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
Seedrs to Offer Investors Venture Capital Trusts
Venture Funding | Jan 22, 2024
Image by storyset on Freepik
Seedrs, Europe's leading private investing platform, has announced its plan to bring Venture Capital Trusts (VCTs) to a broader, more diverse investor base.
This initiative, starting with the ProVen VCTs managed by Beringea, marks a significant shift in the venture capital landscape, offering new opportunities for investors interested in high-growth companies.
What are VCTs
Since their inception in 1995, Venture Capital Trusts have been instrumental in establishing the UK as a hub for entrepreneurship and venture capital. VCTs are a closed-end fund created by the U.K. government in the 1990s to help direct investment into local private businesses.
With over £6 billion managed by VCTs, supporting more than 1,100 startups and scale-ups, these trusts have fueled success stories like Depop, Zoopla, and Quantexa. VCTs offer investors tax reliefs and potential for healthy returns, with the ten largest VCT managers delivering an average net asset value total return of 81.4% over the past decade.
Historically, VCTs have catered to an older demographic, with the average VCT investor being 56 years old. Seedrs aims to change this by opening up VCTs to younger and more diverse demographics. This aligns with Seedrs' mission to democratize venture capital, making it accessible to a wider range of investors. The ProVen VCTs, with over £330 million under management, offer a diversified portfolio across emerging technologies and established industries.
See: Seedrs Update: UK Equity Crowdfunder Raises Over US$100 Million Online Capital In February
Seedrs is making VCTs accessible to smaller investors, with a minimum investment threshold of just £500. This is a significant development as it opens up opportunities for a broader range of investors to participate in venture capital investments. Seedrs is not the first crowdfunding platform to offer VCTs. Crowdcube, in partnership with Octopus, also offers shares in VCTs with a similar minimum investment of £500.
Investors in VCTs can claim immediate tax relief of 30% up to £200,000 each year, along with tax relief on dividends and exemption from capital gains tax when shares are sold.
VCT structure, along with the SEIS and EIS schemes in the UK, are effective in encouraging investment in early-stage firms, a policy that could be beneficial if replicated in other countries like the US.
Key Differences of Venture Capital Funds in Canada vs UK VCTs
- Unlike VCTs in the UK, Canadian venture capital funds do not typically offer the same tax incentives, such as income tax relief and exemption from capital gains tax.
- Canadian funds may have different investment focuses compared to UK VCTs, often tailored to the Canadian market and its specific sectors of strength.
See: AI Metamorphosis in Venture Capital
- The regulatory environment in Canada is different from the UK, impacting how these funds are structured and operate.
Outlook
Seedrs' announcement is a sign of the changing times in venture capital and investment. For those in the NCFA Canada community, staying informed about these developments is key to capitalizing on the changing landscape of finance and entrepreneurship. It's important for investors to conduct thorough due diligence and consider consulting with financial advisors before investing in these funds.
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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Sustainable Business and The Regenerative Future
Regeneration | Jan 22, 2024
Image by Freepik
Transformative Business Strategies for 2024. A Call for Regenerative Business Practices at Davos 2024
At the 2024 World Economic Forum in Davos, a new narrative in sustainable business emerged, focusing on regeneration rather than mere sustainability.
Business leaders are now recognizing that to thrive in a climate-impacted world, it's not enough to merely reduce harm; instead, there's a need to create a positive impact.
A Pew Research Center survey of 8,842 U.S. adults in late 2023 reveals that 63% believe climate change impacts in the U.S. will worsen in their lifetimes. While most anticipate making minor sacrifices due to climate change, only a smaller portion foresee major lifestyle changes.
- The survey highlights a partisan divide: 88% of Democrats versus less than half of Republicans expect to make sacrifices due to climate change.
- The public views the energy industry and large businesses as more capable of combating climate change than individuals.
- Despite the lower ranking of climate change compared to other national issues, there's strong support for U.S. involvement in global efforts to mitigate it.
See: How Open Banking is a Game-changer for Sustainability
A growing number of corporate leaders are witnessing the impact of severe weather conditions on their financial performance. According to a Deloitte survey conducted in 2022, a striking 97% of executives worldwide reported that their businesses have suffered adverse effects from climate change, including significant disruptions in their supply chains.
The focus of sustainable business has shifted towards regeneration
This new approach goes beyond merely responding to climate change; it involves creating proactive, positive impacts.
