Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Digital Identity, Privacy, KYC, AML/ATF
The Global Effort to Level the Playing Field with Tech Giants
Competition | Feb 12, 2024
Image: Unsplash/hisuccc
The global community has begun to question whether big tech corporations are being held suitably accountable for their actions.
Today technology companies have grown to unprecedented sizes, their influence permeates every facet of our daily lives. From how we communicate and consume media to the way we shop and interact with the world around us, tech giants like Google, Meta (formerly Facebook), Amazon, and others have become central to our digital existence.
The Rise of Regulatory Interventions
Recently, there's been a shift in how governments approach the regulation of tech giants:
- The European Union's Digital Markets Act (DMA) is a prime example, identifying 22 "gatekeeper" services that will face stringent new rules aimed at ensuring fair competition and innovation.
- Meta complied with the UK Competition and Markets Authority (CMA) to sell the animated images platform Giphy, signaling a growing willingness among tech companies to adapt to regulatory demands. These actions represent significant steps toward curbing the unchecked power of Big Tech, setting a precedent for other nations to follow.
See: DoF Consultation: Financial Competition in Canada
- Also, the Canadian government took decisive action against Facebook (now Meta Platforms Inc.) over privacy violations. Stemming from the global Cambridge Analytica scandal, the Privacy Commissioner of Canada found in 2019 that Facebook had contravened Canadian privacy laws by inadequately protecting Canadians' personal information. This failure allowed third-party applications to access users' data without obtaining explicit consent, spotlighting serious flaws in Facebook's approach to privacy and its compliance with national regulations. Despite the investigation's findings, Facebook contested the Privacy Commissioner's authority and recommendations, leading to a legal standoff that highlighted the challenges faced by national regulators in enforcing compliance among global tech behemoths.
- The approach to tech regulation varies significantly across jurisdictions. Japan, for instance, has recently begun to implement new legislation focused on data protection and social media platforms.
- Australia's News Media Bargaining Code forced major tech companies to negotiate payment with Australian media companies for their content. These examples illustrate the diverse strategies employed worldwide to manage the impact of Big Tech, reflecting different national priorities and regulatory philosophies.
The Role of Competition Law and Litigation
Competition law has emerged as a key tool in establishing checks and balances against the monopolistic tendencies of Big Tech. The landmark judgment in Meta Platforms and Others v Bundeskartellamt by the Court of Justice of the European Union (CJEU) underscored this point, linking breaches of the EU General Data Protection Regulation (GDPR) to abuses of dominant market positions. This case, among others, highlights a growing recognition of the need to adapt legal frameworks to address the unique challenges posed by the digital economy.
See: CFPB (Office of Competition and Innovation) is Shifting Policies that Provide Special Regulatory Treatment for Individual Firms
In 2021, the Canadian Competition Bureau launched an investigation into Google's alleged anti-competitive practices, focusing on the tech giant's dominance in the online advertising market. This investigation is a critical example of how competition law is applied to ensure that the digital economy remains competitive and innovative.
Beyond governmental action, private litigation has proven to be a potent tool in holding tech companies to account. High-profile cases, such as Google's settlement over privacy allegations in its "incognito" mode, have brought significant public attention to the practices of these corporations. These legal battles, while challenging, play a crucial role in ensuring that tech giants cannot operate above the law.
Ben Lasserson, Partner, Mishcon de Reya:
Each of the Big Tech giants is essentially a monopolist in their own ecosystem
Image: Unsplash/Matthew Henry
Best Practices for Regulating Tech Giants
The goal is to create a digital ecosystem where tech companies can thrive and innovate while ensuring they do not abuse their market power to the detriment of consumers and smaller competitors. Here are some key best practices:
1. Clear and Adaptable Regulatory Frameworks
- Regulations should be clearly defined to avoid ambiguity that tech giants could exploit. Laws need to precisely target anti-competitive behaviors without stifling innovation. Given the rapid pace of technological change, regulatory frameworks must be adaptable. This could involve sunset clauses for regulations to be reviewed and updated regularly based on the evolving digital landscape.
