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
SEC Files Lawsuit and Accuses Kraken of Commingling
Crypto Enforcement | Nov 21, 2023
Image: Unsplash/Bryan Burgos
The SEC has filed a lawsuit accusing Kraken of operating as an unregistered platform and improperly mixing customer funds with corporate assets.
This move echoes previous actions taken by the SEC against other major exchanges like Coinbase and Binance. Kraken, a prominent crypto exchange, has become the latest target of the U.S. Securities and Exchange Commission (SEC).
SEC Allegations
According to the SEC, Kraken has not only operated as an unregistered broker, clearing agency, and dealer but has also commingled up to $33 billion in customer crypto with its corporate assets. The SEC's lawsuit seeks to permanently ban Kraken from operating as an unregistered exchange and demands a fine along with the return of any ill-gotten gains.
Kraken Stands Firm and Criticizes SEC
Kraken stands firm in its disagreement with the SEC's allegations. The exchange asserts that it does not list securities and plans to vigorously defend its position. Kraken emphasizes the lack of regulatory clarity in the U.S. and criticizes the SEC's approach of "regulation by enforcement," which it believes harms American consumers, stifles innovation, and undermines U.S. competitiveness globally.
See: Kraken’s Strategy for Canadian Market Growth
In its blog post, Kraken outlines its stance, highlighting that the SEC's complaint does not allege fraud, market manipulation, customer losses due to hacking, compromised security, or breaches of fiduciary duty. Kraken argues that the SEC's claim of "commingling" is a misrepresentation, as it merely involves the use of fees already earned by the exchange.
Kraken also points out the legal precedents where courts have rejected the SEC's theory that digital assets traded on platforms are securities transactions. The exchange believes that the current lawsuit will fail for similar reasons. Kraken emphasizes that there is no legal framework for registering as an exchange, broker-dealer, or clearing agency for investment contracts, as demanded by the SEC.
Committed to Accelerating Crypto Adoption
Amidst this legal battle, Kraken remains committed to its mission of accelerating cryptocurrency adoption and ensuring financial freedom and inclusion.
See:
Kraken Agrees to $30 million Settlement with SEC and Stops U.S. Customer Staking Program
Kraken (Payward Inc.) in Advanced Stages of SEC Unregistered Securities Probe
The exchange continues to advocate for practical and effective rules for digital assets and stresses the importance of comprehensive Congressional action to avoid the U.S. falling behind in the global crypto and Web3 advancements.
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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OSC’s New Financial Advisory Reforms
Regulation | Nov 15, 2023
Image: Unsplash/frame harirak
Latest OSC draft statement of priorities reveal new course in the financial advisory landscape for discount brokers and robo-advisors
Lifting Limitations on Financial Advice
- The OSC in collaboration with CIRO is contemplating a significant change by allowing Order Execution Only (OEO) firms, like discount brokers and robo-advisors, to offer non-tailored financial advice such as risk warnings and guidance to enhance the safety net for investors. This move addresses a critical gap in the current financial ecosystem, where DIY investors often resort to unreliable sources like social media for guidance, especially regarding complex products like leveraged investments and meme stocks.
See: Consultation: OSC Wants to Increase Fees for Crypto Firms
- This OSC initiative is part of a larger strategic overhaul over the next six years, influenced by its recent reorganization and recommendations from various authoritative bodies.
- These changes represent a broader commitment to ensuring that the Canadian financial market remains dynamic, transparent, and trustworthy. This approach is crucial for maintaining a robust financial ecosystem that supports both investor interests and market growth.
Feedback Opportunity
Stakeholders are invited to contribute their views on the OSC's draft statement of priorities until December 18.
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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Christine Lagarde Advocates for a European SEC
Regulation | Nov 20, 2023
Image: Unsplash/Christian Lue
Christine Lagarde, President of the European Central Bank (ECB) calls for the establishment of a European equivalent to the U.S. Securities and Exchange Commission (SEC).
The Need for a Unified Regulator
Lagarde's proposal came during her speech at the European Banking Congress in Frankfurt. She emphasized the urgent need for a strong, single regulator to foster the development of a unified capital market in the region. The fragmentation of Europe's capital market has been a longstanding barrier to the continent's economic progress, and Lagarde believes that a European SEC could be the solution.
