Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Enterprise, Scaleup
OECD-FSB Discuss New AI Trends in Finance
AI | Oct 10, 2024
Image: OECD - FSB Roundtable on AI in Finance: Summary of Key Findings
Generative AI and 3rd Party Services are Transforming Finance
Artificial Intelligence (AI) in all of its flavours are changing the banking sector and financial services from advancements in everything from fraud detection to customer support. There is an increasing reliance on third-party AI services providing fintechs new opportunities but requiring strong governance. The Organisation for Economic Co-operation and Development (OECD) and Financial Stability Board (FSB) held a public-private round table in May earlier this year to discuss the latest risks and challenges. A summary of key findings was recently published (12 page PDF). This article focuses on new AI trends and implications for financial technology firms.
1. From Streamlining Internal Processes to Customer Facing Apps
While it's largely known that financial institutions (FIs) are using AI/GenAI for automating and optimizing a wide range of internal processes to free up resources, such as code creation, generating regulatory documents, and translating legal materials, FIs anticipate that GenAI will be a major factor in customer facing applications.
See: How AI is Shaping the Future of Financial Services in Canada
AI powered financial advising services can provide a highly customized customer experience. Fintechs that innovate and gain early adoption of individualized client services can remain competitive and also attractive to the banks.
We are finally arriving at the day where AI financial planning tools can instantly recommend the best solutions for unique client needs with a simple 'optimize' button, which will transform the customer journey and experience (not to mention their level of satisfaction and trust).
2. Third Party AI Services Must Balance Innovation and Risk
The financial sector is becoming increasingly dependent on third party AI service providers for cloud infrastructure, data analytics and the latest AI models. While outsourcing or integrating these services boosts innovation, it increases the risks of concentration (working with a limited vendor), accountability and transparency.
See: Industry Resists SEC’s Oversight on AI in Finance | California’s AI Safety Bill Veto and Its Impact
Fintechs and FIs must monitor and control these embedded AI services, especially critical functions. This means that both fintechs and FIs must carefully manage their relationship with these third party AI vendors to avoid becoming overly dependent on a single vendor and to remain flexible. Diversifying service providers while also building internal AI capabilities is advised in most cases to avoid vendor lock-in.
Further, increased regulatory compliance requires that firms ensure proper governance and accountability when working with third party vendors, so striking the right balance of controls and innovation is key.
3. Generative AI's Competitive Advantage Will Disrupt
The roundtable discussed how early AI fintech adopters might outperform established financial institutions in niche sectors and industries. GenAI has proven to be a game changer in asset management, trade analysis, risk assessment and portfolio optimization. This means fintech startups can use AI tools to disrupt traditional financial services by being agile, scaling quickly, and deploying these solutions in less liquid markets.
The panel focused on how early AI adopters might outperform established financial institutions, especially in specialized industries. By automating intricate processes like trade analysis, risk assessment, and portfolio design, GenAI in particular is revolutionizing asset management, trading, and portfolio optimization.
Fintechs now have more chances to compete in markets where conventional companies are taking longer to develop as a result of this change, levelling the playing field against larger competitors.
4. Human Oversight is Critical for Accountability and Trust
According to the expert panelists participating in the roundtable, human monitoring is still essential, so AI decisions can be reviewed and evaluated to ethical principles to avoid mistakes made by AI that can have huge negative implications like in fraud detection.
See: AI’s Ethical Dilemma Grows as Innovation Surges
Transparent AI is key for building and maintaining consumer trust. Fintechs can differentiate themselves by highlighting strong governance frameworks and ethical AI use that keep 'humans in the loop' while also creating efficient, fair and accountable outputs.
