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
CSA Backs New Sustainability Disclosure Standards
Policy | March 14, 2024
Image: Freepik
Canadian Regulators Advance Sustainability Disclosure Standards
On March 13, 2024, the Canadian Securities Administrators (CSA) endorsed the Canadian Sustainability Standards Board's (CSSB) consultation on the inaugural Canadian Sustainability Disclosure Standards 1 and 2 which integrates sustainability into the fabric of Canadian financial reporting setting a new benchmark for responsible investment and corporate governance.
See: Canada’s Shift to Enhanced Climate Disclosures
- The CSSB's consultation seeks to gather broad feedback on its first set of sustainability disclosure standards, aiming to refine and enhance these guidelines based on stakeholder input. For the CSSB standards to become mandatory, they must be incorporated into CSA rules. This process will involve a thorough review and potential modification of the standards to align with the unique needs of the Canadian market.
- The CSA is closely monitoring global developments, including the SEC’s recent approval of climate-related disclosure rules, to ensure Canadian standards are harmonized with international best practices.
- Post-consultation, the CSA plans to propose a revised rule focusing on climate-related disclosures, taking into account the finalized CSSB standards. This proposal will seek public feedback on various aspects, including application scope and compliance support for issuers.
Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission:
“We are pleased to see publication of the CSSB’s consultation on its first set of standards. We’re interested in the feedback the CSSB receives generally and specific to certain questions, as it may help inform revisions to our proposed climate-related disclosure rule. We strongly encourage interested and affected parties to share their views on the proposed CSSB standards.”
See: Fintech Can Combat Corporate Greenwashing
Outlook
With the SEC approving climate-related disclosure rules, Canadian regulators are aligning with global standards, and by addressing the specific needs of Canadian issuers, the CSA and CSSB are transitioning to a more sustainable, transparent, and resilient financial 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 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 Adopts New Climate Disclosure Rules, Excluding Scope 3
Regulation | March 13, 2024
Image: Pixabay/geralt
SEC's New Climate Disclosure Rules Will Be A Game Changer for Investors
The Securities and Exchange Commission (SEC) has recently adopted new rules aimed at enhancing and standardizing climate-related disclosures by public companies and in public offerings (after receiving 24,000 comment letters). This move is a response to the growing demand from investors for more consistent, comparable, and reliable information regarding the financial impacts of climate-related risks on companies. Here's a closer look at what these rules entail and why they matter.
- Companies are now required to disclose climate-related risks that significantly affect their business strategy, operations, or financial condition. Registrants must conduct a detailed impact analysis of the actual and potential material impacts of identified climate-related risks on their strategy, business model, and outlook. Companies must provide both quantitative and qualitative descriptions of expenditures and impacts resulting from activities to mitigate or adapt to material climate-related risks.
See: Cato Analysis: SECs Proposed Climate‐risk Disclosure
- Disclosures must include information on the board's oversight of climate-related risks and management's role in assessing and managing these risks.
- Companies are required to describe their processes for identifying, assessing, and managing material climate-related risks and how these processes are integrated into their overall risk management.
- Large accelerated filers and accelerated filers must disclose material Scope 1 and Scope 2 emissions, with assurance reports provided at specified levels.
- Notes to the financial statements must detail the capitalized costs, expenditures, and losses related to severe weather events, carbon offsets, and renewable energy credits, as well as the impact of these factors on financial estimates and assumptions.
Reaction
An article by Governance Intelligence called "Why the requirements are much weaker than planned" by Sehoon Kim, highlights the significant dilution of the initially proposed requirements, particularly the controversial decision to not mandate companies to report Scope 3 emissions, which pertain to emissions generated throughout a company's supply chain and by the use of its products. This decision represents a substantial scaling back from the original proposal, focusing instead on requiring larger companies to disclose Scope 1 and Scope 2 emissions, related to their direct operations and energy use, only when such information is deemed materially relevant to investors.