See: European Central Bank Preparing for Digital Euro
Europe faces a myriad of challenges, including deglobalization, demographic shifts, and the imperative of decarbonization (See: Climate fintechs getting funded 2023). Addressing these issues requires massive investment and a concerted effort across the continent. The current patchwork of national watchdogs has been insufficient in mobilizing the necessary capital and resources.
Christine Lagarde, President of the European Central Bank (ECB):
[It] is clear that the conditions for capital markets to develop in Europe have not yet been satisfied. Most importantly, we have lacked a unifying project around which [Capital Markets Union] can be anchored.
Until now, the strategy of policymakers has been focused on eliminating obstacles within local markets. However, Lagarde pointed out that this approach has fallen short in offering adequate motivation for stakeholders to develop a pan-European market.
See: European Regulators Condemn US ‘incompetence’ in SVB Collapse
The Vision
The European Securities and Markets Authority (ESMA) currently performs some regulatory functions, but its powers are limited and fragmented at the national level.
Lagarde contends that the current moment calls for a shift to a more centralized, 'top-down' strategy. This approach mirrors the establishment of the U.S. Securities and Exchange Commission (SEC) in the 1930s, which was instrumental in curbing state-level attempts to fragment the securities markets.
Lagarde envisions a regulatory body with a broad mandate, including direct supervision to mitigate systemic risks posed by large cross-border firms and market infrastructures. This body would not only streamline oversight but also enhance the efficiency of capital markets across Europe, making it a stronger player on the global stage.
See: European Union: Capital Markets Union Action Plan
A critical component of this vision is the creation of a single rulebook, enforced by a unified supervisor. This approach would mitigate fragmentation and empower private entities to expand their ambitions in fostering high-growth private investments.
Conclusion
Christine Lagarde's bold call for the creation of an equivalent to the European SEC and a unified regulatory framework could be the key to unlocking the potential of European capital markets, driving investment, and fostering economic growth.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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OpenAI’s Shakes Up Leadership. Altman Out. Murti In.
AI | Nov 20, 2023
Image: Unsplash/Andrew Neel
Sam Altman, a co-founder of OpenAI, was removed from his position as CEO by the company's board, and Mira Murati has been appointed as interim CEO.
OpenAI Shakeup
- The unexpected removal of CEO Sam Altman and the subsequent appointment of Mira Murati as interim CEO have sent ripples through the tech community. This development highlights the complexities of AI governance and the critical role of leadership in steering AI's future.
- This decision, rooted in concerns over Altman's communication style and strategic direction, has sparked a contentious debate among investors and stakeholders.
See: OpenAI’s First Developer Day: A New Chapter in AI
- Mira Murati, previously the CTO, has been appointed as the interim CEO. Murati, known for her impressive tenure at Tesla and her commitment to AI safety, brings a fresh perspective to OpenAI's leadership. Murati's leadership style, emphasizing responsible innovation, could guide OpenAI towards a future where AI is developed with a keen eye on societal impact and ethical considerations.
Implications
- The reaction from OpenAI's investors to Altman's departure has been notably intense. Some investors are reportedly considering leveraging their relationship with Microsoft, a major investor in OpenAI, to reinstate Altman.
- Reportedly, Sam Altman plans to launch a new AI startup if he isn't reinstated as CEO.
- The leadership change at OpenAI is more than just a corporate reshuffle; it's a reflection of the broader challenges in AI governance. As AI technologies become increasingly influential in various sectors, the need for transparent, responsible, and ethical leadership becomes paramount. The situation at OpenAI serves as a case study in how swift changes in leadership can impact the direction and perception of AI development.
So Why Was Sam Ousted?
- According to an internal memo from COO Brad Lightcap, Altman's departure was not due to malfeasance or issues related to the company's financial, business, safety, or security practices. Instead, it was attributed to a breakdown in communication between Altman and the board.
- This clarification dispels earlier speculations about the reasons behind the firing, which included concerns about the premature commercialization of OpenAI's research.
See: OpenAI Faces FTC Scrutiny Over Consumer Harm Allegations
- The incident led to the resignation of OpenAI president Greg Brockman and several engineers, highlighting the profound internal impact and the challenges in maintaining employee morale and trust during major leadership transitions.
