Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fundraising, Investing, Trading
AI’s Hidden Costs in Replacing Junior Workers
AI | Oct 22, 2025
Image: Freepik/rawpixel.com
Data Reveals Hidden Cost of Early Automation Savings
On October 13 2025, the Economist ran a story 'Can AI replace junior workers?' that analyzed a total of 300,000 companies and found that firms adopting AI hired 7.7% fewer junior employees over six quarters compared with non adopters. These research findings came from a Harvard SSRN study by Seyed Hosseini and Guy Lichtinger, who tracked the introduction of AI integrator roles across a subset of 10,600 of these firms. They found that while senior hiring remained flat, most declines came from reduced job postings rather than layoffs.
In a different study by the Yale Budget Lab review, 'Evaluating the impact of AI on the labour market', found that since 2022 the overall mix of jobs hasn’t changed much yet. Their data also revealed that AI’s effects are starting to appear inside companies now but they haven't yet shown up in national reports.
Where AI Hiring Slowdowns Are Emerging
In Canada, the same early signs are visible. The Future Skills Centre found in 2025 that about half of Canadian workers hold jobs with high AI exposure, and that postings for automatable roles have fallen since 2022. (see: Right Brain Left Brain AI Brain). Statistics Canada’s September 2025 update showed youth unemployment at 14.7%, the highest rate since 2010 excluding pandemic years.
Demand for AI capability is climbing fast though. PwC’s 2025 AI Jobs Barometer found that job postings requiring AI skills made up 1.8% of all listings in Canada in 2024, the highest level recorded. Globally, PwC reported that workers with AI skills now earn a 56% wage premium. Lightcast data confirmed that postings asking for generative AI skills grew from 55 in January 2021 to nearly 10,000 by May 2025.
Early AI Savings Are Creating Hidden Costs
In 2023, IBM announced a hiring pause for administrative positions likely to be automated, estimating that about 7,800 jobs could eventually be replaced. Two years later by 2025, IBM’s chief executive said that hundreds of jobs had already been automated but new programming and sales roles were added to manage and improve AI systems (read: costs). These new positions required higher pay and technical skill, meaning that overall labour costs rose even as headcount stayed about the same.
PwC’s 2025 report described 4x increase in productivity but increased sending on advanced human oversight due to the specialized staff required to operate and oversee (rather than removing human involvement completely).
Mid Tier Graduates Face the First AI Hiring Crunch
The first jobs being cut are entry level analytical roles that once helped graduates learn on the job and grow into future innovators. Without those opportunities, companies risk gaps in the talent pipeline that sustains innovation and good governance.
Among those entry level roles, mid-tier graduates are being hit hardest. They aren't highly specialized enough to keep, and not low enough cost to retain. Data from Harvard and Yale show the same pattern now appearing in Canada’s banking and software sectors, where AI can handle document review and code debugging but not creative or complex work.
See: OpenAI Launches AI Jobs Platform to Rival LinkedIn
Canada’s rate of AI adoption is still lower than in the United States, but the same pressures are starting to appear. Companies that don’t build structured training and mentoring around AI now will likely face skill shortages and higher rehiring costs later.
Takeaways
1. Automation saves first but costs later
Harvard data show a 7.7% drop in junior hiring at companies that adopt AI. IBM’s experience confirms that after automating 7,800 jobs, it had to rehire more expensive employees for oversight and compliance work.
2. Canada’s entry talent pipeline is shrinking
Youth unemployment has reached 14.7%, the highest since 2010 outside the pandemic. The first jobs being reduced are early analytical roles that once gave graduates the training and judgment to move into leadership positions.
3. Mid-tier graduates face the toughest impact
Among the junior jobs being lost, graduates from mid-tier universities are at the most risk. Their work is often routine enough to automate but not low-cost enough to retain, leaving a growing gap in Canada’s talent base.
See: Which Fintech Processes Are Most Ready for Agentic AI
4. AI skills bring the biggest rewards
PwC found that employees with AI skills earn 56% more on average, but only 1.8% of job postings in Canada mention these skills. Fintechs that start training programs now can close that gap and strengthen their competitive edge.
Summary
AI is changing how companies build their workforce, not just how they cut costs. The data show that when junior jobs disappear, the long-term cost is a weaker talent pipeline and higher spending to rebuild skills later. Investing in AI training, early-career development, and responsible oversight will pay off later in productivity and help drive competitiveness.
