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
California’s AI Safety Bill Veto and Its Impact
AI Regulation | Oct 1, 2024
Image: Freepik AI
California's AI Safety Bill Veto Ignites Debate Over Tech Regulation and Innovation Balance
A major AI safety bill in California called "SB 1047" was recently vetoed by Governor Gavin Newsom igniting discussions on how to reign in and control the usage and controls of large language AI models like ChatGPT. The bill planned to impose strict safety testing measures prior to implementation but several members of Congress and many IT leaders (of course) were in opposition. Govenor Newsom said that the bill would have put too much burden and costs on AI companies (regardless of their risk level).
See: Ilya Sutskever’s AI Startup SSI Secures $1 billion
The proposed framework would require developers to evaluate and certify safety testing to avoid misuse of AI including the development of bioweapons and other threats. Newsom's veto letter implied that the approach was insufficient given the wide range of risks in AI systems. His stance is that California should prioritize ethical AI without impeding on the ability to innovate and benefit economically from the technology. He mentions alternative options for regulating AI in a more targeted manner, such as the collaboration between industry, academics and key stakeholders to build proper guardrails for the use of responsible AI.
Implications
So is the bill dead? Although Newsom's rejection of SB 1047 prevents it from becoming law in its current form, it could be resurfaced with changes as part of a larger or different regulatory initiative. This is important because Newsom indicated that he's willing to work on alternative regulatory measures that strike a better balance between safety and innovation.
This veto is an important barometer of AI regulation in the US given that California is home to many of the world's largest AI firms including Google, Meta, OpenAI, Nvidia, and Salesforce. Their massive presence means that any AI law in the state of California would have far reaching implications for the US and global IT sector.
See: NVIDIA’s Controversial Data Scraping Under Fire
Newsom's decision is also part of a larger discussion with over 120 AI related bills currently active in Congress covering a swath of topics from safety and ethics to education and workforce development. Individual state governments are also working on their own regulations with organizations actively tracking progress like the Brennan Center for Justice and the International Association of Privacy Professionals (IAPP).
For tech giants, it means that they can continue to develop advanced AI models 'guns a blazing' with fewer constraints (at least far fewer than having projects go through a rigorous safety screening progress first). While this is great for tech companies and their investors in California, it raises concerns about AI oversight without state controls.
In addition to SB 1047, California is considering a number of other AI proposals such as addressing disclosures from AI-generated political advertising, safeguarding minors from sexual content produced by AI, automated decision making systems, and transparency/openness of AI training data.
Conclusion
Companies and investors need to stay abreast of AI regulations in Canada and around the globe, as they can have huge influence on company operations and ethical concerns.
See: Will Nuclear Fuel the Data-Driven Future?
Participate in the discussion and push for fair laws that promote creativity and innovation while protecting the public.
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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Binance Hits $100 Trillion as CZ Set for Early Release
Crypto | Sep 27, 2024
Image from Binance website
Binance Founder, Changpeng Zhao, Set for Early Prison Release Today
Changpeng Zhao (CZ) is anticipated to be released from prison today two days ahead of schedule because his original release date of Sept 29, 2024 falls on a weekend. Even while he will not be able to take on a leadership position at Binance for at least three years, his $60 billion fortune is still dependent on the platform's success because he is its biggest shareholder. CZ completed a four-month term including 2 months in a light security jail before being sent to a halfway home. What will CZ do next? While in prison he launched an Educational Platform Giggle Academy
Binance New CEO Announces $100 Trillion Total Trading Volume
When CZ was sent to prison, Richard Teng took over Binance as the new CEO, a former financial regulator who was overseeing compliance and regulatory partnerships. He has made it his mission to keep Binance focused on innovation and development while guiding it toward stricter regulatory compliance since taking the helm. This week, Teng announced that Binance exchange had surpassed a $100 trillion in total trading volume since launching in 2017 and under his leadership the company has now surpassed 230 million users via global expansion to jurisdictions like Indonesia, India, Kazakhstan, Thailand, and Dubai.
IPO on the Horizon?
In a recent interview with Coindesk, Teng made it clear that Binance does not have plans for an Initial Public Offering. Due to it's huge trading volume and rapid user growth, the company is profitably stable as it moves from a founder-led to a board-led sustainable enterprise.