Harnessing AI's Potential in Canadian Fintech
Based on the latest discussions at the OECD-FSB AI in Finance Roundtable, it's pretty clear that AI is changing the landscape of financial services. Fintechs and financial institutions should embrace AI for operational efficiencies to earn a competitive edge while reducing risks of third party dependency, governance, and ethical AI. NCFA Canada's community, whether they are a new business or established firm, should think about how they can use these insights to lead and innovative in the fast paced and evolving AI powered financial services industry of the future. And if you haven't heard the news, the 'Godfather of AI', British-Canadian Geoffrey Hinton was just awarded the Nobel Prize in Physics for his foundational work in AI neural networks.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Marathon Bitcoin Miner Ventures into Whisky Barrels
Tokenization | Oct 9, 2024
Image: Freepik/bearfoto
Marathon’s Anduro Takes Tokenization to Bitcoin with Whiskey Pilot
Marathon Digital Holdings is breaking ground into tokenization with its latest venture, Anduro under the Avant platform which was created in partnership with tokenization specialist Vertalo. The project plans to tokenize real-world assets (RWAs) on the Bitcoin blockchain starting with whisky barrels where investors can purchase and exchange fractional ownership via the platform.
This project is part of a growing trend in Bitcoin's ecosystem where RWA's that are non-digital and non-financial are being converted into tradeable tokens and then offering them to investors as an investment, store or value or utility.
See: Coingecko 2024 Report: Investing in Tokenized RWAs
Although tokenization for RWAs has been widely used in Ethereum and Solana, Bitcoin has been slower to include the smart contract capability that enables this kind of tokenization. Things are starting to change with the creation of platforms like Avant.
For miners like Marathan who are experiencing reduced income from decreased block rewards as a result of the latest Bitcoin halving, they are incentivized to look for new sources of revenue, which can lead to the incubation and/or launch of some exciting projects.
Several Tokenization Platforms Driving Industry Forward
While Anduro and Vertalo are tokenizing on Bitcoin, several other platforms are leading the charge across various asset classes and blockchain networks:
- Ondo Finance tokenizes U.S. Treasury bonds and money market funds in the Ethereum ecosystem and offers low-risk asset tokenization to both institutional and individual investors looking for safe and liquid assets.
- Maple Finance offers blockchain-based credit solutions and decentralized liquidity pools, enabling lenders and borrowers to engage in tokenized RWAs like Treasury bills.
- Centrifuge is tokenizing invoices and receivables (similar to 'invoice factoring' in traditional terms), which allows companies to use these assets as collateral for loans.
- Tokeny specializes in compliant digital securities and the infrastructure to safely issue and manage tokenized assets. Institutional investors choose its platform because it incorporates several blockchains, such as Ethereum and Tezos.
Beyond Whisky
Various asset types are expected to be digitized over the next few years. Below are a few of the asset classes that are ripe for tokenization and digital markets.
See: How Fintechs Are Unlocking Value in Private Markets 2024
- Real Estate
- Precious Metals
- Art and Collectibles
- Bonds and Securities
- Commodities
Tokenizing the Future
Tokenization offers new liquidity, transparency, and inclusion in financial markets, making it very interesting for fintech startups and investors in communities such as NCFA Canada. Tokenization is one of the most significant financial trends to monitor as blockchain technologies innovative new use cases for both buyers and sellers.
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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Streamline Workflow: Choosing the Perfect Internet Service for Maximum Efficiency
Oct 8, 2024
Image: Freepik
The internet is an invaluable tool today. People with reliable internet access find they can accomplish more each day. However, finding the perfect internet service for maximum efficiency can be challenging. There are countless options, and a person doesn't want to make the wrong choice. What factors should be considered when selecting an internet provider?
Available Providers
Many people are looking into switching to fiber internet service, but they may be unable to do so. The first step in finding the perfect internet service is to learn about available options. While many providers service customers nationwide, others are limited regarding their geographical coverage. Consumers must know what options are available in their area so they don't waste time looking into one company only to find it is not offered where they live or work.
Know What is Needed
Before researching available providers, people must list what they use the internet for. Some people only use the internet for email and to gather information. Others need high-speed service so their video conferences don't lag. The number of users who will be online simultaneously also plays a role in what is required in an ISP. A higher-speed option is needed in this situation.
Data Caps
Some providers have data caps in place. When a user exceeds the cap, the service slows, or the provider takes other measures to restrict usage. Learn whether a provider being considered has a data cap, what measures will be taken if the user exceeds this cap, and which plan will provide enough data that the cap won't be an issue.
