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
OECD-FSB Discuss New AI Trends in Finance
AI | Oct 10, 2024
Image: OECD - FSB Roundtable on AI in Finance: Summary of Key Findings
Generative AI and 3rd Party Services are Transforming Finance
Artificial Intelligence (AI) in all of its flavours are changing the banking sector and financial services from advancements in everything from fraud detection to customer support. There is an increasing reliance on third-party AI services providing fintechs new opportunities but requiring strong governance. The Organisation for Economic Co-operation and Development (OECD) and Financial Stability Board (FSB) held a public-private round table in May earlier this year to discuss the latest risks and challenges. A summary of key findings was recently published (12 page PDF). This article focuses on new AI trends and implications for financial technology firms.
1. From Streamlining Internal Processes to Customer Facing Apps
While it's largely known that financial institutions (FIs) are using AI/GenAI for automating and optimizing a wide range of internal processes to free up resources, such as code creation, generating regulatory documents, and translating legal materials, FIs anticipate that GenAI will be a major factor in customer facing applications.
See: How AI is Shaping the Future of Financial Services in Canada
AI powered financial advising services can provide a highly customized customer experience. Fintechs that innovate and gain early adoption of individualized client services can remain competitive and also attractive to the banks.
We are finally arriving at the day where AI financial planning tools can instantly recommend the best solutions for unique client needs with a simple 'optimize' button, which will transform the customer journey and experience (not to mention their level of satisfaction and trust).
2. Third Party AI Services Must Balance Innovation and Risk
The financial sector is becoming increasingly dependent on third party AI service providers for cloud infrastructure, data analytics and the latest AI models. While outsourcing or integrating these services boosts innovation, it increases the risks of concentration (working with a limited vendor), accountability and transparency.
See: Industry Resists SEC’s Oversight on AI in Finance | California’s AI Safety Bill Veto and Its Impact
Fintechs and FIs must monitor and control these embedded AI services, especially critical functions. This means that both fintechs and FIs must carefully manage their relationship with these third party AI vendors to avoid becoming overly dependent on a single vendor and to remain flexible. Diversifying service providers while also building internal AI capabilities is advised in most cases to avoid vendor lock-in.
Further, increased regulatory compliance requires that firms ensure proper governance and accountability when working with third party vendors, so striking the right balance of controls and innovation is key.
3. Generative AI's Competitive Advantage Will Disrupt
The roundtable discussed how early AI fintech adopters might outperform established financial institutions in niche sectors and industries. GenAI has proven to be a game changer in asset management, trade analysis, risk assessment and portfolio optimization. This means fintech startups can use AI tools to disrupt traditional financial services by being agile, scaling quickly, and deploying these solutions in less liquid markets.
The panel focused on how early AI adopters might outperform established financial institutions, especially in specialized industries. By automating intricate processes like trade analysis, risk assessment, and portfolio design, GenAI in particular is revolutionizing asset management, trading, and portfolio optimization.
Fintechs now have more chances to compete in markets where conventional companies are taking longer to develop as a result of this change, levelling the playing field against larger competitors.
4. Human Oversight is Critical for Accountability and Trust
According to the expert panelists participating in the roundtable, human monitoring is still essential, so AI decisions can be reviewed and evaluated to ethical principles to avoid mistakes made by AI that can have huge negative implications like in fraud detection.
See: AI’s Ethical Dilemma Grows as Innovation Surges
Transparent AI is key for building and maintaining consumer trust. Fintechs can differentiate themselves by highlighting strong governance frameworks and ethical AI use that keep 'humans in the loop' while also creating efficient, fair and accountable outputs.
Harnessing AI's Potential in Canadian Fintech
Based on the latest discussions at the OECD-FSB AI in Finance Roundtable, it's pretty clear that AI is changing the landscape of financial services. Fintechs and financial institutions should embrace AI for operational efficiencies to earn a competitive edge while reducing risks of third party dependency, governance, and ethical AI. NCFA Canada's community, whether they are a new business or established firm, should think about how they can use these insights to lead and innovative in the fast paced and evolving AI powered financial services industry of the future. And if you haven't heard the news, the 'Godfather of AI', British-Canadian Geoffrey Hinton was just awarded the Nobel Prize in Physics for his foundational work in AI neural networks.
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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Court Approves $16.5 Billion FTX Repayment Plan
FTX | Oct 9, 2024
Image: Pixabay/BenjaminNelan
FTX’s $16.5 Billion Repayment Plan Likely to Boost Bitcoin's Price and Liquidity
FTX announced on October 7, 2024 that the United States Bankruptcy Court in Delaware has agreed to FTX's repayment plan of disbursing between $14.7 billion and $16.5 billion to creditors.