See: Is productivity, wealth creation and competition at the forefront of Canada’s growth agenda?
2. Promoting Fair Competition
- Implementing strict anti-monopoly measures to prevent market dominance that stifles competition. This includes scrutinizing mergers and acquisitions that could lead to unfair market consolidation.
- Ensuring that smaller players have fair access to markets dominated by tech giants. This could involve mandating interoperability standards or opening up platforms to third-party developers under fair, reasonable, and non-discriminatory (FRAND) terms.
3. Consumer Protection
- Strengthening privacy and data protection laws to ensure that consumers' personal information is not exploited for profit without explicit consent. This includes enforcing transparent data practices and giving consumers control over their data. (See: 67 of top 1000 US websites violate EUs GDPR law)
- Requiring tech companies to be transparent about algorithms, data collection practices, and the use of personal data. This transparency can empower consumers to make informed decisions about their digital interactions.
4. Encouraging Innovation
- Creating a supportive environment for startups and smaller tech companies through grants, tax incentives, and access to resources. This can help foster innovation and provide viable alternatives to services offered by tech giants.
- Promoting the use of open standards to encourage interoperability and compatibility across different platforms and services, facilitating innovation and competition.
5. International Cooperation
- Working towards global regulatory standards for digital markets can help prevent tech giants from exploiting regulatory gaps between countries. International cooperation can lead to a more consistent approach to antitrust enforcement, data protection, and cyber security.
See: BoE Report: Open Banking Boosts Productivity, Competition
- Establishing agreements on cross-border data flows that protect consumer privacy while not impeding global digital commerce.
6. Effective Enforcement
- Ensuring that regulatory bodies have robust enforcement mechanisms, the authority and resources to enforce regulations effectively. This includes the ability to impose significant penalties for non-compliance that are substantial enough to deter anti-competitive behavior.
- Establishing mechanisms for consumers to report grievances and seek redress for harms caused by the actions of tech giants. This can include simplified legal processes or dedicated consumer protection agencies.
7. Stakeholder Engagement
- Engaging a broad range of stakeholders, including tech companies, consumer groups, academics, and policymakers, in the regulatory process. This inclusive approach can help ensure that regulations are balanced, effective, and reflective of diverse perspectives.
8. Monitoring and Research
- Continuous regularly monitoring the tech sector for emerging trends and potential anti-competitive behaviors. This can help regulators stay ahead of the curve and address issues proactively. Investing in research to understand the impacts of digital technologies on society, competition, and the economy. This knowledge can inform evidence-based policymaking.
Conclusion
the path to regulating tech giants will undoubtedly require a concerted effort from all stakeholders. The outlined best practices offer a roadmap for creating a digital environment that prioritizes consumer welfare, fosters healthy competition, and encourages innovation.
See: FCA’s Emerging Regulatory Strategy for Big Tech and Artificial Intelligence
By embracing these principles, regulators can ensure that the benefits of the digital age are widely shared, preventing monopolization by a few dominant players. The journey is complex, but through vigilance, adaptability, and collaboration, we can shape a digital ecosystem that benefits all, characterized by innovation, fairness, and respect for individual rights.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Court Rules Govt’s Use of Emergencies Act Unjustified
News | Jan 23, 2024
Image by Freepik
A Federal Court in Canada has ruled that the Liberal government's invocation of the Emergencies Act in early 2022 to disperse convoy protesters was unreasonable
The Emergencies Act, invoked for the first time in Canadian history, granted law enforcement extraordinary powers to remove and arrest protesters, and allowed the government to freeze the finances of those connected to the protests. This decision was made in response to protests that clogged key arteries in Ottawa and blocked border points, primarily driven by dissatisfaction with the government's COVID-19 policies, including vaccine requirements.
The Federal Court's Ruling and Implications
Federal Court Justice Richard Mosley stated that the situation created by the protests did not meet the threshold of a national emergency as defined by the Canadian Security Intelligence Service. He emphasized that the invocation of the Emergencies Act was "unreasonable and ultra vires," a Latin term meaning beyond the powers of the law. Mosley's decision also highlighted that the economic orders issued under the Act infringed on protesters' Charter rights, particularly concerning freedom of expression and unreasonable search and seizure.