Pricing
Pricing is always a consideration when choosing a new internet service provider. Look at the cost per month when comparing providers and research additional fees. Are customers charged the cost of equipment? Will there be set-up and installation fees? What charges are imposed when a user exceeds the data cap? People need this information when comparing providers to ensure they get the service they need at a price they can afford. Bundling services may help reduce costs. Look for cancellation fees, as well, because they can be costly. If the service doesn't meet expectations, people might be stuck because they want to avoid paying a hefty cancellation fee.
Special Features
Internet service providers must compete for customers. To attract new customers and retain existing ones, providers might offer unique features and add-ons. Many providers offer free items with certain service tiers. For example, the company might provide a gift when a customer has been with them for an extended period. Others offer free equipment. Customers need to decide which perks best meet their needs.
Customer Service
Consumers need reliable internet service, particularly those who work from home regularly. When the connection doesn't work, they need help immediately. Consider this when comparing internet service providers and find one that offers outstanding customer service. The customer service team will be responsible for helping clients get their internet up and running again quickly. Ensure this team is responsive, friendly, and helpful. In addition to calling in and speaking to a team member, individuals should read online reviews from current and former customers to learn more about the company's service.
See: Can Canada Harvest the Next Wave of Productivity Growth?
Internet service providers differ significantly in their plans, pricing, customer service, and more. Consumers need to consider all factors when choosing a new provider. Spend time researching the options to find the right provider the first time.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Role of Fintech in the Circular Economy
Circular Economy | Oct 8, 2024
Image: Freepik
Manufacturers and fintech firms are driving sustainability and circular economy innovations to reduce waste and boost efficiency
Many manufacturers and sellers have prioritized sustainability and circular economy concepts in response to environmental regulation, institutional pressure, and the need for more resource-efficient manufacturing.
A study published on ResearchGate, conducted by Abdul Gani, Neeraj Bhanot, Faisal Talib, and Mohammed Asjad, shows that small and medium-sized enterprises are the most important part of the global economy where sustainability practices are gaining worldwide attention. A prominent example of this would be Evergreen Solar (which specializes in designing and installing solar energy systems for residential and commercial customers in Canada.) and Tentree (a Canadian clothing brand that plants ten trees for each item sold and uses materials that are eco-friendly.)
See: Alternative forms of capital will be key to develop sustainable economic systems
However, large-scale industries are also following sustainable practices. Resolute Forest Products is an organization that is committed to sustainable forest management and is investing in renewable energy projects aimed to reduce carbon footprint.
Sustainability and the Circular Economy?
The Circular economy works upon three principles based on sustainability:
- Eliminating pollution and waste
- Circulating products and materials to maximize their value
- Regulating the environment
This model promotes the leasing, sharing, repairing, reusing, refurbishing and recycling of used products and materials for the longest time period possible. This way, the lifespan of goods and articles manufactured is prolonged. This also lowers waste production at a significant rate.
See: Sustainable Business and The Regenerative Future
By shifting to the circular economy, organizations can boost their productivity and profits at a significant rate. For example, Loop Industries has seen substantial profits and growth thanks to the high demand of its recycled polyester products.
How Technology is Powering the Circular Economy
Since the 70’s, technology has become the most important part of this economic model. This was the time when the first Earth Day was commemorated in April 1970. This is when the term “Recycling” was gaining momentum, with revolutionary processes and machinery that paved the way for material recovery.
By the 90’s, the term “Extended Producer Responsibility” was introduced, which ensured responsibility took the centre stage. It focuses on the responsibility of the producer for their product’s impact in the last stage of its life cycle and after consumption. It also encourages manufacturers to create products that significantly lower the impact on health and the environment.
EPR programs, often equipped with technology, incentivize manufacturers to create and manage their products in a responsible manner. They do so by identifying the impact of the life cycles of the products. This, on the other hand, promotes circularity through mindful designing and end-of-life planning.