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 aa 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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Canada Renews $189M Black Entrepreneurship Program
Funding | Oct 22, 2025
Image: Freepik
Ottawa Renews $189M Program to Support Black Entrepreneurs
On October 20, 2025, the Government of Canada announced a renewed investment of $189 million in the Black Entrepreneurship Program (BEP), continuing its commitment to helping Black entrepreneurs start, scale, and strengthen businesses nationwide. The announcement was made in Toronto by the Honourable Rechie Valdez, Minister of Women and Gender Equality and Secretary of State (Small Business and Tourism), as part of Small Business Week.
Expanding Access to Capital and Opportunity
The BEP was first launched in 2021 to expand access to capital, mentorship, training, and data for Black business owners. Since then, it has supported more than 24,000 Black entrepreneurs across Canada, while the Loan Fund has delivered over $70 million in approved financing through 801 loans.
See: RemitHope Mobilizes Diaspora Giving for Impact
With this new five-year commitment running from 2025 to 2030, the program will continue supporting inclusive economic growth through three core pillars: the Loan Fund, the Knowledge Hub, and the Ecosystem Fund.
Strengthening Research and National Networks
Under the renewed investment:
- $105.4 million will be allocated to regional development agencies to expand the Ecosystem Fund, broadening community coverage and business support.
- $7.5 million to the Knowledge Hub to strengthen research and improve the availability of high-quality data on Black entrepreneurship in Canada.
- $67 million will be directed to the Black Entrepreneurship Loan Fund, managed by the Federation of African Canadian Economics (FACE) in partnership with the Business Development Bank of Canada (BDC), providing loans of up to $250,000 to eligible business owners.
Minister Valdez highlighted that empowering Black entrepreneurs contributes to job creation, innovation, and community development across the country.
“The strength of Canada’s economy comes from the talent and tenacity of our people. When Black entrepreneurs can access capital, mentorship and reliable data, they turn ideas into jobs and community prosperity,”
The renewed program will also continue supporting the federal government’s Black Justice Strategy by addressing systemic barriers and advancing anti-racism efforts through economic participation. By deepening collaboration between government, lenders, and ecosystem partners, the initiative aims to strengthen Canada’s inclusive business landscape and ensure equitable access to opportunity for Black entrepreneurs nationwide.
In Closing
The renewal of the Black Entrepreneurship Program reflects Canada’s commitment to inclusive growth and aligns with NCFA’s work to expand access to capital and opportunity. Through the Canada Africa Fintech Summit, NCFA and its partners promote collaboration between Canadian and African innovators, helping entrepreneurs build sustainable businesses and strengthen economic ties. The program’s focus on capital, research, and networks supports the same goals driving NCFA’s efforts to advance a fair and competitive financial innovation ecosystem.
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 aa 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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Jon Medved Steps Down as OurCrowd CEO After ALS Diagnosis
OurCrowd | Oct 22, 2025
Image: Inaugural Canadian Crowdfinance Summit 2015, NCFA Craig Asano with Jon Medved CEO OurCrowd
CEO Jon Medved Transitions to Chairman of OurCrowd Following ALS Diagnosis
On October 21 2025, as reported by several news outlets, OurCrowd announced on Tuesday that Founding CEO Jon Medved will move into the role of Chairman after being diagnosed with ALS, also known as Lou Gherig’s disease. OurCrowd named Cali Chill as Acting CEO and COO, a long-time executive who has led investment operations. Medved will stay active by focusing on strategy, global partnerships, and support for portfolio companies.
In his conversation with Calcalist, Medved said that after thirteen years leading the company this change was necessary but that he continues to work full days.
“A few months ago, I was hospitalized and diagnosed with ALS, a serious and terrible disease. Everything still works, but it’s very difficult for me to breathe. I’m improving and fighting it, and I still work eight to ten hours a day, which allows me to continue treatment.”
OurCrowd began in 2013 when new rules under the JOBS Act opened doors for online investment. The platform connected smaller accredited investors with venture deals that were once limited to big institutions. Under Medved’s leadership, it grew into one of the world’s largest tech investment networks, backing companies such as Anthropic, Databricks, Groq, and SpaceX.
