Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Voices
2024 Investment Crowdfunding Ecosystem Report Insights
Investment Crowdfunding | Jan 4, 2025
Image: Investment Crowdfunding Ecosystem Report 2024, Crowdfund Capital Advsiors
CCA's 2024 Investment Crowdfunding Report Tells a Story of Resilience, Growth, and Transformation
Thanks to NCFA Advisor and Principal at Crowdfund Capital Advisors, Sherwood 'Woodie' Neiss for putting together and publishing the 2024 Investment Crowdfunding Ecosystem Report which is available for download at no charge. It's a mammoth task to track and analyze so much transactional data, year after year, so hats off and much credit where it's due.
This article draws on the data and insights from the report to keep you informed of the latest equity crowdfunding trends. In a high interest rate environment where traditional venture capital slowed, investment crowdfunding continued to forge new capital volumes while creating jobs and reinvesting billions (yes, that's billions) back into local economies in the U.S. the focus of the report.
See: CCA Policy Proposal to Expand Investment Crowdfunding
Sherwood Neiss, Principal of Crowdfund Capital Advisors:
"Crowdfunding isn’t just about raising money—it’s about fostering ecosystems of innovation, jobs, and intergenerational wealth."
Key Report Takeaways - Impact, Impact, Impact
1. Record Capital Raised
Equity Crowdfunding campaigns raised a total of $547 million in 2024, thanks to parallel offerings, which combine retail and accredited investor funding. Without parallel offerings, standalone Regulation Crowdfunding (RegCF) from retail investors only raised $375 million (down from it's peak of $554 million in 2021), continuing a 3 year slide. In our mind, equity crowdfunding always combined retail + accredited investors but parallel offerings makes strategic sense as they can tap into different networks with the appropriate exemptions.
2. Job Creation Soars
One statistic that jumps out is the impact that RegCF has had on job creation. In 2024, investment crowdfunding supported companies created 110,976 jobs which is a whopping 1625% increase from the 6,432 jobs that were generated from crowdfunding in 2016.
See: Public Market Challenges and Equity Crowdfunding Capital
The average crowdfunded company employs approx 10 people, which is also double the workforce size from earlier years. These businesses are small to medium sized enterprises (SMEs) that are often community-focused and reinvest in their growth locally creating a positive ripple effect in the economy.
3. Strong Valuation Growth
Investors are becoming more and more confident in crowdfunded businesses, as there are more and more success stories and a broader range of companies that are raising investment crowdfunding capital.
Pre-revenue startups that were crowdfunded, achieved an individual median valuation of $10 million, which has doubled from $5 million in 2016. Post-revenue companies achieved an individual median valuation of $20 million, demonstrating that scaling companies with proven revenue models attract greater interest in investment crowdfunding markets. These trends reflect the maturity of crowdfunding markets and the ability to facilitate capital for companies of all stages of development. See: Revolut’s Crowdfunding Success from Start-up to $45 Billion
4. Economic Ripple Effect
Crowdfunded businesses reinvested $26 billion back into the economy in 2024, according to the report. That's an astonishing figure but not entirely surprising given that many are local, community-based SMEs who understand organic growth and the need to reinvest in their communities and local economies.
See: How Fintechs Are Unlocking Value in Private Markets 2024
This reinvestment figure works out to a 10x economic multiplier. By way of comparison, we've been in many meetings where either government or philanthropic entities are seeking ROIs of up to 3x for their capital commitments. 10x ripple can make waves.
Investment Crowdfunding Trends
1. Parallel Offerings Maximize Dollars and Impact
The combination of parallel offering by raising capital via RegCF AND Rule 506(c) exemptions is a growing trends that allows companies to attract capital from both retail and accredited investors. It also streamlines their campaigns and messaging, and demonstrates how crowdfunding markets are evolving to meet the needs of all types of investors.