See: FTX Clients To Be Fully Reimbursed with Interest
While its a watershed moment for many in crypto, the size and volume of this repayment plan may have significant implications for Bitcoin's price and market liquidity.
John J. Ray III, CEO FTX:
"The Court's confirmation of our Plan is a significant milestone on our pathway to distributing cash to customers and creditors. Today's achievement is only possible because of the experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX's books from the ground up and from there marshaling assets from around the globe. It also reflects the strong collaboration we have had with governments and agencies from around the world that share our goal of mitigating the wrongdoings of the FTX insiders."
- Amount Collected - Between $14.7 to 16.5 billion has been collected and will be given back to creditors.
- Repayment - 98% of FTX creditors are expected to get 119% of their allowable claims (includes interest) with the reimbursement to begin within 60 days of the plan's effective date (yet to be announced).
See: Caroline Ellison Sentenced 2 Years for Role in FTX Fraud
- Liquidity Surge - With billions of dollars potentially reentering crypto markets across more than 200 jurisdictions, this distribution will significantly boost market liquidity. Analysts believe that more than $2.4 billion could enter the market, driving up Bitcoin's value. Since the collapse of FTX in 2022, Bitcoin's price has increased from $16,000 to $63,000.
- Tax Concerns - Some creditors are concerned over the tax implications of getting cash payouts rather than in-kind cryptocurrency. The court backed the cash settlement option for practical reasons, with 94% of creditors supporting the payback arrangement.
John J. Ray III, CEO FTX:
"Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history. The estate is working to finalize arrangements to make distributions to creditors across more than 200 jurisdictions around the world. In preparation for this process, we are finalizing agreements to retain specialized agents to assist us in getting recoveries to customers around the world as safely and expeditiously as possible. I want to thank all customers and creditors of FTX for their patience throughout this process."
See: CSA Extends Deadline for Crypto Platforms’ VRCA Compliance
Outlook
While the implications of the repayment plan are not guaranteed, the ramifications for Bitcoin are quite clear. That is, more liquidity will likely result in higher prices.
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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AI Pioneer Geoffrey Hinton Wins 2024 Nobel Prize in Physics
AI | Oct 8, 2024
Image: Freepik AI
'Godfather of AI' Geoffrey Hinton Wins 2024 Nobel Prize in Physics for Pioneering Neural Networks
In a monumental achievement for Canada, the 2024 Nobel Prize in Physics went to Canadian physicist Geoffrey Hinton and American John Hopfield of Princeton University who share the award for their groundbreaking work on neural networks, allowing machines to learn and identify patterns.
Geoffrey Hinton, Godfather of AI:
“I’m flabbergasted. I had no idea this would happen”.
Hinton, commonly known as the "Godfather of AI" has been at the forefront of AI research for decades and has played a key role in turning artificial intelligence (AI) from a specialized field of study into a game changing technology that powers facial recognition, language translation, medical diagnostics and much much more.
See: Canada’s AI Laws Delayed? Québec Leads Ethical Innovation
The Nobel committee emphasized how Hinton and Hopfield created neural networks that could handle enormous volumes of data, identify patterns, and make predictions by applying ideas from statistical physics.
Balancing Innovation and Ethical AI
Ellen Moons, a member of the Nobel committee at the Royal Swedish Academy of Sciences said:
"These networks are now part of our daily lives, for instance in facial recognition and language translation. While machine learning has enormous benefits, its rapid development has also raised concerns about our future. Collectively, humans carry the responsibility for using this new technology in a safe and ethical way for the greatest benefit of humankind.”
See: A Look Inside Canada’s AI Commercialization Challenge
Hinton said at a press conference:
"[Machine learning will] have a huge influence, it will be comparable with the industrial revolution. However, it will surpass humanity in intellectual capacity rather than physical prowess."
After resigning from his position at Google to talk more candidly about the risks of AI, Hinton has, however, voiced reservations about the future of AI in addition to praising the latest developments and said, "I continue to worry about a number of possible bad consequences, particularly the threat of these things getting out of control".
Conclusion
While the risks of AI are ever-present and real concerning, the Nobel Prize is a honour for not only Hinton but also for Canada and it's place in the global AI ecosystem. As AI continues to transform businesses and society, Hinton's work exemplifies innovation and the potential of scientific discovery, as well as the responsibility that comes with it.