As reported by Crowdfund Insider, OurCrowd now reports more than 2.6 billion USD in commitments across 500 portfolio companies and 68 funds with 240,000 registered investors from 195 countries.
Cali Chill said he is honoured to lead at this time and credited Medved for building the culture that drives the company. He said that by offering curated access to venture opportunities, OurCrowd bridges the gap between institutional investors and individuals who want professional access to global startups. Medved said he will keep pushing to democratize venture investing and use artificial intelligence to reach a wider community of investors.
See: OurCrowd Double IPO Success Provides Crowdfunding Validation
A Lasting Connection With Canada’s Crowd
Medved has been a returning keynote speaker at NCFA Canada events over the years, such as the 2015 Canadian Crowdfinance Summit and FFCON19: Fearless. He was known for his inspiring energy, storytelling, and ability to connect people. After his talks, crowds would often follow him as he handed out business cards and traded ideas with founders and investors. He was highly sought after and a regular guest in leading media outlets where he spoke about Israel’s technology ecosystem, global venture markets, and innovation trends. His stories about Israel’s startup culture and how necessity sparked resilience left a strong mark on the Canadian innovation community.
One memorable example came during his keynote at CCS 2015, when Medved made a spontaneous commitment on stage to open a Canadian office for OurCrowd. Within months, the firm delivered on that promise, establishing operations in Toronto and announcing a 1 million USD investment in Influitive, a Toronto-based advocate marketing leader. Ontario’s Minister of Economic Development at the time, Brad Duguid, described the move as "a landmark step for Canada’s growing technology and venture capital scene".
Read: Equity Crowdfunding Leader OurCrowd Opens Canadian Office; Targets 1st Investment in Canadian Company Influitive
Medved Continues to Lead Through ALS
Even now as Jon manages ALS, he continues to work and inspire others. He remains a powerful voice for founders, investors, and countries building inclusive capital markets. His determination to keep working through adversity shows the same spirit that made OurCrowd a global success. On behalf of NCFA, we wish all the best for Jon and his team during this 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 aa 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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Fintech Charters and Challenger Banks Driving Competition
Fintech Competition | Oct 21, 2025
Image: Freepik/kues1
New Data Show How Proportionate Licensing and Capital Models Boost SME Credit and Competition
On October 8 2025, QED Investors and Oliver Wyman released Seizing the Bank Charter Moment (37 page PDF), tracking that fintechs filed more than 20 charter applications in 2025 (3x the number in 2023). The analysis found that obtaining a charter reduced funding costs by 150 to 300 basis points and improved net interest margins by 2 to 4%, driven by access to insured deposits and direct payment rails.
Also, on October 16 2025, Innovate Finance published Challenger Banks: A British Success Story (28 page PDF) confirming that UK challengers now hold about 25% of SME business current accounts and provide 60% of SME lending, up from under 5% seven years earlier.
Bank Charters in United States Regaining Momentum
The report found that fintechs with a bank charter earn an average return on equity of 14 to 16%, compared with 9 to 10% for those still operating as non-banks. The analysis outlined three main ways fintechs can hold a charter: (1) Full national bank charter; (2) Industrial loan company model that allows more flexibility for parent investors; and (3) Limited-purpose charter that does not take deposits but still falls under direct supervision.
The report shows that about 20 new applications had been filed by fintechs and new entrants, at the time of publishing. The Financial Technology Association said this renewal of new fintech charter bank activity can help increase competition. FDIC officials noted that the total number of US banks has fallen from roughly 8,500 in 2008 to 4,500 today, strengthening the case to restore market entry options.
For growing fintechs, the economic break-even point for considering the bank charter pathway is around $5 billion in assets and a return on equity above 12%. Meaning beyond that level, the cost savings from having a charter more than offset the added compliance and capital requirements. Even with about $50 to $100 million in new capital requirements and $8 to $12 million in yearly compliance costs, the charter still provides a net advantage.
See: Ripple Seeks US Bank Charter for Stablecoin Expansion
As an aside, the lower cost of capital for chartered banks comes from structure, not size. Non-banks depend on wholesale funding or partner-bank arrangements that add about 1.5 to 3% to their cost of money because these funds are not insured. And chartered banks fund mainly through insured deposits, giving them a built-in advantage even after paying for regulatory oversight.