2. Flexible Funding Models
As original visioned, investment crowdfunding isn't just about 'equity offerings'. In fact in 2024, 32% of campaigns were structured as debt or revenue sharing agreements. Model flexibility offers a variety of businesses more ways to crowdfund while catering to varying investor preferences, and ensures there are options for a wide range of industries and companies of various sizes/types.
3. Capital Distribution Beyond Major VC Hubs
Equity Crowdfunding continues to break down geographic barriers. In 2024, over 53% of capital was invested outside traditional tech hubs like California, New York, and Massachusetts.
See: Corporate Venture Capital in Canada: Insights and Challenges
As access to capital is democratized, innovators and entrepreneurs in smaller cities and even rural areas are becoming empowered to brings their ideas to life, levelling the playing field while promoting innovation across the country.
4. Resilience and Long-Term Value
Crowdfunding capital is more resilient than traditional VC/PE capital, as it is stickier and their own capital invested for the right reasons which is often beyond pure profit and aligned to support innovation, a community venture or aligned value/purpose. With enough years behind its belt, investment crowdfunding capital is finally showing it's strength as a reliable alternative to traditional channels. And with a 10x multiplier ripple effect on local economies and job creation, it's long term value is evident in community development and economic growth.
Why It Matters
Investment Crowdfunding is not just about raising money but about connecting everyday investors with innovative businesses and creating ecosystems of growth. In 2024, crowdfunding proved its ability to democratize finance, empower entrepreneurs, and drive measurable economic impacts. For entrepreneurs, policymakers, and investors, the message is clear:
"Crowdfunding is a vital tool for raising capital and driving innovation and economic growth in today's inclusive economy."
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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A Look at BRICS Expansion Numbers and Implications
BRICS | Dec 30, 2024
Image: BRICS Expansion Map, Geopolitical Economy
BRICS Expansion by Population and GDP and Global Implications
The founding members of the original BRICS Bloc that launched in 2009 was originally made up of Brazil, Russia, India and China, followed by South Africa joining in 2010. BRICS aims to nurture economic cooperation between member states, reduce reliance on Western dominated financial systems and push for a more multipolar global order. Its goals include promoting trade in local currencies, exercising control over its resource dominance, and increase power for emerging markets in global governance institutions. In 2024, BRICS added four new member countries. Now in January 2025 and as featured on Geopolitical Economy, BRICS is a major player globally and expanding with an additional 9 'partner' countries. Let's look at the numbers and trends in more detail to be understand the implications.
BRICS Members and Partners
BRICS distinguishes between members and partners based on their level of integration. This tiered approach allows BRICS to grow while aligning new members with the rollout of its strategic goals.
See: Russia Pivot’s on Crypto as BRICS Momentum Builds
- Members are fully integrated into the group, with decision-making power and formal voting rights.
- Partners are in the early stages of association participating in economic and development initiatives but without full membership status or voting privileges.
- Also, several countries have been invited to join BRICS as either a member or partner but have yet to confirm or have declined membership.
Current Members (9 countries - see RED):
- Brazil
- Russia
- India
- China
- South Africa
- Egypt (joined in 2024)
- Ethiopia (joined in 2024)
- Iran (joined in 2024)
- United Arab Emirates (joined in 2024)
New Partner Countries (as of January 2025 - see ORANGE):
See: Digital Export Trends and Global Trade Fintech Opportunities
- Belarus
- Bolivia
- Cuba
- Indonesia
- Kazakhstan
- Malaysia
- Thailand
- Uganda
- Uzbekistan
Invited but Pending or Rejected (invited as member or partner - See YELLOW, AQUA, NAVY):
- Algeria (member, pending response)
- Nigeria (partner, pending response)
- Turkey/Türkiye (partner, pending response)
- Vietnam (partner, pending response)
- Argentina (initially invited as member but withdrew in 2024 under a new government)
See: Is the BRICS Alternative Currency Plan Falling Apart?
Post January 2025 expansion, there are a total of 18 BRICS and affiliated countries representing approx half of the global population and over 41% of the world’s GDP when measured by purchasing power parity (PPP).
