Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Regtech, Compliance, Governance
House Fails to Stop SEC’s Accounting Rule SAB 121
Crypto Regulation | Jul 12, 2024
Image: Freepik/pch.vector
US House Fails to Override Biden's Veto on SEC's Controversial Staff Accounting Bulletin 21 (SAB 21)
Recently, a bill to override President Joe Biden's veto of the controversial SEC Staff Accounting Bulletin No. 121 (SAB 121) was not successfully passed by the U.S. House of Representatives. According to SAB 21, businesses that hold digital assets on behalf of clients are required to list those assets on their balance sheets as liabilities.
See: SEC Intensifies Accounting Audits in 2023
The override attempt failed to garner the two-thirds majority required to overcome the presidential veto, even though it was approved by both the House and the Senate with support from both parties.
Background on SAB 121 and Bill to Overturn It
SAB 121, which the SEC released in March 2022, has caused controversy in the cryptocurrency and banking worlds. Through correct accounting for digital assets, the guideline seeks to protect investors and enhance transparency by possibly reducing the risks associated with their volatility. However, opponents contend that this regulation places excessive constraints on companies and may inhibit innovation in the quickly developing crypto markets.
Representative John James (R-MI) proposed the bill to repeal SAB 121, and it received a lot of support, indicating that lawmakers were generally skeptical of the SEC's strategy. The bill's supporters argued that the SEC's guidelines were unduly burdensome and detrimental to companies, particularly those that dealt with digital assets. There was significant bipartisan opposition to the SEC's mandate, as seen by the House's 228–182 vote and the Senate's 60–38 vote.
Biden's Veto and Its Implications
President Biden vetoed the bill emphasizing how crucial it is to uphold strict regulatory standards in order to safeguard investors and consumers. Biden claimed that repealing SAB 121 would weaken the SEC's power and its capacity to impose important financial reporting standards in his veto statement.
See: Canada to Enforce Cryptoasset Reporting by 2027
The House attempted to override the veto after it was issued, but was unsuccessful with a vote of 214–191, falling short of the necessary two-thirds majority. Due to this result, SAB 121 is still in force and will continue to have an impact on how businesses declare their digital assets.
Outlook
More legislative and regulatory hurdles are expected as the sector develops. It will be up to policymakers to strike a balance between protecting investors and maintaining market stability while promoting innovation.
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
 |  |  |
|---|---|---|
 |  |  |
SEC Drops BUSD Paxos Trust Investigation, No Enforcement
Enforcement | Jul 12, 2024
SEC Ends Investigation into Paxos Over Binance USD Token with No Enforcement Action Taken
The Securities and Exchange Commission (SEC) of the United States has finished its probe into Paxos Trust Company concerning the stablecoin Binance USD (BUSD) issuance and is not taking any enforcement action over BUSD.
Paxos statement as reported by WSJ:
“Paxos Trust Company has always maintained that its USD-backed stablecoins are not securities under federal securities laws and that the Wells Notice was unwarranted and unjustified. We are proud of our relentless advocacy for stable-value digital assets and that the SEC staff determined it will not bring enforcement action against Paxos in connection with BUSD.”
Background
Since 2019, Paxos, a regulated blockchain infrastructure company, collaborated with Binance to issue a BUSD stablecoin which was authorized by the New York Department of Financial Services (NYDFS) and is fixed 1:1 to the US dollar.
The SEC warned Paxos in a Wells Notice at the beginning of 2023 that there may be enforcement action taken in response to BUSD's classification as an unregistered security. The NYDFS was compelled by this notice to direct Paxos to stop issuing new BUSD tokens, while stablecoin redemptions were still permitted.
See: Paxos International Launches Yield-Bearing USDL Stablecoin
In response to these regulatory demands, Paxos severed ties with Binance in respect to the issuance of BUSD. The business vowed to protect investors and guarantee that all BUSD tokens are entirely backed by US dollar reserves kept in FDIC-insured accounts.