United Kingdom Competition Via Proportionate Rules
Innovate Finance report shows that challenger and specialist banks increased their small business lending to £110 billion in 2024 (about $140 billion CAD), which is 4.5% higher than the year before. The British Business Bank reports that these banks now provide about 60% of all lending to UK small and medium-sized enterprises (SMEs), a significant achievement.
However, the report warns that upcoming rules under Basel 3.1 and the Small Domestic Deposit Taker (SDDT) regime could make it harder for smaller banks to lend. They estimate that the new rules could reduce small business lending by up to £44 billion, which they describe as a potential tax on growth. Their Think Challenger proposal calls for more balanced regulation so that smaller, well-managed banks can continue to support small firms and customers while staying safe and sound.
See: UK Open Banking Update and Road to Open Finance
This UK's experience offers clear lessons for Canada; that clear and fair (proportionate) rules can encourage innovation and competition while maintaining trust and stability in the system.
For larger banks, the benefits of collaboration are also visible. Institutions that work with challenger banks or fintechs on digital credit and data analytics see 10 to 15% faster deposit growth compared with those that compete alone.
Canada Has A Narrow Window to Modernize
In July 2025, the federal government began consulting on how to update the country’s deposit insurance system. Open banking including accreditation rules are expected to appear in the fall budget. The Retail Payment Activities Act (RPAA) is now fully in effect, bringing both domestic and international payment firms under the supervision of the Bank of Canada. Together these steps strengthen oversight but do not yet create a path for fintechs to operate as full banks.
For policymakers, both reports referenced in this article are evidence that fair and proportionate rules for capital and licensing help increase competition and small business lending without creating extra risk. Canada could adopt a tiered model where smaller fintech lenders meet simpler capital and reporting standards based on their size and activities, while full deposit-taking banks continue to meet the higher bar.
Canada doesn't yet have a charter pathway for fintechs or smaller non-bank lenders. Introducing a proportionate licensing framework with a transparent and time-bound review process would improve predictability, attract investment, and show that Canada is open to fintech banking innovation.
See: How Competition Powers Canada’s Economic Growth
For fintech founders, timing, a level playing field and the ability to innovate and compete without structural barriers now matters. For investors, the valuation gap is becoming clear. In the US, fintech banks with charters trade at about 1.6 times book value, compared with 1.1 times for similar lenders without charters. A well-defined Canadian charter model could close that gap and attract more long-term domestic investment into fintech banking.
Conclusion
The simple truth is when proportionate rules are clear and scaled to risk, competition improves, credit costs go down, and innovation thrives. The UK and US results show that proportionate regulation produces measurable gains in lending and economic resilience. Canada now has a short window in 2025 to enable domestic fintechs a fair chance to grow and succeed at home.
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 aa 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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Why Policy Scenarios Now Matter for Fintech Strategy
Fintech Risks | Oct 20, 2025
Image: Freepik/Rawpixel.com
Tiff Macklem Fireside Implies Fintechs Must Plan For Multiple Policy Outcomes as Trade and Inflation Risks Rise
On October 16, 2025, Bank of Canada (BoC) Governor Tiff Macklem joined Adam Posen at the Peterson Institute for International Economics (PIIE) in Washington for a public conversation about Canada’s economic outlook and global trade. Macklem said new tariffs, slower trade, and changing supply chains are impacting the Canadian economy.
As a result, he explained that the BoC is now using several possible economic paths instead of one fixed forecast because global uncertainty has become constant. The new approach was outlined in the Bank’s July 2025 Monetary Policy Report and compares what could happen if tariffs stay the same, ease, or rise, and indicates the impact of each option on inflation, output, and interest rates.
Canada’s Four Challenges in a Divided World
Macklem described four forces that will impact the next 10 years for Canada:
1. Trade now clusters around three main hubs led by the United States, China, and the European Union. The United States still dominates world finance even as investors question its safe haven status, and other countries like Singpore pushing above their weight.
See: Data Shows Tariffs Are Threatening Early Stage Innovation
2. Global trade and money flows are becoming uneven again (a recurring structural issue). Some regions keep running big surpluses while others, including North America, rely more on borrowing. Macklem said this growing imbalance adds risk to the global financial system and limits how much small economies like Canada can control their outcomes.