By the Numbers
1. Population - 9 of the world's 20 most populated countries
- India and China combined account for over 2.8 billion people which is more than a third of the global population.
- Indonesia adds another 290 million people to the bloc (fourth most populated)
- Other countries with tens to hundreds of millions of people include Brazil, Russia, Ethiopia, and Egypt.
In total, BRICS member countries and affiliates represent approx. 4 billion people so the group has a massive labour force and consumer market.
2. Economic Strength
To better understand BRICS' economic power one must understand the difference between nominal GDP versus Purchasing Power Parity (PPP). Nominal GDP measures the total economic output of a country in current market prices using current exchange rates which is a good measure of global trade and investment power. A different measure, PPP GDP accounts for price differences between countries so it more closely reflects the actual purchasing power of currencies and provides a better measure of living standards and real economic productivity.
See: Global VC Hotspots: A Look at Top Growth Cities
This difference is why every day citizens may be living in a 'wealthy country' but complain about declining living standards, versus a citizen living in a 'developing economy' that feels their living standards are only improving.
- BRICS countries account for over 41% of global PPP GDP, by far surpassing the G7’s 29%. China alone contributes 19% of global PPP GDP, followed by India at 13%.
- The G7's total nominal GDP however is $40 trillion while the BRICS’ total nominal GDP is approximately $27 trillion which is reflective of the strength of Western currencies like the US dollar and higher per capital incomes.
3. Resources and Commodities
BRICS nations are global leaders in producing essential commodities:
- Energy - Five of the top 10 oil producers are in BRICS (Russia, China, Iran, UAE, and Brazil). BRICS members like Russia and Iran dominate natural gas production with Indonesia and Malaysia as significant contributors.
- Agriculture - China and India produce over 50% of the world’s rice while Brazil is a top exporter of soybeans and beef. Indonesia, Malaysia, and Thailand, new BRICS partners, account for nearly 90% of global palm oil production.
- Strategic Minerals - BRICS countries control significant reserves of iron ore, nickel, and copper which is critical for industrial and tech applications. Indonesia’s membership adds the world’s largest nickel reserves to the bloc.
Why It Matters
One of BRICS’ key goals is reducing reliance on the U.S. dollar known as de-dollarization in order to improve financial influence, although it's currently being debated how effective current anti-dollar measures are. By promoting trade in local currencies andthe potential of a shared BRICS currency, the bloc looks to challenge the West's financial dominance. This shift will have significant implications for global trade and investment.
See: UN’s Blueprint for AI Governance and Global Representation?
China is leading the global transition to renewable energy and is currently has twice as much solar and wind capacity as the rest of the world combined positioning BRICS as a major player in combating climate change.
Rise in global purchasing parity and economic power / influence of the Global South. In 1990, the G7 controlled 52% of global PPP GDP. Today, that share has dropped below 30%, while BRICS continues to grow.
Strategic Implications
- BRICS countries population exceeds 4 billion and represents massive labour and consumer markets. Too big for businesses looking to expand globally to ignore.
- The bloc has significant influence/control over critical commodities like oil, gas, and agricultural products gives BRICS strategic influence in global trade negotiations.
See: Vancouver’s Bitcoin Vision: A New Era for City Finances
- As BRICS continues to gain economic clout, it is pushing for stronger influence/representation over international governance institutions like the IMF and World Bank while advocating for a more multipolar world order.
Closing Thought
The expansion of BRICS is challenging the traditional power balance and represents a turning point in global geopolitics and economics. Western democracies and global businesses need to fully understand and adapt to this new reality, as the world reshapes into xyz.
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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OpenAI’s Latest Updates Stock Sale, Lawsuit & Innovations
OpenAI | Dec 19, 2024
Image: Freepik/starline
OpenAI Makes Headlines with Employee Stock Sales, AI Updates, and Musk Lawsuit
It's been a whirlwind for OpenAI, capturing the tech world's attention with all kinds of developments from a private stock sale that will turn hundreds of employees into millionaires to a high profile lawsuit and exciting product launches. Here's what you need to know to stay informed.