See: CSA Backs New Sustainability Disclosure Standards
The introduction of blockchain technology in 2010 brought a revolutionary era in the circular economy altogether. This technology enabled manufacturers to tackle the long-standing issues in the transparency of the supply chain, addressing accountability and traceability- the most important elements for encouraging circularity by ensuring responsible and efficient sourcing and disposal of materials. Blockchain technology also helps customers make well-informed decisions and deem companies responsible for the practices followed by them.
However, the story doesn’t end with blockchain. Today, there are various other technological advancements that are energizing the circular economy, such as:
- Circular Economy Token Systems - Gamification and tokenized systems are used to promote sustainable choices by offering rewards and incentives to individuals and companies to increase green user engagement, thus contributing to the circular economy.
- Sorting Robots Powered by AI - There are various AI robots specializing in sorting. They are programmed in such a way as to improve the efficiency and accuracy of the recycling process of a material. By doing so, these robots are helpful in tackling global waste crisis in an impactful manner. These robots enhance the transparency of supply chains by providing real-time data on the quantity, quality, and value of any product. Fintech platforms can leverage this level of transparency to offer more transparent and accurate financial products. Furthermore, it also helps you reduce the financial risks associated with investing in recycled products, thus enabling manufacturers make data-driven decisions.
- Blockchain Traceability offers a decentralized ledger to record each transaction and movement within a supply chain. All the people participating in the supply chain, such as raw material suppliers, manufacturers, retailers, and customers, contribute to the blockchain data. This level of transparency helps in tracing the journey of any product with the utmost accuracy, encouraging sourcing and efficient recycling. There are many global organizations like IBM Food Trust and Provenance, that track the origin of products and ensure sustainability and ethical sourcing.
- AI-enabled Circular Design is also helping in product designing and recycling processes. These tools use machine learning algorithms that recognize patterns and the correlation to the data. Furthermore, AI promotes the creation of products that are aligned with the principles of circular economy.
Fintech Poised to Grow the Circular Economy
- Market Growth - According to a recently MarkNtel Advisors study, fintech was valued at approximately US$553 billion in 2023 globally and is rising at a CAGR of 6.6% from 2023 to 2030.
See: Sustainability: A Must for Fintech Growth
- Investment - In recent years, investments in startups specializing in fintech have risen. A significant part of these investments have been allocated to areas that prioritize sustainability and circular economy solutions. A Canadian company that meets this definition is CoPower, a Toronto-based fintech firm focused on sustainable investing (purchased by Vancity Community Investment Bank). CoPower focuses in offering investment possibilities for clean energy and green infrastructure projects that adhere to the concepts of sustainability and circular economy. CoPower provides 'Green Bonds' to fund projects such as energy-efficient retrofits, solar energy, and geothermal installations, making it a pioneer in integrating financial solutions with a sustainable effect.
- Regulatory Promotions - Many governments across the world are introducing regulations that are supportive of fostering the growth of fintech in the circular economy. For example, The European Union has a Circular Economy Action Plan that promotes sustainable finance and investment for various circular economy projects. The United Kingdom also has a Green Finance Taskforce that promotes finance and investments for sustainable projects.
More Examples That Utilize Fintech in a Circular Economy
Below are a couple of Canada examples that have adopted fintech solutions to support a circular economy:
Loop Industries
Loop Industries is a chemical company based in Terrebonne, Canada. This company has developed a technology that recycles plastic waste into polyester fibre. This company has utilized fintech solutions to boost its supply chain, manage financial risks, and secure funds for its revolutionary recycling technology. Loop uses a technology that provides a sustainable and eco-friendly alternative to the traditional production of plastic. This technology contributes to a more circular economy as it encourages the reduction of waste and the conservation of resources.
CarbonCure Technologies
Based in Halifax, Nova Scotia, CarbonCure Technologies has developed a process that captures and stores carbon dioxide in concrete. This company has utilized fintech to attract investment and secure funds for carbon capture solutions. CarbonCure’s technology is helpful in lowering carbon emissions and making the construction more sustainable and eco-friendly, thus promoting sustainable economy.