Teng admits the complexities of managing a global crypto exchange with different laws in different countries. With 19 licenses worldwide including recent approvals in emerging regions.
Conclusion
Whether CZ moves into philanthropy, invests, or launches other new ventures, he will be influential in shaping the future of Binance's future path and the overall crypto landscape.
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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Sam Altman Eyes $10B Stake of OpenAI’s For-Profit Shift
AI | Sep 27, 2024
Image: Freepik
Sam Altman could net a $10B Stake As OpenAI Shifts to a For Profit Future
OpenAI is considering giving Altman a 7% equity stake which could potentially be worth $10 billion profit. The news is taking place as OpenAI transforms itself from a non-profit into a for-profit public benefit corporation (known as 'B Corp') combining its nonprofit roots with expanding commercial goals which would help secure new investment.
- OpenAI is looking to raise $6.5 billion at a valuation of $150 billion, making it one of the most valuable startups in the world.
- Altman's net worth would increase by $10 billion if he is able to acquire 7% equity interest.
- The company has doubled its headcount from 770 employees in 2023 to 1,700 staff during rapid expansion.
Bret Taylor, OpenAI Board Chair:
"The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity.”
See: Sam Altman Leaves OpenAI’s Safety Committee
Originally setup as a non-profit in 2015, OpenAI's goal was developing AI that would be safe and helpful for people. Back in 2019, the company launched a for-profit subsidiary to to meet its ambitious AI research fundraising goals, however the latest move to a for profit strategy has drawn both interest and criticism.
Leadership Departures Signals Change
More prominent executives at OpenAI have excited the company causing concern among AI experts including Mira Murati Chief Technology Officer and Bob McGrew and Chief Research Officer. The departures come after Altman was fired and then reinstated as CEO last year, which ignited controversy and company restructuring. As reported in Fortune, Altman has stated that these exits were due to individual career decisions and nothing to do with the for profit restructuring.
Sam Altman, OpenAI CEO:
“This is just about people being ready for new chapters in their lives.”
"Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding. I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company."
Why It Matters
The for profit transition of OpenAI is a turning point in the governance, ethics, and development of AI.
See: Apple In Investment Talks With OpenAI $100 Billion Valuation
Government, stakeholders, investors are sure to keep a watchful eye on OpenAI's manoeuvring as it will reshape the direction of a future where artificial intelligence tries to strike the balance between profit, innovation, and responsibility.
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’s Double-Edged Sword of Retail Investing
Report | Sep 25, 2024
Image: Freepik, AI generated
OSC Research on AI and Retail Investing - Exploring Opportunities, Risks, and Scams
The Ontario Securities Commission (OSC) just dropped two reports about Artificial Intelligence and Retail Investing. The first report explores the 'Use Cases and Experimental Research', and the second report looks at 'Scams and Effective Countermeasures'. Below we share some takeaways of how AI is affecting individual investors on both sides of the equation, good and bad.
AI Use Cases in Retail Investing
While there are many emerging use cases of how AI is being used to enhance the retail investing experience, there are two main areas that people investing in stocks, bonds, ETFs, and other financial instruments without professional management are using new AI tools today.
The first is using AI as a decision support tool. Retail investors are using AI systems to analyze portfolios or the entire market to gain data-driven insights, guidance, and recommendations. Previously, access to this type of intel was either too complex or expensive for ordinary, smaller investors to use on a regular basis. An example of this is via self-directed investment platforms with AI chatbots or financial advisors that can evaluate an investor's objectives and compare them with their stock picks and/or portfolio.
See: A Look Inside 2024 DIY Investing Trends in Canada
The second main use case is trading automation, where retail investors can automate their investing decisions via robo-advisors or AI powered investment funds. This allows individual investors to manage their own portfolios efficiently and without the need for ongoing monitoring. These solutions are popular with ordinary investors because they basically provide low cost, lite touch portfolio management services without large advisory fees.
Select Risks and Challenges
The reports highlights a laundry list of risks for retail investors which is heightened due to the limited financial experience and resources available to them compared to institutional investors. Here are a few challenges to understand and mitigate.
