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
IMF Pressuring El Salvador to Limit BTC Exposure
Bitcoin | Oct 7, 2024
Image: Freepik/pvproductions
During Funding Negotiations, the International Monetary Fund (IMF) Urges El Salvador to Limit Bitcoin Exposure
In 2021, El Salvador become the first government to declare Bitcoin as a legal currency much to the chagrin of IMF. Now during fresh funding/debt related discussions, the IMF is urging El Salvador to restrict the usage of crypto and enhance its regulatory framework to limit exposure to Bitcoin.
See: IMF 9 Point Action Plan for Crypto Asset Treatment: Recommends Against Legal Tender Status
The IMF has been critical of El Salvador's Bitcoin adoption since the start, highlighting risks to financial stability, economic growth, and transparency. Previously, the IMF called for the full dissolution of the country's bitcoin law to mitigate risks but the IMFs latest transcript press briefing is now urging El Salvador to narrow the law's scope to reduce public exposure to crypto.
Julie Kozack, IMF Director of Communications:
"With respect to the details on bitcoin what we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting the public sector exposure to bitcoin."
El Salvador and Bitcoin
As part of its bold efforts to incorporate Bitcoin into its banking system, in November 2022 El Salvador's President Nayib Bukele announced that it would commit to purchasing 1 BTC daily until it becomes unaffordable with fiat currencies. As of October 7, 2024, according to it's bitcoin office website, El Salvador owns over $376 million in Bitcoin, and according to Cointelegraph, the country was approx $31 million in profit after 3 years of implementing it's crypto banking strategy.
See: El Salvador Update: ‘Volcano Bonds’, Bitcoin City, Crypto Visa Program
Further, as per Forbes, President Bukele indicated that it would not include fresh debt issuance in its 2025 national budget, hinting that the country is preparing for the prospect of not receiving IMF funding despite the IMF investigating the country's crypto products like its Volcano Bonds.
Having said that, there are ongoing talks between El Salvador and the IMF to help boost productivity, improve governance, and stabilize the economy.
Domestic Perspectives
Crypto advocates in El Salvador feel that the Bitcoin regulation has changed the country's reputation abroad. According to John Dennehy, creator of the educational non-governmental organization Mi Primer Bitcoin, Bitcoin has changed how people throughout the world view El Salvador, dispelling previous myths about its instability and violence. And according to Lina Seiche, the inventor of "Little Hodler" the country has benefited from more investment and tourism since legalizing bitcoin assets.
See: Tax-Free Bitcoin Zone Proposed by the USABTC
Conclusion
If El Salvador can strike a compromise with the IMF in following some of the IMFs recommended regulations while also keeping its Bitcoin policies in place, it may be a pathway forward while establishing a precedent on the integration of cryptocurrencies with established financial institutions around the world.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Appeals Ripple Ruling; Veri Token Holders File Complaint
Ripple | Oct 7, 2024
SEC Files Notice of Appeal in XRP Case As VeriDAO Token Holders File Complaint Against Acting Crypto Chief
On October 2, 2024, the SEC filed a notice of appeal after judge 2023 ruling by Judge Analisa Torres that Ripple's XRP tokens were considered securities when sold to retail investors. Adding to the complexity of the discussion in focus, Veri token holders who were also a party in the SEC vs Ripple case have filed a complaint against the SEC (Acting) Chief of the Crypto Asset and Cyber Unit for regulatory overreach and questionable enforcement practices that stifled innovation in the U.S. digital asset market.
Background
In December 2020, the SEC sued Ripple Labs CEO Brad Garlinghouse and co-founder Chris Larsen claiming that XRP was sold as an unregistered security. After significant a prolonged back and forth case, in 2023 Judge Analisa Torres ruled a mixed outcome saying that XRP was not deemed a security when sold to retail investors (win for crypto industry), yet institutional sales made by the founders of Ripple were in fact an unregistered securities offering.
See: SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
The recent filing by the SEC on October 2 is an appeal to the courts in attempt to reverse some of the verdict. While the appeal was predicted by industry, it clouds the potential of a recent application by Bitwise to register an XRP exchange-traded fund (ETF) out of Delaware.
Bar Complaint Against Jorge G. Tenreiro
Crypto advocates have now focused their attention on Jorge G. Tenreiro who played an important role in several enforcement cases including XRP, VERI, and TON projects. Veri token holders have filed a complaint against Tenreiro who is currently the (Acting) Chief of the SEC's Crypto Asset and Cyber Unit, highlighting misconduct and overreach (i.e., misleading evidence and aggressive tactics) while linking similarities between his acts in the VERI case and the Ripple case.