See: Climate Inflation Discussion for a Sustainable Future
Scope 3 emission requirements sparked intense public debate and received a record number of comments, reflecting strong interest and significant opposition, including threats of legal action from several Republican state attorneys general. Much of the debate has centered on 'cost-benefit concerns' whether the compliance costs for companies would outweigh the benefits of mandated disclosures to investors. The SEC's own estimates suggested substantial compliance costs, potentially doubling for the average publicly listed company.
The rules are expected to disproportionately affect smaller companies, which are less likely to have voluntary disclosure practices in place, while larger corporations may see minimal impact.
* March 18, 2024 Update
Why It Matters
By requiring detailed disclosures, the SEC aims to provide investors with the tools they need to make informed decisions based on the climate-related risks and opportunities faced by companies.
See: Sustainability: A Must for Fintech Growth
These mandated disclosures promote transparency and accountability and encourage companies to more actively manage their climate-related risks, potentially leading to more sustainable business practices over the long term.
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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U.S. Expanding Access to Capital Act Boosts Startup Funding
Policy | March 13, 2024
Image: Unsplash/Alexander Mils
New legislation in the U.S. opens doors for startup investment
The House of Representatives has recently passed the Expanding Access to Capital Act, an important piece of legislation sponsored by Patrick McHenry, which aims to streamline and enhance the funding process for entrepreneurs and startups.
The bill was approved with a vote of 212 to 205, reflecting a division along party lines. Fifteen Representatives abstained from voting. Although the bill did not receive support from Democrats, the final version of the legislation included several amendments proposed by Democratic members. Although the House has passed the legislation, its reception in the Senate remains uncertain. Before becoming law, legislation must pass through several stages, including potential amendments and approvals by different legislative bodies (e.g., the Senate in the United States). Until it is finalized and enacted, the exact provisions and their implications 'may' change.
See: Neiss Advocates for Economic Growth via H.R. 2799
The Expanding Access to Capital Act introduces several regulatory changes aimed at democratizing investor participation by making it easier for a broader range of investors to engage in the funding of startups and small businesses, such as:
- By simplifying the securities regulations, the act aims to lower the barriers for small businesses and startups to access public and private capital markets. This simplification could involve reducing the paperwork and compliance costs associated with issuing securities, making it more feasible for smaller companies to raise funds.
- Crowdfunding has emerged as a vital tool for democratizing investment in startups. Regulatory changes may include increasing the limits on how much money can be raised through crowdfunding platforms, as well as easing restrictions on who can invest through these platforms, thereby widening the pool of potential investors.
- The act seeks to modify the definition of "accredited investors" to allow more individuals to invest in private offerings. Currently, accredited investor status is largely based on income or net worth, limiting investment opportunities to a relatively small portion of the population. By broadening this definition, more people could participate in early-stage investments.
See: NASAA Intensifies Access to Capital Debate
- For investors in startups and small businesses, the lack of liquidity can be a significant barrier. Regulatory changes aimed at improving the liquidity of private securities could make it easier for investors to sell their stakes, thereby attracting more participants who are concerned about the ability to exit their investments.
- By reducing the complexity and cost of reporting and disclosure requirements for small businesses, the act could make it more attractive for these entities to seek investment from a broader audience. This approach balances the need for investor protection with the goal of reducing burdensome obligations that can deter small businesses from seeking public investment.
- The act may also include provisions to support the development and use of innovative investment platforms and technologies that facilitate easier access for investors. This could involve regulatory sandboxes or other measures that allow for the testing of new financial technologies and investment models without the full weight of regulatory compliance from the outset.
Outlook
As we await its final approval and implementation, the outlook for entrepreneurs seeking to bring new ideas to market is decidedly more optimistic, signaling a shift towards a more accessible and dynamic financial ecosystem. These regulatory changes are designed to create a more inclusive investment ecosystem, where more individuals have the opportunity to invest in startups and small businesses.