Outlook
The NYDFS is still keeping an eye on Paxos's compliance and redemption procedures, but this case highlights how much regulatory attention is being paid to stablecoins and other digital assets. As seen by recent steps taken against Uniswap and Robinhood as well as the continuous investigation of Coinbase's staking services, the regulatory moves against Paxos are a part of a bigger trend. The crypto industry is likely to face ongoing regulatory challenges as authorities seek to establish clearer frameworks for digital assets.
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
| | |
|---|---|---|
| | |
Inside Federal Securities Laws and Crypto’s Tightrope
Regulation | Jul 11, 2024
Image: Gurbir S. Grewal Director Enforcement Division, SEC
Insights from SEC's Director of Enforcement: Federal Securities Laws in the Age of Crypto
in a recent speech titled "What's Past is Prologue: Enforcing the Federal Securities Laws in the Age of Crypto", Gurbir S. Grewal, Director of the SEC's Division of Enforcement, delivered an overview of the present legal environment for crypto assets at the Third Annual Symposium of the William & Mary Business Law Review.
See: Challenges in Global Crypto Regulations – Lessons from Dubai
He highlighted the importance of strong enforcement, the continuous applicability of federal securities laws, and the delicate balancing act between innovation and compliance. Below are select quotes across five themes from the depths of the SEC's securities enforcement division that shine light on the implications for the cryptocurrency industry.
1. Historical Continuity of Securities Regulation
Grewal emphasizes the continued applicability of the basic principles that informed the development of US securities laws.
“The history of our securities laws makes clear that Congress always intended the definition of what is a security to be principles-based and flexible to cover the many kinds of schemes where promoters seek others’ money and promise profits in return. Whether something is a security depends on the substance of the transaction – not its name, not its form, and not its underlying technology.”
He implies that crypto assets have to live by the same regulatory frameworks as conventional securities, even though blockchain technology is unique. This guarantees strong investor safeguards while preserving market integrity in the face of technological improvements.
2. Investor Harm and Market Integrity
Grewal laments the substantial financial impact that the volatility of the cryptocurrency market has caused to regular investors.
“The current turmoil in the crypto markets is taking a real toll on everyday Americans. According to one survey, approximately 16% of U.S. adults have invested, traded, or used crypto, and among that group approximately 46% report their investments have done worse than they expected. In the end, investors, large and small, defrauded, and billions in customer assets misused or stolen.”
To stop further exploitation and rebuild investor confidence, there needs to be more governmental oversight of the cryptocurrency markets due to the massive losses and fraudulent activities that have occurred there. These comments highlight how important it is to follow securities rules strictly in order to protect investors.
3. Compatibility of Innovation and Compliance
A key theme in Grewal’s speech is the compatibility of technological innovation and regulatory compliance.
“Innovation and compliance with the securities laws are not mutually exclusive. The quarrel, therefore, is with noncompliant actors, not the technology or its promises.”
See: SEC Enforcement Director Grewal On Crypto Regulation
Grewal argues for a moderate strategy that promotes innovation while guaranteeing investor protection by differentiating between non-compliant behaviour and the promise of blockchain technology.
4. Public Trust and Regulatory Enforcement
Grewal is talking about the critical role of public trust in financial markets, which is reinforced by strict securities laws.
“Public trust requires robust enforcement of the securities laws. We must act with all the tools at our disposal to protect investors and enhance public trust and confidence in our markets."
This means that for the cryptocurrency industry, following regulatory guidelines is crucial for both legal compliance and preserving investor confidence and market participation. Strong enforcement measures reassure investors about the integrity of the market and function as a deterrent against unwanted behaviour.
5. Socioeconomic and Racial Disparities
Grewal brings attention to the disproportionate impact that crypto market volatility has on minority and marginalized communities.
“Crypto assets are the only major financial products that Black Americans are more likely to own than white Americans. And there is some evidence that Black and brown investors have now been disproportionately harmed during the downturn of crypto markets."