The crypto community is hoping to have their complaint validated, which would lead to disciplinary action against Tenreiro and a re-examination of previous SEC actions under his oversight.
See: Inside Federal Securities Laws and Crypto’s Tightrope
Such a result may have significant implications for crypto and how the SEC handles future cases. You can learn more about the New York bar complaint against Jorge Tenreiro for professional misconduct here.
Outlook
The outcome of the SECs Ripple appeal and bar complaint against the SEC's Jorge G. Tenreiro is of major significance to retail investors, token holders and the entire crypto industry, as the dispute will likely influence crypto in the U.S. and around the globe.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
SEC | Oct 7, 2024
Image by Freepik
Gurbir Grewal departs the SEC to work for Milbank LLP After Aggressive Enforcement Tenure
In an Oct 2 press release, the SEC announced that Gurbir S. Grewal, the Director of Enforcement will leave on October 11, 2024 to become a partner in the litigation and arbitration of Milbank LLP. During his three year tenure at the SEC, Grewal oversaw more than 2,400 enforcement proceedings and obtained more than $20 billion in fines and disgorgements. Sanjay Wadhwa, the current Deputy Director, will take over as Acting Director.
- As the crypto sector can easily attest to, during Grewal time at the SEC he oversaw cryptocurrency enforcement with over 100 actions targeting major platforms for securities violations, such as the sale of Ripple's XRP token, Coinbase's staking services, and Kraken's staking program too.
- Grewal boosted penalties to serve as deterrants, and more than $1 billion was awarded to whistleblowers during his time.
- He also emphasized recordkeeping compliance and transparency, which lead to over $2 billion in fines to regulated entities.
- Prior to Grewal's post at the SEC he served as New Jersey’s Attorney General focusing on securities fraud and economic crimes.
See: SEC Enforcement Director Grewal On Crypto Regulation
Gurbir S. Grewal:
“While we have faced and overcome many challenges over the last three plus years, there has been one constant throughout: the public servants of the Enforcement Division stand ready to do everything they can to protect investors and market integrity. Their expertise, professionalism, and dedication are, indeed, unparalleled, and it has been the privilege of a lifetime to have been able to call them colleagues. From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a Division during my tenure. I am grateful to Chair Gensler not just for the opportunity to lead the Division, but also for his unwavering commitment to investor protection and support of a robust enforcement program.”
Conclusion
Grewal's exit could signal a shift in SEC's enforcement after having set the standard for strong protection and aggressive regulatory compliance. He brings a wealth of securities enforcement experience to his new role as partner at Milbank LLP.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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JPMorgan vs. Regulators Over Zelle Fraud Scams
Payments | Oct 4, 2024
Image: Freepik
JPMorgan Chase Considering Lawsuit Against Consumer Financial Protection Bureau (CFPB) Over Zelle Fraud Claims
JPMorgan Chase is thinking of suing Consumer Financial Protection Bureau (CFPB) after the CFPB claimed that the bank failed to remove fraudulent accounts from the platform and didn't reimburse scam victims on the peer-to-peer payment network Zelle, which is owned by a consortium of 7 major US banks and setup to compete with fintech giants, Paypal and Venmo in 2017. Previously, the U.S. Senate scrutinized JPMorgan for it's handling of these same Zelle payments network fraud claims.
See: CFPB Eyes Digital Payment Regulation for Big Tech
JPMorgan strongly disagrees with this claim and hinted in a recent financial filing that they make consider taking the CFPB to court over the issue. This is certainly an interesting twist where a major bank may sue their regulator. Lots of tension as incumbent banks, fintechs, and regulators balance client protection and fraud concerns in a quickly evolving market.
What's the Issue With Zelle and Fraud?
- A U.S. Senate report claims that Zelle handled transactions totaling more than $800 billion in the previous year of which $166 million was challenged as fraudulent taking place at one of 3 large banks including Wells Fargo, Bank of America, and JPMorgan Chase.
- Only around 38% of these claims received reimbursement.
- According to JPMorgan, it reimburses 100% of transactions that are considered "unauthorized," but the way such transactions are classified is the issue. Refunds are unlikely if a consumer voluntarily pays money to someone, even if they were defrauded because the customer 'authorized' it.
- The bank has now included a warning message to help customers stay safe and understand that refunds may not be available for certain transactions.
- According to Zelle, 99.9% of its transactions are trouble-free and as a precaution now warns consumers of scammers.
Larger Debate
The CFPB believes that banks should do more to identify and prevent fraudulent/fake accounts, and customers should be compensated when they are scammed.