- Example: Patagonia, leading the movement with its regenerative organic practices in cotton production. In 2022, it's founder, Yvon Chouinard, transferred all company shares to a trust dedicated to fighting the climate crisis, declaring "Earth is now our only shareholder" and emphasizing a shift from profit extraction to protecting nature.
- Example: As Jesper Brodin, co-chair for the World Economic Forum Alliance of CEO Climate Leaders and chief executive officer of the IKEA's Ingka Group, emphasizing the need for business models that do not deplete natural resources. "How could it be possible to build a future business model on depletion of [natural] resources?" It's simply the absolute worst idea.
Gim Huay Neo, managing director of the World Economic Forum Geneva:
"We have to build new economic models, new businesses and possibly new lifestyles or humanity that are just as good, or even better, than what we have today. This regeneration approach is not just about tweaking existing models but rethinking and reinventing business practices to create a positive impact, moving towards sustainability that benefits both the environment and the economy."
Integrating 2024 Sustainability Trends into Business Practices
Incorporating the latest sustainability trends into business practices is crucial for companies, both large and small, in 2024.
1. Businesses must embed sustainability into their core strategies, aligning profitability with societal impact through economically viable and socially responsible business models, while staying ahead of regulatory changes for compliance and responsible conduct, including adapting to new sustainability reporting requirements and legal drivers.
See: Canadian Banks Face Scrutiny Over Sustainability Claims
2. Collaboration is essential, with companies forming alliances across industries, governments, and civil society to address sustainability challenges, drive innovation, and share best practices, alongside preparing for new regulatory disclosure requirements on their environmental impact and leveraging technology for data collection and analysis.
3. Genuine stakeholder engagement is key, moving beyond simple solutions to impactful collaborations and initiatives, ensuring board diversity translates into real environmental and social impact, prioritizing employee well-being and mental health within corporate culture, and requiring CEOs to balance public positions on social and political issues with stakeholder expectations and potential risks.
Outlook
Companies, small and big, are advised to incorporate sustainability and regenerative strategies into their business practices and join this transformative movement. By doing so, your company will not only align with the growing global demand for environmental responsibility but also reap the benefits of increased resilience, innovation, and customer loyalty. Embrace these strategies to ensure long-term profitability and a positive impact on both society and the planet. Act now to lead the change towards a sustainable future and set a benchmark in your industry.
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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Open Banking: Revolutionizing Financial Data Sharing
Open Finance | Jan 17, 2024
Image by stockgiu on Freepik
Open Banking 101: An Explainer on the Future of Financial Services
Today we're sharing a great measured and informative 101 Open Banking piece based on a recent Q&A interview between Mark McQueen, Founder at Wellington Growth Partners (Interviewer) and Fintech VC Christian Lassonde, Founder and Managing Partner of Impression Ventures (Interviewee) called 'What is Open Banking and Why Should I Care?'. While readers should definitely delve into the entire interview, below is a summary along with an update on a few global open banking trends.
What is Open Banking?
At its core, Open Banking is a digital tool that allows individuals to access and share their bank statements securely. It represents a shift from the insecure practice of sharing online banking credentials to a more secure method of data sharing. This innovation is not just about "improving the plumbing" of financial services but revolutionizing how consumers and businesses interact with financial data.
See: Canada’s Open Banking Journey: Interview with Abe Karar, Chief Product Officer, Fintech Galaxy
Open Banking finds its utility in various domains. To provide just a few examples:
- Identity Verification: Services like Wealthsimple use Open Banking for confirming user identities.
- Credit Monitoring: Platforms such as Borrowell and Credit Karma utilize it for analyzing bank statements.
- Lending Decisions: Lenders use transaction history for underwriting models.
- Small Business Accounting: Tools like Freshbooks and Quickbooks access banking data for daily reconciliation.
Countries like the UK, which have embraced Open Banking and report significant benefits
If embraced by North American governments, consumers could see benefits similar to those in the UK, including better financial management and access to competitive financial products. Small businesses, in particular, could see substantial gains from tailored financial tools.
- Increased Service Adoption: More consumers are using Open Banking services.
- Enhanced Financial Management: Users report better budget management and expenditure reduction.
- Savings and Expenditures: Open Banking has helped users save more and build financial cushions.
- Trust in Services: High levels of satisfaction and trust have been noted among users.
Top Positive and Negative Comments from the Interview
+ Open Banking is a significant step towards empowering consumers with control over their financial data.
+ It promises to bring innovation and competition to the financial services sector, benefiting consumers and small businesses alike.