See: NCFA Response to the Modernizing Ontario’s Capital Markets Consultation Taskforce
By lowering barriers to entry and making it easier for companies to raise capital, the Expanding Access to Capital Act aims to foster a more vibrant and diverse economic landscape. Canadian capital markets and regulators are you listening?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Court Debates Emoji as Binding Contract Signatures
News | March 12, 2024
Image: Freepik/Emoji
A Saskatchewan appeals court is currently deliberating whether a thumbs-up emoji sent via text message can legally constitute a signature in a contract
The case in question involves a legal dispute in Saskatchewan, Canada, where the courts are deciding if a thumbs-up emoji sent in a text message can be considered a legally binding signature in a contract. This issue arose from a conflict between two farming companies, South West Terminal and Achter Land & Cattle.
- In March 2021, South West sent a text message to Achter Land, asking for confirmation of a contract to purchase 86 metric tons of flax grains, to which Achter Land responded with a thumbs-up emoji. However, the flax grains were never delivered, leading to a lawsuit where South West Terminal was awarded $82,000 by Justice T.J. Keene of the Court of King’s Bench for Saskatchewan.
See: Decoding Emoji Interpretations Across Generations: Legal Implications and Regulatory Insights
- The judge ruled that the emoji sent by Achter Land constituted a valid signature, indicating agreement to the contract.
- Achter Land's lawyer argued against this decision in the Court of Appeal for Saskatchewan, claiming that an emoji cannot serve as a valid signature due to its lack of explicit intent and clear agreement indication. The lawyer also contested the formal nature of their previous text agreements.
Syngrafi Intervenes
Toronto-based company esignature firm, Syngrafi, intervened in the appeal, emphasizing the importance of attaching electronic signatures to documents to meet legal requirements. The company's involvement highlights the evolving nature of digital communication and its implications for contract law. The appeals court has yet to issue a ruling, but the outcome could have significant implications for how electronic communications and expressions, like emojis, are interpreted legally in contract agreements.
Why It Matters
This evolving case is at the intersection of digital communication and legal standards for contracts. The outcome could set a precedent for how emojis and other informal digital expressions are interpreted in legal agreements, impacting future digital communications and contract law.
See: Syngrafii Integrates Trulioo’s Advanced Identity Verification to Enhance eSignature Security
The involvement of companies like Syngrafi also indicates a growing need for clarity in electronic signatures, reflecting the changing landscape of business transactions in the digital age.
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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Chris Woolard’s Insights 1 Year After 2023’s Banking Turmoil
Banking Insights | March 7, 2024
Image from Christopher Woolard's Linkedin profile
Reflecting on the Banking Sector's Resilience and Regulatory Evolution
A year after the Spring 2023 banking turmoil, triggered by the failures of major institutions like Credit Suisse and three US regional banks has set the stage for a significant supervisory shift. With the Basel 3 Reforms at the forefront, financial institutions worldwide are implementing stronger capitalization and more rigorous risk management practices to ensure stability and resilience of the global banking system. In this LinkedIn pulse article, Christopher Woolard, Partner at EY, EMEIA lead financial services regulation, Chair EY Global Regulatory Network, sheds light on regulatory trends that every financial institution should be aware of.
Select Quotes and What It Means for Fintechs and Investors
"Almost a year has passed since the financial markets’ volatility was triggered by the failures of Credit Suisse and three US regional banks."
This quote highlights the interconnectedness of global financial markets and the domino effect that the failure of significant institutions can have. For fintechs, it underscores the importance of robust risk management and the need for a contingency plan. Investors should be aware of the systemic risks and consider the stability of the financial institutions within their portfolios.
"Implementation of the final part of the Basel framework, Basel 3 Reforms, updated in light of the 2007–08 global financial crisis, will be key to ensuring banks are well capitalized."