3. He said higher tariffs and unpredictable policy weaken demand, raise costs, and reduce the efficiency of supply.
4. Canada is feeling these pressures through weaker exports, slower investment, and lower productivity growth, outcomes that no interest rate decision can reverse.
From One Forecast to Several Possible Futures
Traditional forecasts assume one view of the world. Macklem explained that the Bank now works with three possible paths. One assumes current tariffs remain. One assumes tensions ease. One assumes further escalation.
See: Stephen Poloz’s Plan to Fix Canada’s Economy
The aim is to keep inflation expectations stable while helping households and businesses adjust to uncertainty. For fintechs and lenders, strategic business planning must now be built around several credible economic futures too, and not rely on a single base case. Funding, pricing, and credit policies should be tested against each path to stay resilient no matter which reality unfolds.
Trade Uncertainty and Financial Risk
Macklem explained that new tariffs and complex rules are adding cost and delay at the Canada–U.S. border, disrupting supply chains. Firms that once relied on integrated supply chains now need new suppliers, new routes, and stricter compliance to maintain trade eligibility. That adds cost and delays that ripple across sectors. Even service firms are affected through their clients and vendors.
For fintechs offering trade finance, payments, or working capital products, this environment creates opportunity but also exposure to new risks. There is demand for tools that make international transactions faster and more transparent, but also new risks tied to client sectors under pressure.
Competitiveness Through Productivity and Reform
The Governor stressed that raising productivity is now essential. He pointed to faster project approvals, fewer internal trade barriers, and stronger transport links as priorities to open new pathways.
See: Canada’s Public Sector Costs and Productivity Gap
The Bank’s recent reports say that fixing long-term barriers in the economy like slow project approvals or weak competition can improve growth more than changing interest rates (aka, monetary policy).
Fintechs can build solutions that help reduce administrative frictions, such as digital identity and onboarding tools can eliminate duplication between provinces. Compliance automation and regulatory technology can shorten approval times. Procurement platforms can help smaller firms reach national customers. These are examples of direct responses to the barriers that Macklem said must be addressed.
Neutral Rate, Cost of Capital, and Planning
Macklem also spoke about the neutral interest rate which is the level that keeps inflation stable without stimulating or slowing the economy. He said it may not align between Canada and the United States because productivity growth and fiscal policies differ. That divergence affects long term funding costs and the flow of investment capital.
See: How Competition Powers Canada’s Economic Growth
For fintechs that borrow in U.S. dollars or rely on foreign investors, funding costs and access to cash can change even if central banks don’t move rates. The safest approach is to plan for different interest rate outcomes instead of assuming Canada and the U.S. will always move together.
Digital Money and the Priority of Trust
When asked about digital assets, Macklem said the Bank’s work on stablecoins and a possible central bank digital currency focuses on preserving trust and value. The principle of the singleness of money means that one Canadian dollar must hold the same worth everywhere, whether in cash or digital form.
Stablecoin systems must avoid runs and guarantee convertibility. For fintech developers and innovators, it means creating systems that work within the regulated financial system, not outside. The most promising area is making international payments faster, cheaper, and clearer, while ensuring every digital dollar is fully backed and can always be redeemed.
Why Case Planning Matters For Fintech
Uncertainty is no longer an exception but a normal condition for business and policy. Every possible trade path changes inflation, growth, and the cost of capital. Fintech founders, investors, and lenders must build this thinking into their models and operations. That includes ready plans for each scenario, triggers for risk adjustments, and playbooks for client support when tariffs or rates move unexpectedly.
See: The Crisis Canada and Fintech Can’t Afford to Waste
The firms that incorporate this discipline and governance will not only manage volatility better but also build trust with investors and customers who highly value predictability in uncertain times.
Outlook
It's time for Canada to demonstrate adaptability, and treat uncertainty as a given design factor instead of a sudden surprise. Canada’s financial ecosystem, from established lenders to digital innovators, must treat uncertainty as a normal part of planning. Fintechs that adopt scenario planning, streamline processes, and improve real economy efficiency can help Canada compete globally even as the trading system fragments.