See: Canada’s Proposed Mutual Fund Crypto Regulations 2024
He also critiques:
“Predatory inclusion tactics of crypto entities directed at Black, brown, and other marginalized communities.”
Market participants and authorities have moral obligations to make sure that financial progress does not take advantage of vulnerable populations. In order to achieve equitable financial inclusion and protect all investors from predatory activities, gaps must be addressed.
Conclusion
Gurbir S. Grewal presents a case for a strict yet flexible regulatory framework that would safeguard investors while upholding the integrity of the market, and encourage innovation in the crypto sector. Grewal describes a regulatory approach that takes into account the historical background, investor harm, compliance, public trust, and socioeconomic inequality.
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
| | |
|---|---|---|
| | |
Bank of England Launches New Data Innovation Strategy
Regulation | Jul 9, 2024
Image: Bank of England - Overview of Data and Analytics Strategy
Q&A Insights from the Bank of England's New Strategy
At the Future of Regulation (DiFoR) conference on July 5, James Benford, the at the FCA delivered a speech outlining the Bank of England's new data analytics strategy, goals, and new enterprise cloud data platform and plan to make data innovation work for everyone.
5 Insights About the BoE's New Data Analytics Strategy
Below we highlight some impactful Q&A of interest to fintechs and financial institutions regarding data innovation plans.
1. What is the Bank of England's New Data and Analytics Strategy?
With the goal of revolutionizing the collection, analysis, and application of data, the Bank of England has launched a new comprehensive data and analytics plan. This approach places a strong emphasis on utilizing data technology to promote financial innovation, increase financial stability, and improve regulatory compliance.
See: BoE Report: Open Banking Boosts Productivity, Competition
The goal of the Bank's use of big data and sophisticated analytics is to build a financial system that is more reliable, open, and effective.
2. How Will the New Cloud Enterprise Data Platform Be Developed and Implemented?
Developing a new cloud enterprise data platform to enable real-time analytics and decision-making by facilitating seamless data integration and accessibility is a key part of the plan. The implementation will be phased with core infrastructure added first and more sophisticated features being added in the future. This approach ensures a safer, adaptable, and scalable environment for handling enormous volumes of financial data.
3. What Steps Are Being Taken to Improve Regulatory Data Collections?
Improving regulatory data collection is one of the main priorities of The Bank of England. The implementation of powerful technologies that automate data collection aims to improve the timeliness and accuracy of data submissions while lessening the reporting load on financial institutions. Improved risk management and more effective regulatory supervision will also be possible with streamlined procedures and improved data standards in the financial industry.
4. How Will Artificial Intelligence (AI) Be Safely and Effectively Integrated?
AI tools will be combined to evaluate large, complex datasets, forecast trends, and spot possible dangers. Strict governance frameworks and ethical standards are being implemented by the Bank to guarantee safe and efficient use.
See: How GenAI Is Transforming Risk and Compliance in Banking
By addressing issues with bias, transparency, and data protection, these steps will promote responsibility and trust in AI-driven systems.
5. How Will the Bank Manage the Transformation?
To succeed the bank will need to adjust its corporate culture, skill sets, and business procedures to transform the Bank's approach to operate a modernised data innovation program. The bank is investing in training and development of staff to provide the necessary skills to work in a data-centric environment. Also, cultivating a culture of creativity and cooperation is necessary for the new approach to be implemented successfully. This entails interacting with stakeholders from the financial industry as a whole and promoting candid discussions on industry best practices and new developments.
What Outcomes Are Expected?
- More timely and reliable data can be expected by using automated data collection systems and advanced analytics. This lowers errors and improves the accuracy of the financial data available.
- Improved transparency and confidence. Clients can feel secure knowing that their data is managed ethically, reducing the possibility of bias and privacy issues.