- In a letter addressed to OpenAI's board, reported by Wired, over 500 OpenAI employees have stated that Microsoft has guaranteed jobs for all OpenAI staff at a new subsidiary, should they opt to join. The letter declares that these employees will depart unless the board reinstates Altman and Brockman, after which they will resign.
Brad Lightcap, COO, OpenAI:
Our collective responsibility right now is to our teammates, partners, users, customers, and the broader world who shares our vision of broadly beneficial AGI.
The Road Ahead for OpenAI and AI Governance
The decisions made now will not only shape the future of OpenAI but also set precedents for how AI companies address the complex interplay of innovation, ethics, and leadership in the AI era.
See: What Startup Rules Did Sam Altman Break During OpenAI’s Path to Its $30B Valuation?
The focus now turns to how Murati will steer OpenAI amidst these challenges, balancing ambitious technological goals with the need for responsible governance and clear internal communication. The broader AI community is closely watching these developments, as they will likely influence the future trajectory of AI research and development, both within OpenAI and in the industry at large.
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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Consultation: OSC Wants to Increase Fees for Crypto Firms
Regulation | Nov 10, 2023
Image: DALL-E3
The Ontario Securities Commission (OSC) has recently put forward a proposal for new fees targeting restricted dealers, including many crypto asset trading platforms.
This development is a clear indication of the increasing efforts to integrate crypto trading platforms into the regulated financial world. These fees are designed to address and recover the higher onboarding costs associated with the registration of restricted dealers, which predominantly include crypto asset trading platforms. The OSC's initiative reflects its ongoing observation of the increased regulatory costs compared to most existing market participants.
Current Fee Structure
- Today, crypto firms are subject to relatively modest registration fees, with amounts hovering around $2,600. This fee is significantly lower than the actual cost incurred by the OSC in registering these firms as dealers with specific terms and conditions.
See: Bitbuy and Localcoin Partner Boosting Crypto Access in Canada
- Firms seeking exemptions to operate as marketplaces pay fees ranging from $4,800 to $7,000, depending on the type of relief sought.
- Current fees also fall short of covering the actual costs associated with these applications.
Proposed Changes
- The proposed fee structure, however, marks a substantial increase. According to the official announcement by the OSC, the proposed amendments, if approved, would introduce two new fees for restricted dealers:
- An additional fee of $24,500 at the time of OSC registration.
- An additional exemptive relief application fee of $24,500 for restricted dealers operating as a marketplace.
- Under the new regime, crypto firms operating marketplace platforms could face up to $49,000 in additional fees.
Impact
The OSC has noted that novel businesses like crypto platforms require more resources to vet. These efforts include initiating compliance discussions, understanding novel business models, and imposing detailed obligations to mitigate investor protection risks. The proposed fees are part of the OSC's broader strategy to foster a fair, efficient, and competitive capital market while ensuring investor protection.
See:
Calgary Police and Chainanalysis Launch the Western Canada Cryptocurrency Investigations Centre
Canada to Require Pension Funds to Report Cryptocurrency Investments
Consultation
The OSC is seeking public comment on these proposals until February 7, 2024, with the new fees expected to take effect on July 2, 2024. This period of consultation offers an opportunity for stakeholders to engage with the regulator and shape the future of crypto regulation in Ontario.
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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Industry Resists SEC’s Oversight on AI in Finance
AI Regulation | Nov 10, 2023
Image courtesy of freepik, fullvector
The U.S. Securities and Exchange Commission (SEC) recently proposed a plan to regulate the use of artificial intelligence (AI) in investment advice, sparking a significant pushback from various industry stakeholders.
Background
In July, the SEC proposed rules that would require banks and fund managers to neutralize or eliminate any conflict of interest involving almost any form of technology when advising clients. SEC Chair Gary Gensler expressed concerns to the Financial Times about the potential for AI to trigger a financial crisis within a decade without swift regulatory intervention. The proposals, known as "Reg PDA," focus on predictive data analytics and aim to mitigate the risk that the scalability of AI-related advice could harm investors more rapidly than previous technologies.
Comment period closed October 10, generating a slew of responses from a wide range of stakeholders. Now, brokers, hedge funds, and investment advisers are challenging the SEC's plan, which they deem unnecessary and impractical to implement.