+ Enhanced security measures in Open Banking could reduce the risks associated with traditional banking methods.
See: FCAC Survey Results: Understanding the Canadian Consumer’s Perspective on Open Banking
- The need for robust protections and security standards against data breaches and fraud is paramount.
- Establishing clear governance and liability guidelines is crucial.
- The shift to Open Banking could disrupt established financial institutions (impact on TradFi)
Implementation Steps in Canada
The framework for Open Banking in Canada is almost ready, but the choice of an oversight body remains a key issue.
In the November 2023 Fall Economic Statement, the Canadian government committed to introduce open banking legislation in the 2024 budget. This legislation will allow consumers to securely share their financial data with trusted third-party providers. It aims to increase consumer control over financial data, boost competition, and encourage the development of innovative financial solutions, signaling a shift towards a more consumer-focused financial environment in Canada.
The government also announced the expansion of Payments Canada eligibility (membership). This expansion will enable a broader range of financial institutions, including payment service providers to participate in Payments Canada. This organization is leading the development of a new Real-Time Rail payment system. The change is expected to lower transaction costs and speed up the transition to faster, more secure payment systems, thereby improving the efficiency and inclusivity of Canada's financial infrastructure.
Global Perspectives on Open Banking
United Kingdom
The UK is a pioneer in Open Banking, having mandated data sharing among banks. This has led to increased service adoption, enhanced financial management, and high user satisfaction reaching a new milesstone 11.4 million payments as of July 2023. The UK's approach, regulatory-driven, contrasts with the consumer-driven momentum in the U.S. and Canada. However, questions remain about the long-term impact on traditional banking institutions and the balance between innovation and regulation. The UK government has published recommendations for the next phase in open banking here.
United States
In the U.S., the momentum for open banking is largely driven by consumer demand (not regulators), particularly from younger, digitally native customers. This contrasts with the approach in the UK and Europe, where open banking has been more regulatory-driven. Open banking in the U.S. is seen as a way to provide valuable insights to financial institutions, leading to new products and marketing innovations. Data aggregation is particularly useful for offering personalized services. Some of the largest U.S. banks have historically resisted open banking, especially when mandated by regulation. Concerns include protecting customer data relationships and the complexities and security risks associated with sharing customer data through open APIs.
See: Visa Survey: Insights into Consumer Preferences for Open Banking
Without a clear regulatory framework, there is uncertainty among American banks about potential liabilities. However, the open banking ecosystem in the U.S. has evolved with financial players often partnering with fintech companies like Plaid, Akoya, and Fiserv.
In fall 2023, the CFPB proposed a rule focusing on consumer control of personal financial data. This rule aims to boost competition by preventing financial institutions from hoarding data and requiring them to share it at the consumer's direction. The response from the industry, including the American Bankers Association and digital banks like Chime, has been mixed. While there is support for the idea of establishing clear rules, concerns remain about operational expenses, liability, and the scope of the rule.
There are industry calls for the CFPB's proposal to go beyond open banking and be more inclusive, covering different types of financial products like payroll data, Buy Now, Pay Later services, and digital wallets, which are crucial for many consumers.
Australia
Australia's journey in Open Banking is noteworthy for its Consumer Data Right (CDR) legislation, which empowers consumers to control their data. This approach has spurred innovation and competition in the financial sector. However, challenges around data security, consumer awareness, and participation of smaller financial institutions remain areas of concern. Learn about NatWest Group's vision for moving forward with Open Banking.
You can watch an episode of NCFAs Fintech Fridays podcast to learn more CDR here: Canada’s Open Banking Journey: Taking inspiration from Australia’s Consumer Data Right with Kate O’Rourke, Treasury’s First Assistant Secretary for the CDR
Outlook
Open Banking stands at the forefront of financial innovation, offering a plethora of benefits for consumers and businesses. However, its successful implementation hinges on addressing security, governance, and regulatory challenges. Stay tuned to NCFA Canada for more updates and insights on Open Banking and other fintech innovations.
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 Issues Warning on AI’s Impact on Global Jobs
AI | Jan 16, 2024
Source: IMF
IMF: 40% of Global Employment Could be Disrupted by AI Likely Deepening Inequlity. A Wake-up Call to Governments to Take Action
The International Monetary Fund (IMF) has raised significant concerns about the impact of Artificial Intelligence (AI) on global employment. According to a recent IMF report analysis, nearly 40% of jobs worldwide could be disrupted by AI. This trend, as IMF chief Kristalina Georgieva notes, is likely to deepen inequality and requires immediate attention from governments worldwide.