Federal Court Justice Richard Mosley:
I conclude that there was no national emergency justifying the invocation of the Emergencies Act and the decision to do so was therefore unreasonable and ultra vires. "Ultra vires" is a Latin term used by courts to refer to actions beyond the scope of the law.
See: Emergencies Act Post-Mortem: Crypto execs in Ottawa discuss Digital Assets
This ruling and the subsequent appeal highlight the ongoing tension between government authority and individual rights. Businesses, particularly those operating in sectors sensitive to national security and public order, must navigate the legal landscape. The decision also underscores the importance of transparency and justification in government actions, especially when they infringe on civil liberties.
You may also recall that when the Canadian federal government invoked the Emergencies Act to address disruptions in Ottawa, they extended anti-money laundering and anti-terrorist financing (AML/ATF) obligations to donation crowdfunding platforms and certain payment service providers temporarily and without prior notice. Then following the revocation of the Emergency Economic Measures Order on February 23, 2022, the government announced plans to permanently implement these AML/ATF requirements for donation crowdfunding. Consequently, new regulatory amendments now mandate AML/ATF registration, reporting, and compliance for donation crowdfunding services and some payment service providers in Canada, expanding the scope of regulation that already included equity/investment and loan crowdfunding platforms. For more details, see the official publication at Canada Gazette.
See: NCFA Response to FINTRAC’s ‘Knee Jerk’ Regulations Requiring Donation Crowdfunding Platforms to Register and Comply with AML/ATF Legislation
NCFA Canada still believes and we quote: "In summary, the regulations are ineffective, burdensome, anti-competitive, and damaging to both the domestic donation crowdfunding sector and the Canadian nonprofit/charitable sector. The goal of protecting Canadians from money laundering and terrorism is laudable, but these regulations should be scrapped, and new regulations drafted in full consultation with stakeholders.” – Daryl Hatton, Founder/CEO, FundRazr
Government's Response
Deputy Prime Minister Chrystia Freeland announced the government's intention to appeal the decision, emphasizing the gravity of the threats faced by Canada at the time. The government has consistently argued that the measures taken were targeted, proportional, and temporary. This stance is supported by the findings of a mandatory inquiry led by Commissioner Paul Rouleau, which concluded that the government met the high threshold needed to invoke the Emergencies Act.
Justice Minister Arif Virani:
"[Rouleau's] decision stands at odds with the decision that was rendered today and I think that is important and that also informs our decision to appeal."
Stay Tuned
As the government appeals this decision, the business community and the public at large will closely watch the evolving legal interpretations and their implications for governance and civil rights in Canada.
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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Minerva & Equifax Canada Partner on AML Solutions
Partnership | Release | Jan 17, 2024
Image by rawpixel.com on Freepik
Minerva Launches Channel Partner Program with Equifax Canada to Enhance AML Solutions
TORONTO, January 17, 2024 - Minerva, a trailblazer in AML technology, has announced the initiation of its channel partner program. This strategic development includes Equifax Canada, a global leader in data, analytics, and technology, as its inaugural partner. This collaboration is set to expand the accessibility and capabilities of Minerva’s AML compliance technology.
See: Financial Institutions and Regulators Alike are Showing Growing Interest in Fintech and Regtech Solutions.
Minerva, renowned for its proactive AML platform, is instrumental in identifying client risks from the initial onboarding stage through to exit, aiding top compliance teams in preempting financial crime. The company's clientele spans prominent financial organizations and enterprises across the US and Canada, including names like MOGO, SBI Canada Bank, and Coinbase.
The channel partner program is designed to provide partners and their customers with direct access to Minerva’s state-of-the-art AML risk assessment solutions. These solutions are crucial for ensuring compliance with evolving regulations and for proactive protection against financial crime. The program is tailored for organizations that aim to resell, cosell, integrate, or refer Minerva’s AML solutions, enhancing their customer relations and market presence.