See: JPMorgan’s New Programmable Payments in Blockchain
Part of the push is from Biden's administration for a wider regulatory effort to protect consumers and lower costs associated with digital payments, overdrafts, and credit card fees. JPMorgan's potential lawsuit could set a precedent for how banks interact with regulators and encourage other financial institutions to challenge regulations more aggressively.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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New Bank of Canada Case Scenarios for Retail Payments
Payments Regulation | Oct 3, 2024
Image: Freepik
Bank of Canada Adds 7 More Scenarios to Help Companies Understand Registration Triggers Under the New Retail Payment Activities Act (RPAA)
On October 2, 2024, the Bank of Canada (BoC) published a new collection of registration examples to assist payment service providers (PSPs) in understanding the implications of the new Retail Payment Activities Act (RPAA) and whether or not they need to register with the Bank of Canada. These include:
- Acquirers
- Card program managers
- Cloud Computing
- Holding Funds
- Lending
- Marketplaces
- Services Backed by Cryptocurrencies
New Case Scenarios
1. Acquirers
What acquirers do and how their job fits into the RPAA are explained in this example. Companies known as acquirers assist businesses in processing payments, most frequently via credit or debit cards. These companies must comply with certain regulations under the RPAA if they engage in activities like keeping money for merchants.
2. Card Program Managers
Businesses that design and oversee payment card systems, such as digital wallets, prepaid cards, or gift cards, are known as card program administrators/managers.
See: Guide: PSP Registration with Bank of Canada (RPAA)
With an emphasis on identifying "incidental activities" that need to comply with the Act, the updated scenario provides examples of what actions are covered by the RPAA.
3. Cloud Computing
The RPAA regulations may also apply to cloud computing companies that facilitate payments, such as by assisting in the initiating or authorizing electronic money transfers.
4. Holding Funds
This situation applies to corporations that keep money for their clients, such as those that hold money in accounts or digital wallets prior to a payment. To help PSPs understand when they must comply with the Act, the Bank of Canada clarifies what actions are considered "holding funds" under the RPAA.
5. Lending
The new lending scenarios concentrate on businesses that give customers credit or loans. It describes which payment tasks, such as managing funds or collecting payments, are protected by the RPAA and which are not. Knowing whether their operations are incidental or subject to PSP requirements is important for lending firms to understand.
6. Marketplaces
It's possible that marketplaces, such as online platforms that link buyers and sellers, are engaging in the scope of RPAA activities.
See: BoC Conducts Mock PSP Registration Ahead of Nov 1, 2024
This scenario explains how RPAA compliance may be necessary for specific marketplace operations including maintaining digital accounts, allowing payments, and keeping cash for users. This helps marketplaces comprehend its regulatory responsponsibilities if it handles money or facilitates payments.
7. Services Backed by Cryptocurrencies
These scenarios are designed to help PSPs that provide crypto services like digital wallets, crypto transfers, and payment facilitation to understand their RPAA responsibilities. The Act requires registration and compliance for activities such as keeping money on behalf of users, initiating electronic transfers, and allowing or sending payment instructions. The BoC highlights that although crypto functions differently from traditional payment methods, their usage for retail payments is still governed by the same regulations. To ensure compliance and improve customer protection, crypto-related PSPs must assess their situation and comply accordingly.
Why These Scenarios Matter
The Bank of Canada's new scenarios are intended to assist PSPs in determining if their services are covered by the RPAA and what steps they must take to comply. These scenarios are an excellent tool for figuring out if you must register with the Bank of Canada and what regulations you must comply with if you run a business in any of these sectors.
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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UN’s Blueprint for AI Governance and Global Representation?
AI Governance | Sep 30, 2024
Image: Governing AI for Humanity (UN)
AI Governance and the Global South: Bridging the Divide or Charting a New Course?
The UN recently published a report titled "Governing AI for Humanity"(101 page PDF, see release) which highlights the rising challenges of the high number of global AI governance initiatives, lack of interoperable standards, and ability to have equitable participation from all countries. Fragmented norms, competing agendas, and the exclusion of major areas like the Global South, all challenge the potential of unified global governance from existing.
According to the report, of the 193 UN members, only 7 countries including Canada, France, Germany, Italy, Japan, United Kingdom and United States are actively involved in all major AI governance platforms currently working to shape global standards, policies and regulations by organizations like the OECD, G20, GPAI and the Council of Europe.