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 aa 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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Ethereum Bot Heist Trial Exposes $25M Scheme
Crypto | Oct 16, 2025
Image: Pixabay/Ashley Jackson
Peraire-Bueno Trial Reveals Hidden Risks in Ethereum MEV Trading and Unclear Legal Limits
On October 15, 2025, Bloomberg News reported that Massachusetts Institute of Technology graduates James and Anton Peraire-Bueno are on trial in Manhattan for allegedly stealing about US $25 million from Ethereum traders using a complex Maximal Extractable Value (MEV) strategy.
The case could have significance in how U.S. law treats algorithmic blockchain activity in the future. The brothers have pleaded not guilty, arguing that their actions were lawful in an unregulated market and that their alleged victims used similar tactics.
Sandwiching Strategy
Prosecutors said in April 2023 the Peraire-Bueno brothers created bait transactions to lure automated trading bots that use a practice called sandwiching. A sandwich attack happens when a bot places a buy order before and a sell order after a large user transaction, capturing a profit while driving up the price. Though widely criticized as manipulative, sandwiching is not illegal.
See: OSC Crypto Trading Platform Compliance Review Findings
According to prosecutors, the brothers learned how to exploit a flaw in MEV Boost (open-source Ethereum software) to see and rearrange transactions before they were confirmed. By using this access, they allegedly turned the tables on the bots and redirected millions of dollars to their own accounts. Prosecutors called the act a “high-speed bait and switch” and said the brothers’ goal was to rip people off.
How the Defense Sees It
Defense lawyers for the brothers argue that the Peraire-Buenos simply outsmarted the bots in a free and open market. They described the strategy as “wildly successful” but legitimate within the competitive crypto space. The defense says the funds were voluntarily traded away by the bots and that the prosecution’s decision to side with their main alleged victim, Savannah Technologies, doesn't mean a crime occurred.
An Israeli crypto trading firm Savannah claims it lost US $13 million when its bots were targeted. Its CEO David Yakira is expected to testify per Bloomberg's trial coverage and also reflected in the case docket. The rest of the missing US $12 million was from unidentified traders.
A Divided Crypto Community
The case has divided developers, traders, and researchers. Ethereum Foundation researcher Dankrad Feist said “stealing from a thief is still theft,” referring to sandwich attackers. Others in the community argue that what the brothers did was a fair play in a secretive, high speed ecosystem with no established rules.
See: Quebec Decision Challenges Canada’s Crypto Rules
Matt Cutler CEO of Blocknative, said the brothers “tricked someone into doing a sandwich that should have been safe by the rules of the network.” He mentioned that it was a bug in the software that made it unsafe, highlighting how fragile some blockchain systems can be when technical flaws meet trading incentives.
Why It Matters
The Peraire-Bueno trial is being watched closely across the fintech and blockchain sectors because it will test whether exploiting code vulnerabilities amounts to fraud. It also raises the question of how far traditional legal concepts like intent and theft can stretch into decentralized and automated markets. The outcome could establish a new precedent for the future of decentralized finance and blockchain governance, where innovation and regulation often collide.
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 aa 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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Quebec Decision Challenges Canada’s Crypto Rules
Crypto Asset Policy | Oct 15, 2025
Image: Freepik AI
Quebec Tribunal Ruling Challenging One-Size-Fits-All Crypto Regulations
In August 2025, Quebec’s Financial Markets Administrative Tribunal issued its decision in AMF v. Gagnon et al. that examined whether tokens linked to a crypto trading signal subscription service were investment contracts under Quebec’s Securities Act or not. The respondents ran an online business that sold memberships through social media and a Telegram group, offering automated buy and sell recommendations for digital currencies such as bitcoin. Investors paid recurring fees to receive trading alerts and access private chat rooms.
See: Canada’s Stablecoin Race Enters Critical Phase
The tribunal found that the respondents misled subscribers and exaggerated claims about profit potential without proper registration. However, it also ruled that the tokens and the trading signals themselves weren't securities. Investors acted independently (i.e., placing their own trades), and there was no pooling of funds or shared enterprise that would meet the legal test for an investment contract in Quebec.
It's an important ruling because it draws a clear line between activities that require securities registration and those that do not. The decision has prompted discussion across Canada about how regulators should evaluate crypto asset business models (subscription required).