Equifax Canada, the first partner in this program, is a powerhouse in providing unique data and analytics solutions, powered by advanced cloud technology. This partnership will enable Equifax Canada’s customers to leverage Minerva’s advanced AML solutions, furthering their commitment to combat financial crime.
See: OSC Publishes TestLab 2022 Report: Exploring Innovations in RegTech with Participate Solutions
Jennifer Arnold, co-founder and CEO of Minerva:
“After a year of meticulous planning and collaboration to provide best in class solutions for our customers, we have now formalized our partnership with Equifax Canada. Together, we are poised to deliver an unrivaled AML compliance and fraud protection offering. By coupling Equifax Canada’s robust customer relationships and fraud expertise with our sophisticated AML compliance solutions, Canadian businesses will now be even more empowered to thrive in a secure financial environment.”
About Minerva
Minerva stands as a RegTech leader, founded by AML industry experts, aimed at transforming AML compliance. The company’s proactive platform employs advanced deep learning models and neural networks to analyze data across multiple languages, aiding compliance teams in staying ahead of financial crime. Minerva’s platform is adept at creating detailed customer profiles and predictive risk analyses in real-time, making it a trusted partner for financial institutions seeking swift and accurate risk assessment results. For more information, visit gominerva.com.
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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Syngrafii Integrates Trulioo’s Advanced Identity Verification to Enhance eSignature Security
Digital Identity | Nov 28, 2023
Image by pressfoto on Freepik
Syngrafii Announces Integration with Trulioo Identity Document Verification, Enhancing its iinked Sign™ and Video Signing Room™ (VSR) platforms.
Syngrafii's strategic integration helps secure electronic signatures, addressing the evolving needs of regulatory bodies and combating financial crimes like mortgage and auto loan fraud. The integration not only streamlines the identity verification process but also fortifies compliance with KYC, KYB, and AML protocols, setting a new standard in the digital signing realm.
See: Digital Identity in the Age of Web3: Empowering Individuals, Transforming Organizations
Key Points:
- The integration with Trulioo's Identity Document Verification brings a new level of assurance in signatory authentication, combining e-signature and IDV processes into a unified, more secure platform.
- This integration is a response to the changing demands of regulatory agencies, law societies, and financial institutions, ensuring compliance and mitigating risks associated with financial crimes, and meets the standards of NIST and DIACC
- Syngrafii's iinked Sign™ now includes a "Write to Sign" feature, allowing signatories to use their own handwriting, enhancing the authenticity and non-repudiation of electronic signatures.
- This collaboration supports Syngrafii's expansion in core markets like Canada and the U.S., while enhancing global trust in digital transactions.
- Syngrafii's suite, including the patented iinked Sign™, VSR™, and LongPen® technologies, offers a robust platform for compliant, secure, and versatile electronic signing experiences.
Why It Matters
See: Mastercard is Navigating Global Trust Frameworks and Building a Global Digital Identity Network
By ensuring higher levels of security and compliance, Syngrafii and Trulioo are not only enhancing the trustworthiness of digital signatures but are also paving the way for safer, more reliable online transactions across various sectors. This is a noteworthy milestone along the journey towards a safer digital future.
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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UK’s Digital Pound Initiative Sparks Privacy Discussions
Regulation | Nov 24, 2023
Image by storyset on Freepik
UK's Approach to CBDCs and Privacy
On November 7, 2023, a question raised in the UK Parliament by Mr. David Davis, a Conservative MP, brought to light the critical issue of privacy in the context of a UK CBDC. The response from Andrew Griffith, also a Conservative MP, emphasized the UK Government's commitment to ensuring rigorous standards of privacy and data protection in the design of a digital pound.
Notably, the government assures that neither it nor the Bank of England would have access to personal data or insights into consumer spending habits.
A recent development in the UK Parliament highlights the growing concern and attention towards the privacy implications of these digital currencies. As Canada's fintech community closely monitors global trends, the discussion around the UK's potential digital pound offers valuable insights.