Key Developments
1. Employee Stock Tender Offer
About 400 OpenAI employees (and former employees) are being given the opportunity to sell some of their shares in a private SoftBank-led stock sale at a company valuation of $86 billion. Some potential payouts are up to $10 million each, and if they sell, they can still continue working there, which is unlike traditional stock sales that might happen when employees leave or during an IPO. This approach aligns incentives in a way that rewards employees while encouraging them to stay (without going public). This deal sees SoftBank increasing their investment in AI driven by products like ChatGPT now with over 100 million users.
2. Elon Musk Lawsuit
Musk (co-founder and early investor in OpenAI) initially filed a lawsuit against OpenAI on Feb 29, 2024 saying that it shifted fro its nonprofit mission to a for profit model. He withdrew the lawsuit in June but reinstated it in August citing concerns over OpenAI's direction and its partnership with Microsoft.
See: Elon Musk’s X Challenges California’s Deepfake Law
In Nov 2024, Musk tried to get a preliminary injunction to stop OpenAI from transitioning to a for profit entity, claiming that it creates unfair competition for his own AI venture called xAI. In response, OpenAI released communications indicating that Musk himself had previously supported the idea of incorporating a for profit component into the company's structure and that Musk's legal actions are baseless and could harm operations. A court hearing is scheduled for January 14, 2025 to address Musk's injunction request.
3. Sora Launch
OpenAI officially launched Sora, its genAI video model that allows users to create videos from just text prompts. It has many interesting features such as Remix, Loop, and Blend to support the creativity of video content creators. Early reviews suggest that there are limitations in Sora's ability to create realistic or seamless video sequences and capabilities are still in development.
4. "12 Days of OpenAI"
OpenAI is wishing AI developers and enthusiasts happy holidays by launching a “12 Days of OpenAI” event that reveals new tools daily for twelve days straight.
- Dec 5: Launch of OpenAI o1 and ChatGPT Pro subscription plan
- Dec 6: Expansion of Reinforcement Fine Tuning research program
- Dec 9: Public release of Sora, a text-to-video AI tool
- Dec 10: Launch of Canvas for collaborative writing and coding
- Dec 11: Integration of ChatGPT across Apple platforms like Siri
- Dec 12: Enhanced voice features with video and festiv Santa Mode
See: Israel’s AI Stock Advisor Approved: Will Canada Follow Suit?
- Dec 13: Introduction of Projects for organizing AI interactions
- Dec 16: ChatGPT Search for accurate answers from the web
- Dec 17: New tools for developers, including fine-tuning methods
- Dec 18: Launch of 1-800-CHATGPT phone access in the U.S.
- Dec 19: TBD
- Dec 20: TBD
4. ChatGPT Gets Accessibility Boost
- American users can now call 1-800-CHATGPT and interact with the AI over the phone. Each user gets 15 minutes of free talk time per month.
- Also, ChatGPT is now available on WhatsApp with a new integration, bringing AI to millions of users globally.
5. Defense Partnership with Anduril
OpenAI has partnered with defense technology company Anduril to develop AI solutions for national security, especially fending off unmanned drone threats. AI is increasing its role in military applications with the U.S. Department of Defense actively researching innovative AI tools for operational use.
In Closing
It's important to stay abreast of the latest innovations and emerging technologies. OpenAI's latest advancements can provide fintechs with opportunities to enhance customer experiences, streamline operations, and drive innovation.
Explore More AI Insights
- The Frontline of AI’s Copyright Law Battle in 2024
Examine the evolving intersection of AI and copyright law, and its implications for creators and businesses in the digital age. - OSC/EY Report: AI in Fintech Use Cases
Discover how AI is revolutionizing capital markets and the fintech sector, with insights into regulatory perspectives and practical applications. - A Look Inside Canada’s AI Commercialization Challenge
Delve into the hurdles and opportunities in commercializing AI innovations within Canada, and their broader economic impact.