See: Proposed SEC Rules on Predictive Data Analytics for Dealer-Brokers and Investment Advisors
In response to industry concerns, Gensler emphasized the importance of protecting investors from the financial equivalent of targeted online communications. He argues that the proposal is about ensuring that revenue and profit motives do not skew investment recommendations.
Despite the industry's opposition, consumer groups have shown support for Reg PDA. They argue that current investor protections are insufficient and that advisers' technology could still steer investors, even if it stops short of explicit recommendations.
Industry Pushback
- Major financial planning groups and firms such as Morningstar and Betterment have raised concerns that the SEC's proposal could undermine the fiduciary duty they owe to their clients. They argue that the broad scope of the proposed rules could extend to basic technological tools, going beyond the intended AI and predictive analytics.
- Critics, such as Jonathan Santelli of Raymond James Financial, argue that the SEC's overly broad definition of 'covered technology' could extend to mundane business operations, potentially stifling innovation and complicating routine processes. The proposal's "broad definitions will halt alternative asset managers' business operations and stifle the use and development of financial technology," said Bryan Corbett, president and CEO of the Managed Funds Association.
See: Can AI Truly Replace Human Financial Advisors?
- Jesse Forster from Coalition Greenwich notes that the pushback also reflects the cumulative regulatory burden effect of a flood of SEC rulemaking, with the industry reaching a breaking point.
- Industry bodies like Sifma and the Investment Company Institute have called for the complete withdrawal of Reg PDA, citing it as arbitrary and capricious rulemaking. They warn that the rule could raise constitutional issues by unduly restricting advisers' communications with investors.
- Stephen Berger, policy head for hedge fund Citadel, described the rules as "ill-considered and overexpansive," claiming that the proposal is universally hostile to technology.
Conclusion
The SEC's initiative to regulate AI in investment advice has sparked a heated debate in the financial sector. As always, balancing investor protection with technological advancement remains a key challenge and industry and regulators must find middle ground to address both innovation and investor safety.
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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Bill C-365: Paving the Way for Open Banking in Canada?
Open Banking in Canada | Nov 10, 2023
Image: Unsplash/Jason Dent
Conservative MP Ryan Williams has tabled Bill C-365, titled "The Consumer-Led Banking Act." a pivotal step in Canada's journey towards Open Banking, a system that could lower banking fees and mortgage rates for Canadians
The Conservative Party presented a private member's bill in the House of Commons on Thursday, November 9, 2023 urging the federal government to expedite the implementation of an open banking system, which has been experiencing delays.
Canadians currently face some of the highest banking fees globally, with average monthly fees around $15, transactional fees of $1.40, and $25 for overdrafts. This situation is largely attributed to the lack of competition in the banking sector, with six major banks controlling a significant portion of the market.
Open Banking, as seen in the UK and other countries, allows bank customers to more financial products and services choice in the market leading to lower banking fees. This system fosters a more competitive environment where banks and financial tech companies vie for customers, leading to better services and lower costs. In the UK, the implementation of consumer-led banking has reportedly saved families an average of $400 per year, with a notable decrease in mortgage rates.
Bill C-365
The proposed legislation, Bill C-365, requires support from multiple parties and seeks to compel the Canadian government to present a second report on Open Banking, which has been pending since May 2023. The bill mandates that Ms. Freeland unveil a plan to implement open banking within 30 days and introduce consumer-led banking legislation within six months. This move is seen as a direct challenge to the current Liberal government's inaction over the past four years.
See:
CFPB Unveils Open Banking and Consumer Data Rights Proposal
Vass Bednar: Canada’s Glaring Banking Protections Gap and Implications for Consumers and Fintechs
The Conservative party, through this bill, is pushing for Canadians to regain control over their financial data, currently dominated by banks. They argue that this legislation will break the oligopoly in the banking sector, offering Canadians financial freedom and savings throughout the year.
Pierre Poilievre, Conservative Leader:
“One of the reasons there’s not a lot of competition is that it’s very hard to move between banks or to other financial institutions,” he said. “The big banks control the data of their customers and that gives them a massive advantage over challengers trying to break into the market.”
Conclusion
Bill C-365 is a beacon of light for many Canadians burdened by high banking fees and open banking advocates. It promises not just financial relief but also a shift towards a more competitive and consumer-friendly banking sector. As Canada potentially joins other G7 countries in adopting Open Banking, this could mark a new era of financial empowerment for its citizens.
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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