- The strategy's focus on effective risk management and regulatory supervision helps to create a more stable financial system. The bank will use AI and machine learning to forecast consumer behaviour, market trends, and possible financial hazards. A safer financial environment lowers the possibility of systemic risks and financial disasters, which benefits consumers.
See: FCA’s Shift to More Transparent Investigations
- The use of automated data collection tools and standardized data formats will minimize data requests and reduce the reporting workload (administrative burden) and costs for both industry and regulators, thus improving regulatory compliance and supervision.
- Stronger data infrastructure will boost collaborative innovation between regulators, fintechs and the Bank of England around financial inclusion, cybersecurity, and other initiatives drawn by insights from shared data, creating an environment that encourages growth.
- Higher quality compliance related data will empower fintechs to make informed data-driven decisions that will improve operational efficiencies and strategic planning, leading to better customer experiences, and ultimately more competitive financial products.
Conclusion
By using the latest technologies to improve data collection/quality and automate regulatory processes while promoting cooperation, regulators and industry may expect better compliance, streamlined reporting requirements, and a smarter and more agile and resilient operating environment.
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
| | |
|---|---|---|
| | |
Changes to PCMLTFA Pre-Published for 30 Day Consultation
Regulation | Jul 8, 2024
Image: Freepik/sentavio
New Regulations under PCMLTFA Announced with 30 Day Public Consultation Open
New rules under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) have been pre-published by the Canadian government. The proposed revisions, which are accessible now in Part 1, Volume 158, Number 27 of the Canada Gazette, seek to put into effect a number of initiatives that have been recommended in recent economic statements and budgets.
See: FINTRAC Guidance on Bitcoin ATMs and Money Laundering
To read the complete text and more information, go to both of the links below:
Overview of Proposed Regulatory Changes
Stakeholders have a 30-day consultation period to provide feedback on these proposed changes.
- Requires properties owned or controlled by individuals or entities listed under various anti-terrorism and sanction statutes to submit detailed reports on sanctioned properties.
- Introduces more stringent reporting guidelines and a registration structure for money service companies operating in the MSB sector in an effort to stop the financing of terrorism and money laundering.
- Requires thorough documentation of the private white-label automated banking machines' ownership, operation, and funding sources in order to improve security and transparency.
- Mandates title insurers to keep extensive records on title insurance policies and enforces the identification of unrepresented and third parties in real estate transactions.
See: Elliptic Publishes New Research on AI and Money Laundering
- Closes a regulatory loophole by making casinos disclose the ultimate beneficiary of payments received from third parties to ensure money traceability.
30 Day Consultation Period
Stakeholders are invited to evaluate the draft regulations and provide feedback during a 30 day consultation period. The contact information for submitting comments on the proposed regulations can be found in the Canada Gazette notice. Final regulations are expected later in 2024. Feedback can be sent by regular mail, email, or the internet.
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
| | |
|---|---|---|
| | |
DCPayments Enhances Digital Solutions with Jasper PIM Buyout
M&A | Release | Jul 8, 2024
Image: Freepik
DCPayments Completes Acquisition of Jasper's Operating Business
Digital Commerce Payments (DCPayments) has completed its acquisition of Jasper Commerce Inc.'s (Jasper) Product Information Management (PIM) business. This transaction, which will take effect on June 30, 2024, aims to improve DCPayments' digital payment solutions while also expanding its market position.
View Jasper release here | DCPayments release here.
Deal Overview
- DCPayments purchased the assets from Jasper Interactive Studios Inc. (JISI), a Jasper subsidiary.
- A revenue earn-out over three years based on the business's gross revenue will be included in the deal, which has a maximum value of $1,500,000, subject to usual purchase price modifications.
- 95% of the proceeds will be distributed to JISI's creditors. Not all obligations, nevertheless, will be fulfilled.