Far from a holistic approach where countries are working for the greater good of humanity, many nations with unique needs and interests are being left out or have decided to not participate based on other motivations, notably the Global South. The truth is that markets and jurisdictional boundaries are not barriers to AI's enormous potential. However, there's a real risk that advantages will be concentrated and the gap between those who can use AI successfully and those who can't will widen if everyone isn't at the table to set the games rules.
The Role of the UN in Bridging the Divide
In order to close the gaps in AI governance, the UN report recommends taking a number of strategic actions:
- Create an International Scientific Panel on AI to serve as a global knowledge-sharing organization that provides unbiased and trustworthy information on the potential applications, dangers, and breakthroughs of AI. On one hand, this would provide Canada's fintech companies with standardized data access and a chance to influence the conversation on responsible AI use in finance. Or would this just add another fragmented initiative and lack of global participation?
- Establish regular UN hosted multi-stakeholder gatherings to advance best practices, align international laws, and deal with cross border AI issues.
See: Double-Edge Sword of AI’s Impact on Workforce Experience
- Create of a global fund and network to increase AI capability worldwide, especially in areas without the requisite knowledge or infrastructure.
- Create an AI Standards Exchange to facilitate communication across systems and the formulation of common terms like security, openness, and justice.
- Setup a Global AI Data Framework to address data stewardship and availability, especially in nations with restricted data access. The proposed framework would prioritize uniform and transparent methods for managing AI training data internationally.
The UN's ability to include a range of viewpoints from less wealthy nations will determine if representational gaps can be closed or if different AI regulatory requirements will need to be accommodated globally.
The Global South and Growing Question of Representation
Is the Global South forging its own course, and if so will the world have diverging paths or shared standards? Given how transformative AI technologies will be deeply embedded in any given country, would such an independent strategy result in a more inclusive and balanced outcome (at the risk of fragmented global standards)?
If the Global South decides to create its own AI governance frameworks (like they established the New Development Bank), it may provide emerging countries a chance to design regulations that are more appropriate for their unique social, economic, and cultural environments. It may provide these nations the ability to reduce the digital gap, guarantee that AI is applied for the good of the public, and promote innovation suited to regional requirements.
See: Human Rights and Artificial Intelligence Governance
However, diverging paths of AI governance and fragmentation in AI regulations will most certainly make it harder and more costly for AI to cross borders and any sort of international cooperation, trade, and data exchange.
The UN's report calls for a balanced approach to ensure that governance is not just broad but also representative. The potential effort by the Global South to develop its own AI standards may spark a wider discussion about equality in technology governance and encourage a more inclusive and diversified approach globally. The goal here is not to establish independent governance groups but to identify ways bridge local and global interests.
Closing Thoughts
Finance and technology leaders should keep a close eye on global AI governance initiatives. Not just for compliance but to actively support inclusive standards and become leaders in ethical AI innovation while creating new economic opportunities and contributing to a more harmonious global tech future.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Binance Hits $100 Trillion as CZ Set for Early Release
Crypto | Sep 27, 2024
Image from Binance website
Binance Founder, Changpeng Zhao, Set for Early Prison Release Today
Changpeng Zhao (CZ) is anticipated to be released from prison today two days ahead of schedule because his original release date of Sept 29, 2024 falls on a weekend. Even while he will not be able to take on a leadership position at Binance for at least three years, his $60 billion fortune is still dependent on the platform's success because he is its biggest shareholder. CZ completed a four-month term including 2 months in a light security jail before being sent to a halfway home. What will CZ do next? While in prison he launched an Educational Platform Giggle Academy
Binance New CEO Announces $100 Trillion Total Trading Volume
When CZ was sent to prison, Richard Teng took over Binance as the new CEO, a former financial regulator who was overseeing compliance and regulatory partnerships. He has made it his mission to keep Binance focused on innovation and development while guiding it toward stricter regulatory compliance since taking the helm. This week, Teng announced that Binance exchange had surpassed a $100 trillion in total trading volume since launching in 2017 and under his leadership the company has now surpassed 230 million users via global expansion to jurisdictions like Indonesia, India, Kazakhstan, Thailand, and Dubai.
IPO on the Horizon?
In a recent interview with Coindesk, Teng made it clear that Binance does not have plans for an Initial Public Offering. Due to it's huge trading volume and rapid user growth, the company is profitably stable as it moves from a founder-led to a board-led sustainable enterprise.
Teng admits the complexities of managing a global crypto exchange with different laws in different countries. With 19 licenses worldwide including recent approvals in emerging regions.
Conclusion
Whether CZ moves into philanthropy, invests, or launches other new ventures, he will be influential in shaping the future of Binance's future path and the overall crypto landscape.
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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