Conclusion
Sustainable practices are impactful in lowering the carbon footprint and saving a lot of money. It enables people to discover and follow the best solutions that can be helpful in conserving resources. Technologies like AI, Blockchain and Fintech are advancing the development and impact of the circular economy by promoting the conservation of resources while streamlining transparent production process that reduce pollution and enable people to adopt sustainable practices.
About the Author
Amir Waheed is the co-founder & CEO of SEO Toronto Experts. He intends to bring a massive transformation to eCommerce SEO Services. His team of talented IT professionals knows the secret of getting huge conversions.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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IMF Pressuring El Salvador to Limit BTC Exposure
Bitcoin | Oct 7, 2024
Image: Freepik/pvproductions
During Funding Negotiations, the International Monetary Fund (IMF) Urges El Salvador to Limit Bitcoin Exposure
In 2021, El Salvador become the first government to declare Bitcoin as a legal currency much to the chagrin of IMF. Now during fresh funding/debt related discussions, the IMF is urging El Salvador to restrict the usage of crypto and enhance its regulatory framework to limit exposure to Bitcoin.
See: IMF 9 Point Action Plan for Crypto Asset Treatment: Recommends Against Legal Tender Status
The IMF has been critical of El Salvador's Bitcoin adoption since the start, highlighting risks to financial stability, economic growth, and transparency. Previously, the IMF called for the full dissolution of the country's bitcoin law to mitigate risks but the IMFs latest transcript press briefing is now urging El Salvador to narrow the law's scope to reduce public exposure to crypto.
Julie Kozack, IMF Director of Communications:
"With respect to the details on bitcoin what we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting the public sector exposure to bitcoin."
El Salvador and Bitcoin
As part of its bold efforts to incorporate Bitcoin into its banking system, in November 2022 El Salvador's President Nayib Bukele announced that it would commit to purchasing 1 BTC daily until it becomes unaffordable with fiat currencies. As of October 7, 2024, according to it's bitcoin office website, El Salvador owns over $376 million in Bitcoin, and according to Cointelegraph, the country was approx $31 million in profit after 3 years of implementing it's crypto banking strategy.
See: El Salvador Update: ‘Volcano Bonds’, Bitcoin City, Crypto Visa Program
Further, as per Forbes, President Bukele indicated that it would not include fresh debt issuance in its 2025 national budget, hinting that the country is preparing for the prospect of not receiving IMF funding despite the IMF investigating the country's crypto products like its Volcano Bonds.
Having said that, there are ongoing talks between El Salvador and the IMF to help boost productivity, improve governance, and stabilize the economy.
Domestic Perspectives
Crypto advocates in El Salvador feel that the Bitcoin regulation has changed the country's reputation abroad. According to John Dennehy, creator of the educational non-governmental organization Mi Primer Bitcoin, Bitcoin has changed how people throughout the world view El Salvador, dispelling previous myths about its instability and violence. And according to Lina Seiche, the inventor of "Little Hodler" the country has benefited from more investment and tourism since legalizing bitcoin assets.
See: Tax-Free Bitcoin Zone Proposed by the USABTC
Conclusion
If El Salvador can strike a compromise with the IMF in following some of the IMFs recommended regulations while also keeping its Bitcoin policies in place, it may be a pathway forward while establishing a precedent on the integration of cryptocurrencies with established financial institutions around the world.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Appeals Ripple Ruling; Veri Token Holders File Complaint
Ripple | Oct 7, 2024
SEC Files Notice of Appeal in XRP Case As VeriDAO Token Holders File Complaint Against Acting Crypto Chief
On October 2, 2024, the SEC filed a notice of appeal after judge 2023 ruling by Judge Analisa Torres that Ripple's XRP tokens were considered securities when sold to retail investors. Adding to the complexity of the discussion in focus, Veri token holders who were also a party in the SEC vs Ripple case have filed a complaint against the SEC (Acting) Chief of the Crypto Asset and Cyber Unit for regulatory overreach and questionable enforcement practices that stifled innovation in the U.S. digital asset market.