Implications for Fintechs and Canada
For fintech companies and stakeholders in Canada, the UK's stance on privacy in the realm of digital currencies is both a benchmark and a learning opportunity. It highlights the importance of balancing innovation with consumer rights, particularly in a domain as sensitive as financial transactions. The UK's consultative approach, involving feedback from February to June 2023, also highlights the role of stakeholder engagement in shaping fintech policies.
See: Jon Conliffe Speech: A digital pound will be needed in this decade
As Canada explores the possibility of its own CBDC digital currency, the UK's model provides a framework for considering privacy and data protection. It is important for Canadian fintech innovators, regulators, and policymakers to prioritize user privacy and control while designing digital financial solutions.
The dialogue in the UK Parliament about the privacy aspects of a potential digital pound is a significant moment for the global fintech community.
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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The Convergence of Smart Grids and Smart Money
AI and Payment Innovation | Oct 10, 2023
Image: Unsplash/Deividas Toleikis
The emergence of a smart grid in payments coupled with artificial intelligence (AI) is a pivotal shift towards smart money and—where transactions are not merely exchanges but intelligent interactions.
Invisible, ID-based Smart Grids
"The more invisible a payment is, the smarter it is," a notion that encapsulates the essence of the evolving payment grid. Largely unseen and innovating at an unprecedented speed, crafting a smart grid that intertwines with our digital interactions. The invisibility here is not an absence but a subtle, intelligent presence that facilitates, secures, and enhances every transaction.
See: Mastercard is Navigating Global Trust Frameworks and Building a Global Digital Identity Network
A pivotal focus for the future of payments is the emphasis on proving identity. The shift from credential-based payments, such as card information, to identity-based validations, underscores a transition towards a more secure and personalized financial ecosystem. The digital ID doesn’t merely serve as a verification tool; it becomes an integral part of the user’s digital persona, ensuring transactions are not just secure but also inherently tied to the individual, not just the credentials.
The potential incorporation of blockchain technology could revolutionize the way financial institutions interact and share data securely amongst each other. Imagine a grid where banks and financial entities could validate details in a payment before it’s sent, ensuring absolute accuracy and significantly speeding up the process. This shift is a redefinition of trust and reliability in the digital finance domain.
Smart Money 'Talks Back'
Imagine payment data that doesn’t just validate but “talks back” through virtual assistants, providing real-time insights, suggestions, and even predictive analyses of spending patterns. This isn’t just smart; it’s intuitive, crafting a financial interaction that’s tailored, insightful, and inherently secure.
See: LQWD’s AI Tech Achieves 4500% Lightning Network Surge
The irony isn’t lost when we consider AI being utilized to combat fraud, which is being perpetuated at an “industrial pace” by AI itself. It’s a synthetic battle, where AI systems are locked in a perpetual chess match, one trying to outwit the other, crafting a scenario where the technology becomes both the shield and the sword in the financial realm.
Things Are About To Get Personal
In the convergence of the smart grid and smart money, the future of finance is not just about transactions but about intelligent, secure, and personalized interactions. It’s a future where your identity is not just a validator but a two-way communicator, where AI facilitates, protects, and advises in your financial journey.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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BoC: Redefining Financial Inclusion for CBDCs
Report | Oct 4, 2023
Bank of Canada's Staff Release New Research on Implications for a Central Bank Digital Currency
- Today, the Bank of Canada's staff released their latest report, "Redefining Financial Inclusion for a Digital Age: Implications for a Central Bank Digital Currency," which delves into the intricacies of digitalization and its impact on financial and digital inclusion, particularly in the realm of payments.
- The Bank of Canada has been exploring the concept of CBDCs and considering various aspects related to its implementation, such as technology options, unmet payment needs, security, and privacy.
- As over 130 central banks around the world are actively researching, developing, or implementing their own CDBCs, and the IMF is implementing a cross-border CBDC global platform.
Report Insights
1. Digitalization and Financial Inclusion
- Canada experiencing a notable shift in consumer behavior and technology use, especially in how Canadians manage money and make payments.