Decision Rooted In Economic Reality
The tribunal focused on how the Gagnon business actually worked, not how the business is described or the types of tokens involved. The respondents sold subscriptions to a crypto signal service through social media and Telegram. Members paid recurring fees (usually in crypto) to access automated trading alerts and private discussion groups. The tribunal found that subscribers of the service acted independently because they placed their own trades, used their own accounts, and there was no pooling of funds or shared enterprise.
Because the respondents did not issue tokens, manage capital, or control investor profits, the activity did not meet the legal test for an investment contract. The tribunal said speculation alone does not make a trading service or token a security.
See: How Competition Powers Canada’s Economic Growth
David Durand, Founder Durand Lawyers and NCFA Advisor, was interviewed for the Law360 article on legal classification of crypto assets, who argued that each crypto asset and business model must be assessed on its economic reality, not through one universal rule.
“The fact that securities regulations would have scant effect in protecting users on decentralized networks makes it evident that defining crypto assets as a security would provide ineffective regulatory enforcement in this respect. "[Overreaching securities regulation on the crypto asset regime would] likely create a system where onerous requirements are placed on users of such assets, with an end result of suppressing innovation [in financial technology and financial capital to leave Canada seeking more favourable environments]."
“The important point here is that the tribunal says a crypto asset is not an investment contract. However, when we criticize the act of trading an asset, we are referring to the investment contract in relation to the person and not the object or the very nature of the crypto asset. The implications are that we are moving in the right direction in terms of the fact that crypto assets were not an investment contract.”
Implications Across Canada
Although the decision applies only in Quebec, its reasoning may influence regulators across Canada. The Canadian Securities Administrators have been moving toward coordinated rules for crypto trading platforms, but this ruling highlights the limits of the CSAs current approach when activities vary so widely in design.
The tribunal also said regulators need stronger evidence before using enforcement tools like freezing orders. It ruled that authorities must show clear proof before stopping a business from operating. This could set a new standard for fairness in future crypto cases.
See: Canada to Enforce Cryptoasset Reporting by 2027
For fintech founders, the ruling gives clearer guidance on what falls inside or outside securities law. Businesses that offer decentralized tools, such as trading signal services, software systems, or network platforms are less likely to be treated as securities, if users of those tools remain in control of their own money and avoid profit sharing and collective investment components.
For regulators, the case is a reminder to focus on real misconduct instead of labelling all crypto activity as securities by default.
Comparison with Ripple and MiCA
The Gagnon reasoning parallels the SEC v. Ripple Labs decision in the United States, where a U.S. court drew a line between tokens sold directly by a company and those traded later on the open market. The court said that how and where a token is sold makes a difference. When people buy directly from the issuer based on its efforts, the sale can fall under securities law, but trades between independent buyers and sellers on exchanges may not.
Europe’s Markets in Crypto-Assets (MiCA) regulation offers another useful example. MiCA builds specific legal categories for utility tokens, payment tokens, and asset-referenced tokens, instead of applying one framework to all.
Read: BIS Proposes Scoring Model for Crypto AML
Canada has yet to create a similar set of purpose-based rules, leaving courts and tribunals to fill the gaps through case law.
Strengthens NCFA's Call for a National Framework
The Quebec tribunal ruling strengthens NCFA's call for a coordinated national digital asset framework that distinguishes between token types and activities. Further, Canada can draw from both MiCA’s structured taxonomy and the functional reasoning used in Ripple and Gagnon. NCFA continues to recommend that policymakers should now focus on:
(1) developing a clear national digital asset taxonomy;
(2) designing safe harbours for compliant innovation;
(3) aligning oversight with international best practices and;
(4) concentrating enforcement on fraud and deception rather than classification disputes.
Canada Must Regulate for Growth
The Gagnon ruling challenges Canada’s regulatory system to evolve beyond the one-size-fits-all treatment of crypto assets. The tribunal recognized that each digital asset and business model carries distinct risks and economic activities.
One brush does not fit all. Crypto assets differ in structure, function, and purpose. Regulation must be designed for growth, not just enforcement. As NCFA recently argued in “Regulating for Growth by Understanding Innovation”, good regulation should reward experimentation, promote competition, and provide safe entry points for new entrants, not block innovators out of fear.
If Canada wants to compete in digital finance, it must build laws that reflect how crypto businesses actually work, support new ideas, and focus on misconduct, not label everything a security first.
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 aa 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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