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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IMF Pressuring El Salvador to Limit BTC Exposure
Bitcoin | Oct 7, 2024
Image: Freepik/pvproductions
During Funding Negotiations, the International Monetary Fund (IMF) Urges El Salvador to Limit Bitcoin Exposure
In 2021, El Salvador become the first government to declare Bitcoin as a legal currency much to the chagrin of IMF. Now during fresh funding/debt related discussions, the IMF is urging El Salvador to restrict the usage of crypto and enhance its regulatory framework to limit exposure to Bitcoin.
See: IMF 9 Point Action Plan for Crypto Asset Treatment: Recommends Against Legal Tender Status
The IMF has been critical of El Salvador's Bitcoin adoption since the start, highlighting risks to financial stability, economic growth, and transparency. Previously, the IMF called for the full dissolution of the country's bitcoin law to mitigate risks but the IMFs latest transcript press briefing is now urging El Salvador to narrow the law's scope to reduce public exposure to crypto.
Julie Kozack, IMF Director of Communications:
"With respect to the details on bitcoin what we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting the public sector exposure to bitcoin."
El Salvador and Bitcoin
As part of its bold efforts to incorporate Bitcoin into its banking system, in November 2022 El Salvador's President Nayib Bukele announced that it would commit to purchasing 1 BTC daily until it becomes unaffordable with fiat currencies. As of October 7, 2024, according to it's bitcoin office website, El Salvador owns over $376 million in Bitcoin, and according to Cointelegraph, the country was approx $31 million in profit after 3 years of implementing it's crypto banking strategy.
See: El Salvador Update: ‘Volcano Bonds’, Bitcoin City, Crypto Visa Program
Further, as per Forbes, President Bukele indicated that it would not include fresh debt issuance in its 2025 national budget, hinting that the country is preparing for the prospect of not receiving IMF funding despite the IMF investigating the country's crypto products like its Volcano Bonds.
Having said that, there are ongoing talks between El Salvador and the IMF to help boost productivity, improve governance, and stabilize the economy.
Domestic Perspectives
Crypto advocates in El Salvador feel that the Bitcoin regulation has changed the country's reputation abroad. According to John Dennehy, creator of the educational non-governmental organization Mi Primer Bitcoin, Bitcoin has changed how people throughout the world view El Salvador, dispelling previous myths about its instability and violence. And according to Lina Seiche, the inventor of "Little Hodler" the country has benefited from more investment and tourism since legalizing bitcoin assets.
See: Tax-Free Bitcoin Zone Proposed by the USABTC
Conclusion
If El Salvador can strike a compromise with the IMF in following some of the IMFs recommended regulations while also keeping its Bitcoin policies in place, it may be a pathway forward while establishing a precedent on the integration of cryptocurrencies with established financial institutions around the world.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Appeals Ripple Ruling; Veri Token Holders File Complaint
Ripple | Oct 7, 2024
SEC Files Notice of Appeal in XRP Case As VeriDAO Token Holders File Complaint Against Acting Crypto Chief
On October 2, 2024, the SEC filed a notice of appeal after judge 2023 ruling by Judge Analisa Torres that Ripple's XRP tokens were considered securities when sold to retail investors. Adding to the complexity of the discussion in focus, Veri token holders who were also a party in the SEC vs Ripple case have filed a complaint against the SEC (Acting) Chief of the Crypto Asset and Cyber Unit for regulatory overreach and questionable enforcement practices that stifled innovation in the U.S. digital asset market.
Background
In December 2020, the SEC sued Ripple Labs CEO Brad Garlinghouse and co-founder Chris Larsen claiming that XRP was sold as an unregistered security. After significant a prolonged back and forth case, in 2023 Judge Analisa Torres ruled a mixed outcome saying that XRP was not deemed a security when sold to retail investors (win for crypto industry), yet institutional sales made by the founders of Ripple were in fact an unregistered securities offering.
See: SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
The recent filing by the SEC on October 2 is an appeal to the courts in attempt to reverse some of the verdict. While the appeal was predicted by industry, it clouds the potential of a recent application by Bitwise to register an XRP exchange-traded fund (ETF) out of Delaware.
Bar Complaint Against Jorge G. Tenreiro
Crypto advocates have now focused their attention on Jorge G. Tenreiro who played an important role in several enforcement cases including XRP, VERI, and TON projects. Veri token holders have filed a complaint against Tenreiro who is currently the (Acting) Chief of the SEC's Crypto Asset and Cyber Unit, highlighting misconduct and overreach (i.e., misleading evidence and aggressive tactics) while linking similarities between his acts in the VERI case and the Ripple case.
The crypto community is hoping to have their complaint validated, which would lead to disciplinary action against Tenreiro and a re-examination of previous SEC actions under his oversight.
See: Inside Federal Securities Laws and Crypto’s Tightrope
Such a result may have significant implications for crypto and how the SEC handles future cases. You can learn more about the New York bar complaint against Jorge Tenreiro for professional misconduct here.