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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Canada Can Learn from UK’s £100M Public Service Reform
UK Innovation | Dec 17, 2024
Image: Freepik/Vectorarte
Canada Should Take a Page From the UK Government's £100 Million Public Service Reform Initiative
There are a myriad of reasons why governments globally are racing to modernize from being inefficient bureaucracies to evolving expectations of citizens, rapid technology advancements, economic competitiveness and need to attract talent etc. Under this backdrop earlier this week, the UK government announced a £100 million initiative led by Pat McFadden, Chancellor of the Duchy of Lancaster to solve the country's most pressing issues with a focus on innovation, agility, and measured results.
The UK’s Plan for Change
It's all part of the UK's broader 'Plan for Change' that aims to transform public services by adopting techniques from the technology sector to achieve five national missions, such as kick starting economic growth and breaking down the barriers to opportunity. The plan is a significant cultural shift in how government operates, and offers Canada lessons to learn from to improve its own public services using a similar approach.
See: Freeland Resigns as Canada at Economic Crossroads
The plan calls for establishing a 'test and learn' culture, which will be an iterative and user-centric approach (think data-driven) to addressing challenges like housing and family support services. Starting in 2025, small teams will be sent to various regions such as Manchester, Sheffield, and Liverpool to experiment with solutions. In tech terms, it's akin to running a pilot project.
Pat McFadden, initiative lead said:
“Test it. Fix the problems. Change the design. Test it again. Tweak it again. And so on, and so on, for as long as you provide the service. Suddenly, the most important question isn’t, ‘How do we get this right the first time?’. It’s ‘How do we make this better by next Friday?’”
A Cultural Shift Toward Innovation
This is a huge cultural change for government, and it's as much about introducing innovative techniques as much as it is a shift away from traditional, bureaucratic models and requires accepting a mindset that encourages experimentation and adaptability. McFadden stated,“If we keep governing as usual, we are not going to achieve what we want to achieve.” Some of the reform effort includes introducing various key techniques to drive change:
See: Rachel Reeves: UK’s Financial Innovation Blueprint
- Agile approach to development where solutions will be achieved iteratively with regular testing and improvements.
- Services will be built based on public needs and feedback.
- Teams will use data/digital tools to track progress and make informed 'data-driven' decisions.
- Teams and work will be outcome-orientated, aiming for clear and measurable results instead of creating long strategy documents.
Fresh Talent Into Government
A major part of this initiative is the need to bring new talent with fresh ideas and cross sector collaboration to avoid silos and redundant work. The UK is recruiting professionals from the tech industry for 6-12 month 'Tours of Duty' to tap into private sector talent and apply the latest skills to public challenges. At the same time, front-line public service leaders are being encouraged to share their practical insights for change. The government is also simplifying its recruitment process to rid of 'mind-boggling bureaucracy,' to attract high-caliber talent more effectively.
“They are the ones on the ground who can see how things are working, where the obstacles are, and where a policy won’t survive contact with reality.”
Lessons for Canada
From housing shortages to lengthy healthcare wait times, Canada suffers from many of the same issues that the UK is dealing with. Canada may find creative, scalable solutions with its own "test and learn" strategy, and could quicken the speed of impactful change by allowing small teams to try new approaches to solve problems.
See: Overcoming Barriers to Growth in Financial Regulation
The Canadian government would be better off to collaborate with digital talent, streamline government procedures, and focus on quantifiable results. All of these changes might improve transparency, and increase public confidence in government.s, this change would increase public confidence in the government.
A Vision for Modern Government
By focusing on innovation, adaptability, and real-world results towards meaningful change both the UK and Canada (if taking a page from the UK's book) could reinvigorate the public sector, making it more dynamic, efficient, and responsive to the needs of its citizens in modern times.
