation
By early July Barclays suspended UK card payments to Binance, citing the FCA warning to customers. In the same week, SEPA payments to Binance were halted and the exchange brought a new compliance director on board, poaching eToro’s Jonathan Farnell.
August saw news that London’s High Court ordered the exchange to identify hackers and freeze their accounts after AI company Fetch.ai alleged $2.6million of its assets were stolen.
Despite increasing clampdowns on Binance’s operations across the globe, with soaring download numbers and unmatched trading volumes it remains the clear leader in its field.
The Tai Chi document
In a recent Finextra long read, Arvin Abraham, UK Fintech lead attorney for McDermott Will & Emery explained that significant signs of potential regulatory and criminal malfeasance by Binance have been in the public record since at least 2018. At that time “Japanese regulators found that it was operating in the country without appropriate registrations to accept business from Japanese residents, ordering it to suspend operations.”
Abraham then points to the scandalous ‘Tai Chi’ document unveiled by Forbes which outlined Binance’s
“elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States.”
See: More regulation coming: SEC Chairman signals stablecoins and other tokens could fall under its rules on security-based swaps
The document was reportedly created by former Binance employee Harry Zhou and was presented to Binance’s founder Zhao in late 2018.
The document was essentially a rough strategy with a few (eyebrow raising) objectives:
- Minimise the impact of US regulation – specifically mentioning the need to undermine “anti-money laundering and US sanctions enforcement” efforts which would detect criminal activity. One method of doing so was ‘distraction’, through participation in government programmes which set out to detect weaknesses in financial systems.
- Insulate the firm from US enforcement. By keeping key personnel outside of US locations and registering US based companies (one such entity named Tai Chi), the exchange would attempt to shelter its true parent company from regulatory repercussions – labelled by Abraham as a classic ‘bait and switch’ to US regulators.
- Calling for ‘strategic’ use of virtual private networks (VPNs) to obscure the locations of traders on the exchange in attempts to avoid scrutiny in jurisdictions unfavourable toward Binance.
In June this year Binance was subject to enforcement actions by the Securities Commission Malaysia for alleged illegal operations. Crackdowns have also been seen in Thailand, India, and Japan where regulators issued similar warnings to the exchange tied to offering services in countries without the necessary authorisation.
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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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JP Morgan warns CBDC could mean banks lose 20-30% of funding
Ledger Insights | Aug 6, 2021
JP Morgan strategist Josh Younger has penned a piece warning that central bank digital currencies (CBDC) need to be designed to avoid disintermediating commercial banks, Bloomberg reports. The topic is one of the key challenges in a retail CBDC design and is widely recognized as a risk.
YoYounger put a figure on the risk saying it could lead to the loss of 20%-30% of the funding base of commercial banks. And that shift could be rapid in a crisis, another issue that central banks acknowledge.
Podcast: Requirements for a fully functional CBDC
Much depends on whether the CBDC holdings will be limited. For example, if a key purpose of the CBDC is financial inclusion and the target is mainly low-income households who typically have less than $1,000 in their accounts, the impact would not be material.
“Hard caps of $2,500 would likely meet the needs of the vast majority of lower income households while not having any discernable effect on the funding mix of large commercial banks,” wrote Younger.
Younger was focused on a U.S. digital dollar. Over in Europe, the European Central Bank floated the idea of a €3,000 cap to dissuade citizens from using a digital euro as a store of value. Earlier this year Morgan Stanley estimated this could attract €873 billion ($1 trillion), or 8% of European commercial bank deposits.
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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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Bank of America says CBDCs could ‘Replace cash completely in the (distant) future’ in Research Note
Coindesk | James Rubin | Jul 11, 2021
The second largest U.S. bank said that the rise of CBDCs was "inevitable."
Bank of America (BofA) called central bank digital currencies “a much more effective payment system than cash,” in a research paper published Wednesday.
The Charlotte, N.C.-based bank, the second largest in the U.S. by total assets, said that CBDCs could “replace cash completely in the (distant) future.”
Inevitable....replace cash completely in the (distant) future.
The report comes amid surging interest among central banks. A May report by the blockchain infrastructure platform Bison Trails found that about 80% of central banks are exploring use cases involving CBDCs, with 40% already testing proof-of-concept programs.
See: Podcast: Requirements for a fully functional CBDC
Bank of America said that CBDC adoption was “inevitable,” citing a declining role for cash, the private sector’s increasing use of blockchain technology, loss of control over currency and CBDCs’ potential to boost the economy. It also noted that central banks that did not launch their own digital currencies could see decreasing demand for their currencies, “substantially in some cases,” and a smaller “global role.”
Addressing concerns that a CBDC could compete with bank deposits, spur bank runs and compromise individual security, the paper highlighted central banks’ “very cautious approach.”
The paper said that CBDCs qualified as money “by allowing store of value and being a unit of account and means of exchange,” differentiating them from cryptocurrencies that “do not meet these criteria. “Since they are traded, they could be seen as an asset class,” the paper said.
See: BIS Research: CBDCs beyond borders: results from a survey of central banks
Bank of America said that CBDCs could lessen the need for stablecoins, noting that the latter could “present a material financial stability risk during times of market stress when there may be a crypto to fiat currency run.”