See: How AI is Shaping the Future of Financial Services in Canada
Key Quotes from the IMF Chief, Kristalina Georgieva:
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"In most scenarios, AI will likely worsen overall inequality."
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"For the other half [of jobs in developed economies], AI applications may execute key tasks currently performed by humans, which could lower labour demand, leading to lower wages and reduced hiring."
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"In the most extreme cases, some of these jobs may disappear."
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"Many of these countries [emerging markets and lower-income nations] don't have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality."
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"AI will transform the global economy. Let's make sure it benefits humanity."
Global Perspective and the Need for Proactive Measures
The IMF's analysis indicates that the effects of AI on employment will be more pronounced in advanced economies, with up to 60% of jobs potentially impacted. This is particularly concerning for white-collar jobs, which are seen as more vulnerable to AI disruption than manual labor. In contrast, emerging markets and lower-income nations might face different challenges, including a lack of infrastructure and skilled workforce to leverage AI effectively.
See: Navigating the End of Jobs: 2023 Human Capital Trends (From a Financial Services Perspective)
While AI poses significant challenges, it also offers opportunities for enhancing productivity and economic growth. Georgieva acknowledges that AI could boost global GDP by 7% annually over a decade, as estimated by Goldman Sachs economists. This dual nature of AI – as both a disruptor and an enabler – underscores the need for balanced and thoughtful policy responses.
Report Recommends that governments establish a safety net, retrain, and address inequalities
- Governments are urged to create robust social safety nets to support those affected by AI-driven job disruptions.
- Invest in retraining programs is crucial to help the workforce adapt to the evolving job market.
- Proactive measures are needed to prevent AI from exacerbating social and economic inequalities.
Outlook
While we've all heard about AI and job disruption or personally know someone impacted for a while now, we can all expect this trend to scale. The IMF's report is a wake-up call across the board.
Read the full 42 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, 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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Chatham House: Global Digital Platform Regulation Insights
Report and Analysis | Jan 15, 2024
Digital platforms have become central to our social, economic, and political lives, the call for effective regulation has never been more pressing
Chatham House's recent publication, "Towards a Global Approach to Digital Platform Regulation," sheds light on this complex issue, offering valuable insights for policymakers, industry leaders, and stakeholders.
Governments worldwide are increasingly recognizing the need to regulate digital platforms. The research conducted by Chatham House is extensive, reviewing 55 laws and legislative proposals from around the world as of October 2022. The report highlights a striking diversity in regulatory approaches. From the EU's values-based lawmaking to China's comprehensive digital technology offerings, no single model has yet emerged as a global standard. This diversity poses a risk of entrenched fragmentation, potentially leading to a patchwork of internet regulations that vary significantly across borders.
5 Main Regulatory Approaches
This analysis reveals five notable regulatory approaches: strict custody, independent regulation, user rights and capacities, extensive platform monitoring, and data localization in content moderation. These trends reflect the varied strategies nations are employing to govern digital platforms, each with its own set of implications for users, companies, and governments.
1. Strict Custody
- This approach involves stringent government control over digital platforms. It often manifests in rigorous content control, heavy censorship, and strict compliance requirements for platforms. Countries adopting this model prioritize national security and social stability, sometimes at the expense of individual freedoms and open internet principles. The challenge here is balancing state control with the dynamic nature of digital content and user interaction.
- Examples: China, South Korea, Singapore, New Zealand, Philippines
See: G20’s Vision for Financial Inclusion through Digital Public Infrastructure
2. Independent Regulation
- Independent regulation refers to the establishment of autonomous bodies to oversee digital platforms. These entities operate separately from government influence, ensuring a degree of impartiality in regulation. This model aims to create a fair and transparent regulatory environment, where decisions are made based on established guidelines rather than political motives. The effectiveness of this approach hinges on the independence and expertise of the regulatory bodies.
- Examples: UK, Canada, European Union, Australia, France
3. User Rights and Capacities
- Emphasizing user empowerment, this approach focuses on enhancing users' rights and abilities to manage their digital experiences. It includes mechanisms for user feedback, content control options, and transparency in platform operations. This trend reflects a shift towards user-centric regulation, recognizing the importance of individual agency in the digital realm.
- Examples: UK, Canada, European Union, Australia, France, China, Russia, Indonesia
4. Extensive Platform Monitoring
- In this model, there is a significant emphasis on continuous monitoring of platform activities. It involves close scrutiny of content, user behavior, and platform algorithms. The goal is to preemptively identify and mitigate potential harms, ranging from misinformation to illegal activities. While this approach can be effective in safeguarding users, it raises concerns about privacy and the potential for overreach.