DCPayments's Perspective
Acquiring Jasper's PIM division is a calculated move by DCPayments to further connect their electronic payment services with strong product management skills. With this addition, DCPayments will be able to provide more complete solutions, assisting companies in expediting market entry and optimizing online operations. Up to $1,500,000 is the total consideration for this deal, subject to usual adjustments and a revenue earn-out spread over three years.
See: “Crypto’s Back”, Stripe to Support On-Chain USDC Payments
Pamela Draper, President of DCPayments:
“Integrating Jasper’s PIM business aligns with our goal to provide a one-stop-shop for businesses enhancing their online presence. This will enable us to deliver faster, more reliable solutions to our clients.”
Jasper's Perspective
For Jasper, the deal is a crucial step toward meeting its financial commitments and looking into new commercial prospects. 95% of the unsecured debts will be settled with JISI's creditors through the primary usage of the revenues. All liabilities will not be satisfied by the deal, though, as Jasper's shares are still listed as suspended on the TSX Venture Exchange.
See: Balance Commits to Alberta, Relocates to Calgary
Mag Saad, Chairman of Jasper:
“This transaction allows us to focus on new ventures and maximize shareholder value. While we face challenges with suspended trading, we are committed to identifying and acquiring new business opportunities to drive future growth.”
Future Plans
Jasper reported a net loss reduction in Q3 2024 and plans to invest in new business activities. However, the necessity for more capital and suspended trading present substantial obstacles.
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
| | |
|---|---|---|
| | |
Balance Invests $10M to Launch Trust Company in Canada
Balance | Release | Jul 3, 2024
Image: Balance
Balance Commits $10 Million to Register Balance Trust Company
Balance, the biggest and oldest custodian of digital assets in Canada, has announced the incorporation of Balance Trust Company as a special purpose trust under the Loan and Trust Corporations Act (Alberta). The company has committed $10 million in regulatory capital into a wholly-owned subsidiary. By offering fiat custody, digital asset custody, collateral management, and escrow services, this new subsidiary hopes to qualify as a custodian in both the US and Canadian markets.
See: Balance Commits to Alberta, Relocates to Calgary
This milestone follows over a year of meticulous preparation, including financial audits, SOC 2 Type 2 certification, and system penetration tests. Balance has also strengthened its insurance programs and added key leadership positions, including a CFO and Chief Compliance and Risk Officer.
Leadership and Governance
The board of directors of Balance Trust Company comprises industry veterans:
- George Bordianu: Co-founder, President, and CEO of Balance.
- Alex McDougall: Co-founder and CIO of Bicameral Ventures, President and CEO of Stablecorp.
- James Slazas: Founding partner and CEO of DARMA Capital.
- Colin Pyle: EVP of Strategy and Corporate Development at RFA Capital Holdings.
- Jean Desgagné: Former President and CEO of the Canadian Depository for Securities (CDS).
Significance of Milestone
Setting up the Balance Trust Company is an important milestone for several reasons:
See: 2023 BIS Survey: CBDC and Crypto Trends Revealed
- Balance is now in a position to provide really localized services in the Canadian market, reducing the dependency on the US for tech and custodians.
- At the moment, Balance uses its digital asset custody solutions to safeguard assets valued at over $2.5 billion. Once the Balance Trust Company is registered, Balance will expand to offer fiat custody, collateral management, and escrow services.
- By becoming a qualified custodian in both the US and Canada, balance will surely expand it's footprint in regulated North American markets.
George Bordianu, co-founder and CEO of Balance:
“Canadian regulated entities are still forced to this day to use US custodians or Canadian custodians leveraging US-based technology. We’re laser-focused on bringing a truly local solution to the ecosystem and are grateful to the team at the ATBF for their help and guidance in achieving this mission and for granting us this letters patent."
See: Canada’s Proposed Mutual Fund Crypto Regulations 2024
Conclusion
Balance Trust Company will be able to assist investment broker-dealers, advisers, and issuers of public ETFs and mutual funds after it is registered and qualified as a custodian.
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
| | |
|---|---|---|
| | |