The Basel 3 Reforms represent a comprehensive set of regulatory standards designed to strengthen the regulation, supervision, and risk management within the banking sector. For fintechs, especially those in lending, payments, and regulatory technology (RegTech), this quote underscores the importance of aligning with or facilitating compliance with these enhanced capital requirements.
See: KOHO’s Strategic Push Towards A Banking License
It signals a need for innovative solutions that can help banks meet these standards efficiently. For investors, the implementation of Basel 3 Reforms is a critical factor in assessing the risk profile and stability of banks. Investments in banks that are proactive in adopting these reforms may be seen as more secure, given their strengthened capital positions and reduced risk of failure. This focus is on capitalization to ensure financial institutions are more capable of withstanding future financial stresses.
"Supervisors are increasingly acting on previous warnings and action points asked of their supervised firms, closely monitoring banks’ efforts to remediate known risk management weaknesses."
This quote suggests a shift towards more proactive and stringent regulatory oversight. Fintechs should anticipate and prepare for increased scrutiny, particularly in areas of risk management and compliance. For investors, this could mean that banks and financial institutions are becoming safer investment options, albeit possibly facing higher compliance costs.
"The 2023 banking turmoil showed that central bank support is crucial during a bank run."
The role of central banks in providing liquidity support during crises is crucial. Fintechs, especially those in the payments and lending spaces, should consider the implications of central bank policies on their operations and liquidity management strategies. Investors might see central bank readiness to support the banking sector as a safety net that mitigates some of the risks associated with bank runs.
See: From Collapse to Reinvention: The Emergence of a Decentralized Crypto Banking Ecosystem
"The European Banking Authority (EBA) Chair Campa echoed the growing regulatory concerns of the linkages between banks and the non-banking financial institutions (NBFIs), including hedge funds, private equity, and cryptocurrencies."
This highlights the growing importance of NBFIs and the crypto sector in the broader financial ecosystem. Fintechs operating in or with these sectors should be mindful of the evolving regulatory landscape and its implications for their business models. Investors should consider the potential for regulatory changes to impact the valuation and risk profile of their investments in these areas.
Why It Matters
The events of Spring 2023 serve as a crucial reminder of the interconnectedness of global financial systems and the importance of robust regulatory frameworks. The focus on implementing Basel 3 Reforms and enhancing liquidity risk management practices is to safeguard financial system against future crises.
See: Open Banking Insights: Decoding Canada’s Financial Future
Understanding these events helps stakeholders prepare for future challenges, ensuring a more resilience banking sector against unforeseen crises.
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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Hong Kong’s Crypto Exchange Registration Update
Crypto | March 4, 2024
Image: Freepik
Hong Kong's Crypto Exchange Licensing Regime - Global Insights
Hong Kong's Securities and Futures Commission (SFC) saw a last-minute surge in registration applications of 24 crypto exchanges applying (albeit many a day after the deadline). What are broader implications for Hong Kong's ambition in setting a new global standard in fintech regulation, with its comprehensive approach to cryptocurrency exchange licensing aiming to enhance market integrity and protect investors.
- As of the February 29 deadline (including the Friday, March 1), a total of 24 crypto exchanges had pending VATP applications with the SFC including prominent platforms like OKX, Bybit, and Huobi HK, . This reflects the significant interest and investment in meeting Hong Kong's regulatory standards, with Web3 firms reportedly spending up to $25 million on compliance and infrastructure. Notably, all major crypto exchanges with ties to mainland China or Hong Kong, including giants like HBGL Hong Kong (an affiliate of HTX, formerly Huobi Global) and HKVAEX (an affiliate of Binance), have applied for licenses. This demonstrates the scheme's appeal to established players seeking regulatory clarity and market stability.
- While this level was significant interest it fell short of Singapore's 70 applicants following a similar regulatory announcement as reported in a South China Morning Post article.
- Exchanges that failed to file a VATP application by the deadline are required to exit the Hong Kong market by May 31. This move follows the city's opening to retail crypto trading in June 2023, emphasizing the regulatory push for compliance and transparency.