Background
In December 2020, the SEC sued Ripple Labs CEO Brad Garlinghouse and co-founder Chris Larsen claiming that XRP was sold as an unregistered security. After significant a prolonged back and forth case, in 2023 Judge Analisa Torres ruled a mixed outcome saying that XRP was not deemed a security when sold to retail investors (win for crypto industry), yet institutional sales made by the founders of Ripple were in fact an unregistered securities offering.
See: SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
The recent filing by the SEC on October 2 is an appeal to the courts in attempt to reverse some of the verdict. While the appeal was predicted by industry, it clouds the potential of a recent application by Bitwise to register an XRP exchange-traded fund (ETF) out of Delaware.
Bar Complaint Against Jorge G. Tenreiro
Crypto advocates have now focused their attention on Jorge G. Tenreiro who played an important role in several enforcement cases including XRP, VERI, and TON projects. Veri token holders have filed a complaint against Tenreiro who is currently the (Acting) Chief of the SEC's Crypto Asset and Cyber Unit, highlighting misconduct and overreach (i.e., misleading evidence and aggressive tactics) while linking similarities between his acts in the VERI case and the Ripple case.
The crypto community is hoping to have their complaint validated, which would lead to disciplinary action against Tenreiro and a re-examination of previous SEC actions under his oversight.
See: Inside Federal Securities Laws and Crypto’s Tightrope
Such a result may have significant implications for crypto and how the SEC handles future cases. You can learn more about the New York bar complaint against Jorge Tenreiro for professional misconduct here.
Outlook
The outcome of the SECs Ripple appeal and bar complaint against the SEC's Jorge G. Tenreiro is of major significance to retail investors, token holders and the entire crypto industry, as the dispute will likely influence crypto in the U.S. and around the globe.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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JPMorgan vs. Regulators Over Zelle Fraud Scams
Payments | Oct 4, 2024
Image: Freepik
JPMorgan Chase Considering Lawsuit Against Consumer Financial Protection Bureau (CFPB) Over Zelle Fraud Claims
JPMorgan Chase is thinking of suing Consumer Financial Protection Bureau (CFPB) after the CFPB claimed that the bank failed to remove fraudulent accounts from the platform and didn't reimburse scam victims on the peer-to-peer payment network Zelle, which is owned by a consortium of 7 major US banks and setup to compete with fintech giants, Paypal and Venmo in 2017. Previously, the U.S. Senate scrutinized JPMorgan for it's handling of these same Zelle payments network fraud claims.
See: CFPB Eyes Digital Payment Regulation for Big Tech
JPMorgan strongly disagrees with this claim and hinted in a recent financial filing that they make consider taking the CFPB to court over the issue. This is certainly an interesting twist where a major bank may sue their regulator. Lots of tension as incumbent banks, fintechs, and regulators balance client protection and fraud concerns in a quickly evolving market.
What's the Issue With Zelle and Fraud?
- A U.S. Senate report claims that Zelle handled transactions totaling more than $800 billion in the previous year of which $166 million was challenged as fraudulent taking place at one of 3 large banks including Wells Fargo, Bank of America, and JPMorgan Chase.
- Only around 38% of these claims received reimbursement.
- According to JPMorgan, it reimburses 100% of transactions that are considered "unauthorized," but the way such transactions are classified is the issue. Refunds are unlikely if a consumer voluntarily pays money to someone, even if they were defrauded because the customer 'authorized' it.
- The bank has now included a warning message to help customers stay safe and understand that refunds may not be available for certain transactions.
- According to Zelle, 99.9% of its transactions are trouble-free and as a precaution now warns consumers of scammers.
Larger Debate
The CFPB believes that banks should do more to identify and prevent fraudulent/fake accounts, and customers should be compensated when they are scammed.
See: JPMorgan’s New Programmable Payments in Blockchain
Part of the push is from Biden's administration for a wider regulatory effort to protect consumers and lower costs associated with digital payments, overdrafts, and credit card fees. JPMorgan's potential lawsuit could set a precedent for how banks interact with regulators and encourage other financial institutions to challenge regulations more aggressively.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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