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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Freeland Resigns as Canada at Economic Crossroads
Finance and Politics | Dec 16, 2024
Chrystia Freeland Resigns, U.S. Tariffs, Weak Dollar, and Rising Debt Highlight Canada’s Tough Economic Choices
On December 16, 2024, Chrystia Freeland resigned as Canada’s Finance Minister and Deputy Prime Minister. Reports indicate that Prime Minister Justin Trudeau asked Freeland to step down. Her resignation letter (see below) suggests major policy disagreements over the government's fiscal direction and its response to mounting economic pressures such as the the government's growing deficient, a weakening Canadian dollar, and Trump's threat of 25% U.S. tariffs across the board. Her sudden exit amidst a crumbling Liberal party is a public warning.
See my letter to the Prime Minister below // Veuillez trouver ma lettre au Premier ministre ci-dessous pic.twitter.com/NMMMcXUh7A
— Chrystia Freeland (@cafreeland) December 16, 2024
Key Highlights from the Fall Economic Statement
The release of Ottawa's Fall Economic Statement (FES) came just a few days before Chrystia Freeland announced her resignation which is unprecedented and highlights serious economic challenges facing the country. Canada's debt to GDP ratio has climbed to 43.2%, which is above the pre-pandemic level of 31.2%, causing concern about financial stability. While the FES is designed to boost tech and innovation to drive economic growth while addressing fiscal challenges, it comes with an expensive price tag with the 2024 deficit expecting to be more than $40 billion, up from earlier projections of $35 billion.
See: Reversing Canada’s Digital Economy Productivity Decline
There are a number of changes announced in FES that could impact the fintech sector and help foster innovation, streamline regulatory alignment and encourage capital flows. Key measures include $26 billion in tax incentives, expanded venture capital funding, and reforms to enhance investment opportunities in Canada.
The government announced changes to the Scientific Research and Experimental Development (SR&ED) tax program. These changes include raising the annual limit for enhanced tax credits from $3 million to $4.5 million and increasing thresholds for eligibility to encourage more businesses to invest in research and innovation. The program will now also allow public corporations to qualify, and capital expenses will again count toward credits.
The government removed the 30% rule that limits how much Canadian pension funds can own in a single company. This change was made to encourage pension funds to invest more in Canadian businesses.
A new $1 billion round of the Venture Capital Catalyst Initiative (VCCI) to provide more support for early-stage companies (with better terms to attract investments from pension funds and other large investors).
The government also plans to invest up to $45 billion in loans and equity to support AI data centers and other projects where Canadian pension funds are key players. These measures are meant to grow AI expertise in Canada and support infrastructure projects to boost job creation.
Critics argue that the 2024 Fall Economic Statement's increased spending could worsen Canada's fiscal challenges.
U.S. Tariff Threat and the Canadian Dollar
Adding to Canada's domestic concerns is Trump's plan to impose a 25% tariff on Canadian imports. The University of Western's Ivey Business School reported that even a 10% tariff could reduce Canada's GDP by approximately 2.4 percentage points over two years, putting around 500,000 jobs at risk.
A report by Trevor Tombe, Professor of Economics at the University of Calgary, suggests that a 10% tariff could reduce Canada's productivity another 1% and result in approximately $30 billion per year in economic costs.
See: Canada’s Innovation Paradox – Strong Start, Missing Impact
All of this has put a lot of downward pressure on the Canadian dollar which has declined to around $0.7 CAD-USD which makes imports like food, fuel and electronics more expensive. It's the combination of rising costs and trade/geopolitical uncertainty that is straining household budgets and creating challenges for companies doing cross-border trade and international business.
Snap Election?
Freeland’s departure has intensified political instability within the Trudeau government. Trudeau may call an election to reset his political agenda but the move could backfire if the Conservatives capitalize on growing dissatisfaction. There's a growing laundry list of folks demanding that Trudeau resign.
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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ASIC Consultation on New Digital Asset Rules
Regulation | Dec 12, 2024
Image: Freepik/WangXiNa
The Australian Securities and Investments Commission Seeks Input on New Digital Assets Rules
The Australian Securities and Investments Commission (ASIC) is working to clarify rules for businesses and individuals working with digital assets. They've published Consultation Paper 381 (CP 381) outlining updates to Information Sheet 225 (INFO 225), which provides more specific guidance on how existing financial laws apply to assets like stablecoins, staking services, and tokenized products. Australia's securities regulator is now seeking feedback on these updates.