See: Kaiko CEO Predicts Hong Kong as the Next Crypto Hub Due to US Crackdown
- The licensing process and compliance costs in Hong Kong, potentially costing upwards of HK$60 million (US$7.7 million), poses significant financial and operational challenges for applicants. The SFC's licensing regime mandates that exchange applicants provide at least 50% insurance for customers’ assets and undergo regular financial statement audits. These high compliance costs, alongside stringent requirements such as external assessor evaluations and the appointment of a local responsible officer (RO), may deter smaller firms and startups.
- While some applaud the SFC's rigorous approach, others caution that overly restrictive measures could hinder Hong Kong's ability to compete on the global stage, particularly against more flexible jurisdictions like Singapore.
Why It Matters
Hong Kong's fintech regulatory framework, particularly in the cryptocurrency sector, serves as a model for balancing innovation with investor protection.
See: WealthTech in Asia-Pacific: A Trillion-Dollar Opportunity
By establishing clear deadlines for licensing and compliance, this regulatory approach protects investors and also promotes Hong Kong as a leading global fintech hub, influencing regulatory practices worldwide.
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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FSRA Launches Tool to Verify Financial Advisors’ Credentials
Campaign | March 2, 2024
Image: Freepik/rawpixel.com
Ontario regulator introduces an online tool to check financial advisors' qualifications
The Financial Services Regulatory Authority of Ontario (FSRA) has initiated an educational campaign aimed at encouraging consumers to verify the credentials of financial advisors before seeking advice. With the introduction of the new online Check Credentials Tool, individuals can now easily confirm if their financial professionals possess the necessary qualifications to use titles like Financial Planner or Financial Advisor in Ontario. The Check Credentials Tool allows consumers to verify if financial professionals hold the required credentials to use specific titles, ensuring they meet minimum education standards and are under proper supervision.
See: Ontario’s FSRA Spearheads Insurance Innovation with Direct Access Model
FSRA's research indicates a concerning trend where 50% of respondents spent more time researching their last cellphone purchase than verifying the credentials of their financial advisor. The tool is designed for convenience, enabling users to quickly check a financial professional's standing, including any disciplinary actions. In Canada, financial advisor scams have evolved, becoming more sophisticated and causing significant losses to consumers.
Huston Loke, Executive Vice President of Market Conduct, FSRA:
"In many cases people are entrusting their life savings to financial professionals and they expect that these people are properly trained and supervised. We encourage consumers to check credentials and we are making it easy through our new Check Credentials Tool."
Investment Scams Are Getting More Sophisticated
In Canada, financial advisor scams have evolved, becoming more sophisticated and causing significant losses to consumers. According to a CTV News, the top scams include:
See: Can AI Truly Replace Human Financial Advisors?
- Investment Scams: These scams lead with Canadians losing substantial amounts, such as $70.2 million in 2021 alone. Fraudsters create fake accounts or websites, convincing people to invest in cryptocurrencies or other ventures, with none of the money being genuinely invested.
- 'Pig Butchering' Scams: Utilizing social media and dating sites, scammers build virtual relationships and eventually solicit money, resulting in over $42.2 million lost by Canadians.
- Spear Phishing: This scam involves sending emails or texts pretending to be legitimate entities to access personal accounts, causing $38 million in losses.
- Merchandising Scams: Using classified ads or fake websites to sell items or rent properties, leading to $5.6 million in losses.
- Service Scams: Offering fake services like phone plans or insurance to steal personal information or access bank and credit card accounts, with $4.8 million lost.
Outlook
By making it easier for individuals to verify the qualifications of financial advisors, the FSRA is empowering consumers to make more informed decisions regarding their financial planning and investments.
See: OSC’s New Financial Advisory Reforms
This initiative promotes transparency and accountability among financial professionals and also contributes to the overall trust and integrity of the financial services industry.
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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