If a retail investor has an investment advisor, they can always ask them a specific question and expect to receive a measured, qualified, and tailored response. This explainability and transparency is different than AI trading systems that often function as 'black boxes' where decision logic is hidden from review. Retail investors who become overly reliant on new AI tools without knowing how they actually work may find themselves in a risky situation. A biases AI model, for example, can lead to bad investing decisions.
See: Generative AI Myths That Founders Should Know
AI systems can have systemic risks like herding behaviour where AI pushes all retail investors to make the same choices because the AI model says so. Retail investors who may lack basic trading knowledge could be disproportionately affected by this, which may increase market volatility, especially during financial crises. Think of how many of us 'follow' google maps down unknown roads yet we can see a steady stream of cars that are also heading down the same unknown road. Did we ever stop and think is this a good decision?
The report highlights a challenge called 'Principal-Agent risk' which describes the danger of an AI tools being used by a larger firm that prioritizes their own profits over the best interests of individual retail investors (unknowingly of course). This could result in a conflict of interest where AI is in fact acting against the best interest of a client.
AI Scams Targeting Retail Investors
With the advancements of generative AI, scammers are creating more convincing phishing ploys, deepfake videos, and even fraudulent investment platforms specifically targeting retail investors. AI is helping fraudsters look more legitimate, making it harder to detect scammers, putting unsuspecting retail investors at risk because they often base their investing decisions from a social media influencer or public endorsement.
See: Can AI Truly Replace Human Financial Advisors?
AI supported Ponzi schemes where scammers advertise fake trading platforms or algorithms driven by AI that provide large profits at low risk. Retail investors are drawn to these schemes to generate quick profits but these platforms are often fraudulent, tricking investors who may never see their funds again.
Protecting Retail Investors
The reports suggests that retail investors can protect themselves from AI powered fraud and manipulation by increasing their financial literacy and knowledge of AI powered scams. According to the findings, prebunking (proactively prevent misinformation) and inoculation strategies can reduce the chance that a retail investor would fall for a specific fraud. that uses artificial intelligence.
Regulation. Measures that require more transparency and disclosures from AI platforms including a clear understanding of how the AI decision logic is being made and ensuring their are accountable for it.
Why This Matters
AI is already changing the retail investing landscape, so the OSC research findings are important especially for retail investors.
See: The AI Revolution in Wealth Management: Top 3 Innovations (and more)
While AI systems are enabling more access at a cheaper cost they also pose new dangers for every day investors. As the sophistication of AI continues to grow, there will be a disproportionate impact for vulernable retail investors.
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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Caroline Ellison Sentenced 2 Years for Role in FTX Fraud
FTX Saga | Sep 25, 2024
Image: Freepik/rawpixel.com
Ex-Alameda CEO Caroline Ellison Gets 2 Years for Covering Up One of Crypto's Biggest Frauds, FTX
Yesterday, a key figure in Sam Bankman-Fried's (SBF) cryptocurrency business and the former CEO of Alameda Research, Caroline Ellison received a two-year jail term for her involvement in the FTX scam, which caused consumer and investor losses of billions of dollars. Compared to SBF who received 25 years in prison, Ellison received a lighter sentence as a result of her cooperation with the police during the trial but the crypto sector will always be affected by her role in this well publicized drama.
Caroline Ellison:
"I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us. The human brain is truly bad at understanding big numbers. Not a day goes by [that I don't] think about all of the people I hurt.”
See: Key Moments Inside the SBF Trial: Days 1-12
Ellison played a unique role in what is now seen as one of the biggest bitcoin scams ever. More than $8 billion in consumer cash was lost in FTX's collapse as a result of Alameda Research's speculative and unlawful trading activities that used FTX's customer deposits under Ellison's direction. Ellison was facing a maximum term of 110 years of jail time but her sentence was lowered to only 2 years by cooperating with federal officials. She is also required to forfeit around $11 billion of her assets to the courts.
Bloomberg reported live on the sentencing. Signalling that the severity of the fraudulent activities warranted consequences, Judge Kaplan said:
A “literal get-out-of-jail-free card I can’t agree to.”
“I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison."
Conclusion
After months have gone by since SBFs 25 year sentencing, the FTX drama has resurfaced with Caroline Ellison's 2 year sentencing, raising more general concerns about accountability, governance, and legal safeguards in the crypto space.