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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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Wharton: The Opportunities and Dangers of Decentralizing Finance
Wharton | Jun 10, 2021
Decentralized Finance — or DeFi — has experienced explosive growth in the past year. But in order for DeFi to fulfill its promise as a disintermediated ecosystem that helps rather than harms, “now is the time to evaluate its benefits and dangers,” write Wharton legal studies and business ethics professor Kevin Werbach and David Gogel, a recent Wharton MBA graduate, in the article that follows. Werbach is author of the book The Blockchain and the New Architecture of Trust and leads Wharton’s Blockchain and Digital Asset Project. Werbach and Gogel recently collaborated with the World Economic Forum to create the Decentralized Finance (DeFi) Policy-Maker Toolkit, providing guidance to regulators and blockchain watchers everywhere.
Intermediaries have always played essential roles within financial markets, facilitating trust, liquidity, settlement, and security. Yet these benefits come with costs. Intermediation contributes to slow settlement cycles, inefficient price discovery, and limitations on market access. Financial services markets tend to be highly concentrated, with a few powerful intermediaries exercising significant control and extracting substantial rents. Since the 2008 Global Financial Crisis, there has been increased attention on structural inequalities and hidden risks of the financial system. Recent controversies such as the GameStop short squeeze, in which retail investors were blocked from trading during a period of volatility, also cast a spotlight on the shortcomings of legacy financial infrastructure.
See:
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Goldman Sachs Files Defi ETF Application
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Inside Jack Dorsey’s Next Big Bet on Bitcoin, DeFi
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WEF: Decentralized Finance: (DeFi) Policy-Maker Toolkit
Until now, however, intermediation was a necessary feature of finance. Even peer-to-peer fintech lending platforms such as Prosper and cryptocurrency exchanges such as Coinbase retain an important central role. This is the environment in which Decentralized Finance (DeFi) has emerged.
DeFi is a developing area at the intersection of blockchain, digital assets, and financial services. DeFi protocols seek to disintermediate finance through both familiar and new service arrangements. They use stable-value cryptocurrencies known as stablecoins as assets, blockchain ledgers for settlement, and software-based smart contracts to execute transactions automatically.
The market experienced explosive growth beginning in 2020. According to tracking service DeFi Pulse, the value of digital assets locked into DeFi services grew from less than $1 billion in 2019 to over $15 billion at the end of 2020, and over $80 billion in May 2021. Novel business models such as yield farming — in which holders of cryptocurrencies earn rewards for providing capital to various services — and aggregation to optimize trading across exchanges in real-time are springing up rapidly. Innovations such as flash loans, which are either repaid or automatically unwound during the course of a transaction, open up both new forms of liquidity and unfamiliar risks.
Despite its scale and potential significance, DeFi is still early in its maturation. Now is the time to evaluate its benefits and dangers. As with everything in the cryptocurrency world, hype around DeFi is sometimes out of control. Extraordinary — and unsustainable — short-term returns warped investor expectations and attracted bad actors as well as innovative builders. Most DeFi activity is still speculative and conducted by relatively sophisticated cryptocurrency holders. As mainstream usage grows, risks and regulatory considerations will loom increasingly large.
“DeFi will ultimately succeed or fail based on whether it can fulfill its promise of financial services that are open, trust-minimized, and non-custodial, yet still trustworthy.”
See:
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Child’s play: Gajesh Naik, 13, manages a fortune in DeFi
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InsurAce Founder at DeFi Insurance Protocol Explains the Difference between Traditional and Decentralized Insurance
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EasyFi CEO on Current Lending and Borrowing Issues and Comments on DeFi
DeFi is a general term covering a variety of activities and business relationships. We define four requirements: financial services; trust-minimized operation and settlement on a blockchain; non-custodial design; and systems that are open, programmable, and composable. We then identify six major DeFi categories — stablecoins, exchanges, credit, derivatives, insurance, and asset management — as well as auxiliary services such as wallets and oracles (external information feeds). Most resemble traditional financial services, at least on the surface. However, they operate without intermediaries. Many incorporate cryptocurrency-based incentive structures to aggregate capital, maintain efficient pricing, and participate in governance decisions.
Within and beyond the categories described here, DeFi is evolving rapidly. Developers are experimenting with new services, business models, and combinations of DeFi protocols. Technologies are maturing. Services are moving to decentralized management and governance of protocols. Tools are emerging to simplify the user experience on and across DeFi services. A significant aspect of ongoing DeFi development will involve the composition of financial primitives as “Money Legos” which can be reassembled in new and dynamic ways.
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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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Upcoming Meeting: Retail Payments Advisory Committee
BoC | Aug 11, 2021
The Interim Retail Payments Advisory Committee (RPAC) is a forum set up by the Bank of Canada to gather industry expertise about the retail payment services landscape. The Bank is designing and getting ready to implement the Retail Payments Supervisory Framework.
See: Bank of Canada (Aug 13 Deadline): Retail Payment Advisory Committee is Seeking New Members
The interim committee provides advice and expertise to support the Bank of Canada’s understanding in the following areas:
- framework structure: helping the Bank of Canada understand the retail payments segment of the financial ecosystem and providing input on the Bank of Canada’s risk assessment, oversight and enforcement procedures
- operational design: offering suggestions on the framework’s overall design, including the creation of registration and reporting processes, the IT system and the website
- industry developments: raising relevant issues for discussion, identifying areas of research and considering how the Bank of Canada can best meet its proposed mandate
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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