- Examples: China, Russia, South Korea, Iran, Belarus
5. Data Localization in Content Moderation
- Data localization mandates that digital platforms store and process data within the borders of the regulating country. This approach is often integrated with content moderation policies. The rationale behind data localization is to exert greater control over digital information and enhance the enforceability of local laws. While it aims to protect national interests and user data, this approach can lead to challenges in global interoperability and may impose significant costs on platforms.
- Examples: Vietnam, Russia, Turkey, Pakistan, Iran
Shaping Global Norms Towards A Harmonized Apporach
The United States continues to be a dominant force in shaping global digital norms, largely through its technology provision. In contrast, the European Union plays a critical role as a counterbalance, focusing on regulation that reflects its values and principles. The report underscores the EU's leadership in translating policy priorities into actionable laws. However, it also points out the challenges in converting these laws into technical standards, an area where China excels with its 'full stack' digital solutions.
See: CFPB Eyes Digital Payment Regulation for Big Tech
The report suggests leveraging the established and universal principles of human rights as a framework for global regulatory approaches. This approach, however, is not a complete solution and needs to be supplemented with measures to preserve an open, global internet, tackle national divergence on platform regulation, and strengthen international digital cooperation.
The document details the fragmentation in governance of digital platforms, emphasizing the need for coordination and interoperability to strengthen states' ability to manage corporate power and reduce compliance burdens on the industry.
The Chatham House report underscores the need for a harmonized approach to digital platform regulation. While each model has its merits and drawbacks, a global framework that incorporates the best elements of each could lead to more effective and equitable digital governance. Such a framework would ideally respect national sovereignty while upholding universal principles like freedom of expression, privacy, and open access.
Report Recommendations
Looking ahead, the report discusses potential pathways for the future of platform regulation, focusing on major digital centers such as the EU, China, the UK, and the US. It highlights the importance of establishing global frameworks that incorporate human rights considerations while striving for alignment on platform regulation principles and working diligently to preserve the open, global nature of the internet.
1. Enhance International Collaboration and Shared Understanding
- Create a common language for platform regulation, focusing on security and user protection.
- Strengthen global networks of regulators for sharing expertise and aligning regulatory practices.
- Support collaboration and transparency among regulatory bodies to ensure consistent rules and technologies.
2. Adopt a Human Rights-Centric Approach for Regulation
- Ensure laws and platform policies for online content are clear, fair, and respect human rights.
- Move beyond simple content removal to include diverse strategies like labeling harmful content.
- Concentrate on the overall impact and processes of platforms, rather than just focusing on individual content pieces.
3. Invest in Global Standards and Software Cooperation
- Actively participate in international internet governance and maintain neutrality in standards bodies.
- Increase funding and support for technology projects that meet shared global needs.
- Strengthen international partnerships for developing technology and digital regulations.
Conclusion
As digital platforms continue to evolve and exert influence over various aspects of our lives, the need for thoughtful, effective, and harmonized regulation becomes increasingly crucial. Stakeholders across the spectrum, from governments to tech companies, must engage in this dialogue, ensuring that the digital future is secure, equitable, and respects the fundamental rights of all individuals.
See: Canada to Launch ‘Digital Ambition 2022’ Public Consultation For Digital ID Framework of Federal Public Services
The National Crowdfunding & Fintech Association recognizes that the goal should be to create a regulatory framework that is adaptable, respects human rights, and fosters innovation while protecting users and societies from the potential harms of unregulated digital platforms. This balanced approach is essential for ensuring that the digital world remains a space for positive growth, open exchange, and the advancement of global digital cooperation.
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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Peirce Laments, SEC ‘Squandered A Decade’
Regulation | Jan 15, 2024
Commissioner Hester M. Peirce
Commissioner Peirce's Critique of the SEC's Long Road to Bitcoin ETF Approval
The U.S. Securities and Exchange Commission (SEC) has finally approved the trading of spot Bitcoin exchange-traded funds (ETFs), marking the end of a decade-long saga filled with regulatory hesitance and missed opportunities.