What Updates Are in Scope?
ASIC’s proposed updates focus on ensuring digital asset businesses understand their obligations under current financial laws. The updates include
See: Canada Pauses CBDC Plans, Australia Advances Wholesale Focus
- ASIC offers 13 practical examples (see below) to show how different digital asset types and services might be classified as financial products.
- Businesses dealing with digital assets classified as financial products must follow the same rules as traditional financial services including obtaining an Australian Financial Services (AFS) Licence.
- ASIC proposes a grace period for businesses actively working towards compliance to protect them from enforcement actions during the licensing process.
- These updates aim to protect customers while supporting market integrity and innovation.
13 Practical Examples
In the consultation document, ASIC provides 13 practical examples to help businesses understand their legal registration and compliance obligations:
1. Stablecoins as Financial Products - Stablecoins tied to an asset (i.e., fiat currency or government bonds) could be seen as financial products depending on their purpose and how they are promoted. For example, if a stablecoin is backed by government bonds and offers financial benefits, it may need licensing as a managed investment scheme.
2. Staking Services - Businesses that let customers stake tokens to earn rewards may fall under financial product rules (esp if they add features like pooling tokens). For example, a staking service combining tokens from multiple users to meet blockchain requirements could require an Australian Financial Services (AFS) licence.
See: Vancouver’s Bitcoin Vision: A New Era for City Finances
3. Tokenized Assets - Tokens representing physical or financial items (i.e., gold or real estate) could be classified as securities if they involve shared profits or pooled funds. For example, a gold-backed token sold on an exchange may need to comply with securities or investment regulations.
4. Wrapped Tokens - Tokens that represent other assets might be financial products if they suggest investment or profit potential. For example, a token offering a stake in a project or company may require registration licensing as a security.
5. Token Sales and Fundraising - Raising funds through token sales, such as Initial Coin Offerings (ICOs), could be regulated as securities if linked to the issuer’s success. For example, selling tokens to finance a blockchain venture may require a prospectus to comply with securities laws.
6. NFTs and Collectibles - Non-fungible tokens (NFTs) are generally not financial products unless marketed with potential financial returns. For example, an NFT that promises a share in future profits from sales may fall under investment rules.
7. DeFi Platforms and Services - Decentralized Finance (DeFi) platforms could require licences if they manage pooled funds or offer lending and borrowing services. For example, a DeFi protocol pooling user funds to generate returns might be classified as a managed investment scheme.
See: Two Artists Sue SEC for NFT legal Showdown
8. Digital Asset Wallet Providers - Wallets offering extra services like earning interest or staking options may need to comply with financial product laws. For example, a wallet letting users pool assets to earn interest would likely require a licence.
9. Payment Services Using Digital Assets - Platforms facilitating payments with digital assets may need licensing as non-cash payment facilities. For example, a business allowing customers to use tokens for everyday purchases might need authorization to operate.
10. Buy-Back Arrangements - When businesses promise to buy back tokens based on value or performance, they may be treated as financial investments. For example, a token issuer guaranteeing buy-backs at a higher price could need an AFS licence.
11. Rewards and Loyalty Programs - Rewards programs using digital tokens may be financial products if the tokens are tradeable and linked to business success. For example, a loyalty token offering value tied to a company’s performance might require regulation.
12. Bundled Services and Products - Digital assets combined with other services may be regulated as a single financial product. For example, a package including tokens with staking and governance features may require licensing for the entire service.
13. Secondary Market Trades - Tokens traded on secondary markets could be regulated if their value depends on the issuer’s performance. For example, a token that increases in value as the issuing company succeeds might fall under securities laws.
See: WonderFi Announces Australian Market Entry
The thirteen scenarios above help businesses assess whether their digital asset offerings comply with existing financial regulations, and clarifies when licensing, disclosure, and compliance obligations apply. Companies are encouraged to assess their service offerings using the practical examples and seek feedback from the ASIC if unsure.