- The decline in the use of cash in favor of cards and digital payments has been significant, prompting broader considerations about digital money and its social implications.
- Digitalization has permeated society, offering new opportunities but also creating and exacerbating existing inequities, especially in payments.
See: Bank of Canada Seeks Your Input on Transaction Reports
- The report applies the social model of disability to the Canadian payments landscape to identify opportunities to remove barriers that marginalize or hinder people. The authors aim to build awareness of the inequities and challenges present in the current payments system and motivate fintech providers to offer more inclusive products and services.
2. Challenges in the Current System
- The authors identify barriers faced by rural populations, Indigenous communities, Canadians with low incomes, and persons with disabilities in using financial products.
- There is a noted deficiency in the current research and payment offerings for those with cognitive accessibility challenges.
- Financial inclusion is often measured by access to bank accounts, with 98% of Canadian adults having a bank account and a debit card.
- However, the remaining 2% who are unbanked, and the 13% without a credit card, may face limited options for online purchases and are at a higher risk of being excluded from the digital economy.
See: McKinsey Global Payments On Cusp of ‘Decoupled Era’
- The decline of cash as a payment method, from approximately 53% in 2009 to below 21% in 2021, also poses challenges for those who rely on banknotes.
3. Trust and Literacy in Financial Inclusion
- Trust and literacy emerge as recurring themes across financial inclusion research. Some people with low incomes have shown a preference for paper bills as assurance when transacting with banks and billing firms.
- Discrimination experiences, especially in financial institutions and banks, have been reported by Black and Indigenous respondents, which may influence their engagement with traditional financial services.
What Can Canada Learn About CBDCs in Other Jurisdictions?
GDPR and Data Privacy
- The General Data Protection Regulation (GDPR) has been implemented by the European Union and is considered a gold standard in regulating how companies use and secure consumer data.
- GDPR-like data privacy laws have been adopted by many countries around the world since 2018, affecting international enterprises with customers or employees in Europe as well as those serving as data processors in Europe or for European companies.
- The implementation of GDPR has faced challenges such as insufficient funds, complex procedural labyrinths, and infighting on implementation among national enforcers.
See: Can Privacy and Financial Regulation Co-exist?
- The GDPR has led to many companies considering reducing their presence in Europe significantly, or even halt services in entire jurisdictions.
Best Practices in CBDCs and Privacy
- Ensuring that users have control over their data and are aware of how it is being used is crucial. This involves clear communication about data usage policies and providing options for data control to the users.
- Some CBDC models propose different levels of anonymity, such as "loose" anonymity, where the transaction data is visible to the central bank or "tight" anonymity, where the data is not visible to the bank.
- Implementing data minimization practices that limit the collection of user data to what is strictly necessary for the transaction or service.
- Employing robust security measures to protect user data from unauthorized access and breaches.
- Establishing a clear legal framework that outlines the rights of the users and the obligations of the CBDC providers.
Country Model Examples
- China's Digital Currency Electronic Payment (DCEP) model has been in pilot testing in various cities. The model is designed to replace cash in circulation and is not fully anonymous. The People’s Bank of China will be able to trace the DCEP to fight against money laundering, terrorist financing, and tax evasion. See also: Offline payments via super SIM cards
- Sweden's e-Krona model by Sweden's central bank, Riksbank, is exploring to have an electronic currency that could ensure that the general public will retain access to a state-guaranteed means of payment in the future.
- Bahamas' Sand Dollar is a digital version of the Bahamian dollar, launched by the Central Bank of The Bahamas. It provides for digital identity and maintains transaction privacy but is also compliant with AML/CFT regulations.
The Consumer's Voice is Critical
The insights derived from the report could serve as a foundational framework for policymakers, financial technology providers, and central banks in designing and implementing digital payment products and services that are not only technologically advanced but also universally accessible and equitable. Beyond fintech innovators, traditional financial institutions, and policy-makers, the general public and consumer must be consulted and brought to the forefront of the discussion.
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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