Commissioner Hester Peirce, often referred to as "Crypto Mom" for her advocacy of cryptocurrency, has been vocal in her criticism of the SEC's prolonged resistance to Bitcoin ETFs. In her statement titled "Out, Damned Spot! Out, I Say!" (a Shakespearean Quote by Lady MacBeth indicating 'metaphorically indicating the guilt she feels for her part in his murder), Peirce expressed frustration over the SEC's inconsistent treatment of Bitcoin-related ETP applications compared to other ETPs. She emphasized that "ETPs are an important innovation" allowing investors to gain exposure to various assets, including cryptocurrencies, in a convenient vehicle.
Peirce pointed out the perplexing nature of the SEC's long string of denials, noting that "predicting approval timelines for spot Bitcoin ETPs was impossible" due to the shifting goalposts set by the Commission.
See: SEC Greenlights Bitcoin ETFs. Is Ethereum Next?
She criticized the SEC for driving retail investors to less efficient means of attaining Bitcoin exposure and for squandering a decade of opportunities by not applying the standard used for other commodity-based ETPs.
Peirce's Persistent Advocacy and the Impact of the SECs Delay
Commissioner Peirce has been a consistent advocate for a more open approach to cryptocurrency regulation. Her recent statements reflect a long-standing concern that the SEC's hesitance has not only stifled innovation but also potentially harmed investors by limiting their access to Bitcoin through more regulated and potentially safer channels.
The decade-long delay in approving Bitcoin ETFs, according to Peirce, has had several consequences:
- The arbitrary treatment of Bitcoin ETF applications may continue to harm the SEC's reputation beyond the crypto space, potentially affecting its ability to regulate markets effectively.
- Peirce criticized the SEC for diverting significant resources to block these applications, which could have been used for other critical regulatory work.
See: Hester Peirce Reaffirms That the SEC’s Current Approach to Crypto Is ‘Not a Good Way of Regulating’
- The actions over the past decade have muddled public understanding of the SEC's role, with the Commission appearing to overstep its mandate by withholding investments it disfavored.
- The SEC's approach has created unnecessary hype and speculation around Bitcoin ETFs, which could have been avoided with a more straightforward approval process.
- The SEC's stance has potentially alienated a generation of product innovators, signaling that regulatory prejudice can lead to unreasonable delays in product launches.
Outlook
Commissioner Peirce emphasizes the importance of American investors' right to express their views on Bitcoin through buying and selling spot Bitcoin ETPs. She also commends the perseverance of market participants who have been persistent in the face of the Commission's obstruction. Her critique of the SEC's hesitance aligns with the growing mainstream acceptance of cryptocurrencies but also paves the way for future crypto-related products.
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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Canadian Banks Face Scrutiny Over Sustainability Claims
Sustainable Finance | Jan 12, 2024
Image by rawpixel.com on Freepik
L4PC Targets Canada's 5 Big Banks. Files Compliant with Regulators About Potential Misleading Sustainability Claims
Canada's big five banks - RBC, TD, BMO, CIBC, and Scotiabank - have come under scrutiny for their sustainable finance practices. A climate advocacy group, Investors for Paris Compliance (I4PC), has filed a complaint with securities regulators, raising concerns about potentially misleading claims and the effectiveness of these banks' sustainability efforts.
See: Survey Results: Unlocking Green Growth Opportunities for Retail Banks
- I4PC alleges that the banks are using the term "sustainable finance" too broadly without backing up their claims with substantial data. This lack of clarity and evidence raises questions about the authenticity of their commitments to sustainability.
- The complaint highlights that some of the deals labeled as sustainable were with oil and gas companies, whose emissions are on the rise. This includes sustainable finance deals with Enbridge Inc., Gibson Energy, and Occidental Petroleum, involving major banks like RBC, CIBC, Scotiabank, BMO, and TD Bank.
- I4PC urges regulators to investigate the adequacy and accuracy of the banks' disclosures regarding sustainable finance. They also call for mandatory disclosure of the emissions impacts of their sustainable finance business or clarification on areas where such impacts cannot be disclosed.
CBA Response
The Canadian Bankers Association, representing the banks, asserts that Canadian banks adhere to North American market standards for environmental, social, and governance (ESG) disclosure.
See: Sustainability: A Must for Fintech Growth
They emphasize compliance with applicable rules and regulations and ongoing collaboration with industry and regulators to enhance sustainability reporting standards.
Outlook
Investors are increasingly vigilant about the authenticity of ESG claims, and financial institutions are under pressure to provide clear, measurable outcomes for their sustainability initiatives. The outcome of this complaint could set a precedent for how sustainable finance is approached and regulated in Canada and potentially influence global practices in the banking sector.
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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