What Does ASIC Want Feedback On?
ASIC is seeking input from digital asset businesses, financial service providers, and other stakeholders on the following:
- Are the examples and explanations in the updated guidelines clear and easy to understand? Do they help businesses navigate the rules for digital assets?
- Is the current process for obtaining licences practical for digital asset businesses? Are there specific issues for products like stablecoins or wrapped tokens?
- ASIC is considering a "no-action" policy that would let businesses applying for licences operate without penalties during the review period. What are your thoughts on this 'temporary relief' idea?
See: PayPal’s Legal Win Helps Shape Future of Digital Wallets
- How can ASIC’s guidelines help businesses transition smoothly to the Government’s proposed regulations for digital asset platforms and payment stablecoins?
- What challenges do businesses face when trying to meet these regulations? Are there practical problems ASIC should address in its guidance?
Your Input Matters
If you’re in the digital asset space or have a stake in how these regulations evolve, now’s the time to speak up. By sharing your feedback, you can help ASIC create rules that support innovation while protecting consumers and keeping markets fair.
The deadline to send your comments to ASICs Digital Asset Team on the proposed updates is February 28, 2025. ASIC plans to release the final guidelines in mid-2025. Email: digital.assets@asic.gov.au
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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BoC Publishes Final Guideline on Safeguarding End-User Funds
Retail Payments | Dec 12, 2024
Image: Freepik/wayhomestudio
The Bank of Canada Releases Final Guidelines for Safeguarding End-User Funds
The Bank of Canada (BoC) has published its final guideline on safeguarding end-user funds (24 page PDF), providing payment service providers (PSPs) with clear expectations and requirements under the Retail Payment Activities Act (RPAA). The BoC has also shared a summary of feedback from their consultation along with their responses (6 page PDF) that helped update the final guidelines.
See: RPAA Registration Deadline Passed See Who Applied
Key Consultation Insights
1. Trust Arrangements
- PSPs need to set up trust arrangements that meet three clear legal requirements under Canadian law.
- They don’t need separate trust agreements with each end-user, but they must clearly declare the trust arrangement.
- PSPs in Quebec must follow specific Civil Code rules, either by establishing a "trust" or acting as administrators of users' funds.
2. Segregation of Funds
- End-user funds need to be placed in safeguarding accounts as soon as they are received.
- If unavoidable delays happen, the funds must be moved to the safeguarding account by the next business day.
- Any delays must be documented and shared with the Bank and reported as a shortfall.
3. Indirect Arrangements
See: Key Findings from 2025 Advanced Payments and Fintech Survey
- Using intermediaries to safeguard funds can be problematic because they might not have the necessary authorizations to act as trustees.
- If an intermediary goes bankrupt, it can be difficult and complex to return funds to end-users.
- These issues make it hard for intermediaries to meet the Bank of Canada's safeguarding rules.
4. Insurance and Guarantees
- PSPs can safeguard end-user funds using insurance or guarantees.
- The guidelines don't specify how these products should be designed.
- Any insurance or guarantee used must meet RPAA rules, including ensuring users can access their funds if the PSP becomes insolvent.
5. Clarified Definitions and Scenarios
- Clear examples explain the difference between "holding funds" (money kept by a PSP) and "in transit" funds (money being transferred right away).
- The updated rules clarify that certain funds like those set aside for chargebacks do not need to follow safeguarding requirements.
⚠ Important Reminder
Registration Under RPAA is Mandatory
If you’re a PSP operating in Canada under the RPAA, you must apply for registration to continue your services legally.
Not yet applied? Assess if you’re subject to the RPAA.
Operating without registration could result in enforcement actions.
📅 Preparing for 2025
Risk management and reporting obligations come into effect on September 8, 2025. Prepare early to meet the requirements. Start now by comparing your current operations with RPAA requirements. Identify areas that need improvement to meet compliance and map out the steps to address any gaps.
Stay tuned for more updates and insights!
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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