Outlook
The outcome of the SECs Ripple appeal and bar complaint against the SEC's Jorge G. Tenreiro is of major significance to retail investors, token holders and the entire crypto industry, as the dispute will likely influence crypto in the U.S. and around the globe.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
SEC | Oct 7, 2024
Image by Freepik
Gurbir Grewal departs the SEC to work for Milbank LLP After Aggressive Enforcement Tenure
In an Oct 2 press release, the SEC announced that Gurbir S. Grewal, the Director of Enforcement will leave on October 11, 2024 to become a partner in the litigation and arbitration of Milbank LLP. During his three year tenure at the SEC, Grewal oversaw more than 2,400 enforcement proceedings and obtained more than $20 billion in fines and disgorgements. Sanjay Wadhwa, the current Deputy Director, will take over as Acting Director.
- As the crypto sector can easily attest to, during Grewal time at the SEC he oversaw cryptocurrency enforcement with over 100 actions targeting major platforms for securities violations, such as the sale of Ripple's XRP token, Coinbase's staking services, and Kraken's staking program too.
- Grewal boosted penalties to serve as deterrants, and more than $1 billion was awarded to whistleblowers during his time.
- He also emphasized recordkeeping compliance and transparency, which lead to over $2 billion in fines to regulated entities.
- Prior to Grewal's post at the SEC he served as New Jersey’s Attorney General focusing on securities fraud and economic crimes.
See: SEC Enforcement Director Grewal On Crypto Regulation
Gurbir S. Grewal:
“While we have faced and overcome many challenges over the last three plus years, there has been one constant throughout: the public servants of the Enforcement Division stand ready to do everything they can to protect investors and market integrity. Their expertise, professionalism, and dedication are, indeed, unparalleled, and it has been the privilege of a lifetime to have been able to call them colleagues. From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a Division during my tenure. I am grateful to Chair Gensler not just for the opportunity to lead the Division, but also for his unwavering commitment to investor protection and support of a robust enforcement program.”
Conclusion
Grewal's exit could signal a shift in SEC's enforcement after having set the standard for strong protection and aggressive regulatory compliance. He brings a wealth of securities enforcement experience to his new role as partner at Milbank LLP.
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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JPMorgan vs. Regulators Over Zelle Fraud Scams
Payments | Oct 4, 2024
Image: Freepik
JPMorgan Chase Considering Lawsuit Against Consumer Financial Protection Bureau (CFPB) Over Zelle Fraud Claims
JPMorgan Chase is thinking of suing Consumer Financial Protection Bureau (CFPB) after the CFPB claimed that the bank failed to remove fraudulent accounts from the platform and didn't reimburse scam victims on the peer-to-peer payment network Zelle, which is owned by a consortium of 7 major US banks and setup to compete with fintech giants, Paypal and Venmo in 2017. Previously, the U.S. Senate scrutinized JPMorgan for it's handling of these same Zelle payments network fraud claims.
See: CFPB Eyes Digital Payment Regulation for Big Tech
JPMorgan strongly disagrees with this claim and hinted in a recent financial filing that they make consider taking the CFPB to court over the issue. This is certainly an interesting twist where a major bank may sue their regulator. Lots of tension as incumbent banks, fintechs, and regulators balance client protection and fraud concerns in a quickly evolving market.
What's the Issue With Zelle and Fraud?
- A U.S. Senate report claims that Zelle handled transactions totaling more than $800 billion in the previous year of which $166 million was challenged as fraudulent taking place at one of 3 large banks including Wells Fargo, Bank of America, and JPMorgan Chase.
- Only around 38% of these claims received reimbursement.
- According to JPMorgan, it reimburses 100% of transactions that are considered "unauthorized," but the way such transactions are classified is the issue. Refunds are unlikely if a consumer voluntarily pays money to someone, even if they were defrauded because the customer 'authorized' it.
- The bank has now included a warning message to help customers stay safe and understand that refunds may not be available for certain transactions.
- According to Zelle, 99.9% of its transactions are trouble-free and as a precaution now warns consumers of scammers.
Larger Debate
The CFPB believes that banks should do more to identify and prevent fraudulent/fake accounts, and customers should be compensated when they are scammed.
See: JPMorgan’s New Programmable Payments in Blockchain
Part of the push is from Biden's administration for a wider regulatory effort to protect consumers and lower costs associated with digital payments, overdrafts, and credit card fees. JPMorgan's potential lawsuit could set a precedent for how banks interact with regulators and encourage other financial institutions to challenge regulations more aggressively.
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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