See: SEC Enforcement Director Grewal On Crypto Regulation
When the dust settles, the case will probably force regulators in the U.S. and around the world to adopt stronger standards designed to stop fraud of this kind in the future to protect investors. Ellison will remain free on bail until November 7.
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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Crypto Mom & Uyeda Defend Flyfish Club NFTs as Utilities
NFTs | Sep 20, 2024
Image: Freepik
SEC Commissioners Peirce and Yueda Disagree with Flyfish Club NFT Enforcement Case
The U.S. Securities and Exchange Commission (SEC) announced an enforcement action against Flyfish Club, a company that offered NFT memberships for a private dinner experience. Two SEC commissioners, Hester Peirce and Mark Uyeda, publicly disagreed with the ruling saying that the Flyfish NFTs were incorrectly categorized as securities. The case has garnished a lot of attention including in Canada where NFT regulation is still a topic of interest.
Flyfish Club's NFT Offering
Flyfish Club is a high-end exclusive eating club in New York City that sold membership NFTs as the only way to access their restaurant. There were two types of NFTs: A standard NFT for general access to the restaurant club, and an 'Omakase' NFT offering access to a special private sushi dining room. Between 2021-2022, Flyfish Club sold $14.8 million of NFTs to holders who were allowed to resell or lease their tokens, which triggered the SEC to classify the NFTs as securities investments. The SEC argued that the Flyfish NFTs should have been registered as securities because the tokens were sold with the expectation of profit from secondary market sales and royalties.
Peirce and Uyeda Criticize the SEC’s Decision
Peirce and Uyeda strongly disagreed with the SEC's decision saying that the Flyfish NFTs were utility tokens and not securities since they were designed to provide access to a dining experience.
See: Two Artists Sue SEC for NFT legal Showdown
- Smells like 'regulatory overreach'. The two commissioners argued that the SEC's focus should be on cases involving fraud or blatant breaches of securities laws, and not innovative projects that sell membership access. The Flyfish NFTs were access tokens and the SEC overreached.
- Utility vs. Security: They emphasized that a product's potential resale value does not always qualify it as a security, and that the Flyfish NFTs offered utility. Peirce and Uyeda believe the SEC incorrectly applied the Howey Test, which determines whether a transaction constitutes an investment contract.
- Stifle Innovation: The commissioners expressed concern that the SEC is stifling NFT innovation, and that utility access NFTs are a tool for creators (i.e, chefs, artists, entrepreneurs) to monetize access to unique experiences or content.
Implications for Canada
NFT regulation in Canada is still a work-in-progress but the Flyfish Club NFT case raises serious issues about how Canadian regulators should approach and handle NFTs that are merely selling access to events or memberships.
See: Dapper Labs Settles NFT Lawsuit, Signs of Regulation?
Imagine if an event organizer that sold NFT tickets to VIP access to network with speakers was slapped with securities law violation.
Need for Regulatory Clarity
The Flyfish Club case is a good reminder that regulatory clarity is needed for investors, NFT developers and creatives alike.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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[CSA for Comment]: Modernizing Continuous Disclosure for Investment Funds
Regulation | Sep 19, 2024
Image: Freepik/pressfoto
CSA Proposes Key Amendments to Enhance Investment Fund Transparency
The Canadian Securities Administrators (CSA) have proposed key amendments to modernize the continuous disclosure framework for investment funds for 120 day comment closing Jan 17, 2025. The changes are meant to simplify reporting and reduce regulatory burden and improve the quality of disclosed information for investors while aligning with global standards.
Top Takeaways
- The proposal reduces the volume of repetitive information in the Annual Management Report of Fund Performance (MRFPs) and eases the burden on fund managers while still providing investors with relevant and concise updates.
- Use a simplified financial reporting statement that reducing regulatory duplication while ensuring investor information needs are still met.
See: CSA’s 2024 Investor Index. What Fintechs Need to Know
- Instead of semi-annual portfolio updates, funds are to provide enhanced quarterly updates to provide investors more timely insights, greater transparency, and more data access.
- Align Canadian regulations with global to nurture cross border investment opportunities and ensure Canadian funds remain competitive globally.
Why It Matters?
The CSA changes are timely given the growth and diversification of Canada's investment fund market. They prioritize efficiency and openness and will lessen the regulatory burden while improving investor safety at the same time.
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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