Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Web3, Decentralization, DAOs
Will Crypto Replace the Dollar?
For Bitvo by Tristram Waye | Sep 15, 2022
Crypto is no longer a financial island
- Early days: It was easy to think about crypto as an island back before 2020. Bitcoin did its own thing, and the growing number of projects had a unique early startup stage audience to support them. The trading in BTC, ETH, and other crypto assets reflected the community built around them. It also reflected an evolving narrative around what crypto was and could be.
- One of these narratives was that crypto was a hedge.
- Another is that it is sound money. Or, put another way, it represents a form of incorruptible value exchange. And the idea here was that this new form of sound money would replace the current system.
See: Coincub: Top 5 Countries with the Best Crypto Tax for Residents
- Adoption curve: Like much of technology, it has followed the adoption curve through the various stages of growth. And as the participants changed, the trading changed.
- Crypto has moved from an island to a loose part of a wider global asset mix. This is similar to the way John Murphy describes how the financial system was analyzed by technical analysts in the 80s. It was siloed. And one day he started to look at intermarket relationships between various financial assets. And that changed everything.
Crypto has evolved as the participants have changed
- Leverage and hedging: As the participation broadened, so too did the influence of other market elements. There is the influence of leverage. There is the use of hedging through derivatives like futures and options products developed around BTC and now ETH.
- Tech index-like: As larger, more traditional players entered the market they built a shorthand story around the asset. The asset trades, at this time, more like a tech index as a result. And as we have seen recently, tech is affected in a big way by changes in interest rates and economic conditions. And we know that economic conditions are a reflection of the interplay between the dollar, commodities, the cost of capital, and capital formation.
See: Ottawa to review Crypto, Stablecoins and CBDCs; Budget promises more financial cops
- Impact of rising rates: The Fed is raising rates into a recession. The increase in rates is driving down activity much more quickly than many thought possible. The rate increase is adding upward pressure to the dollar, which is a problem for all the dollar-denominated debt that exists around the world.
- And there is a lot of dollar-denominated debt now being paid back with local currencies falling in value.
- As the dollar rises, it creates a massive global short squeeze.
- Dollar may fail higher: So one thought out there is that we are at the end of the current monetary environment. And the dollar is likely to fail, but it will not fail lower, but instead, it may fail higher by destroying the entire system it supports. So if you are thinking about bitcoin as a replacement for the dollar, you are going to have to think about a much bigger playing field.
- Intermarket analysis can be as simple or complex as you want. But if you think about an economic cycle, that will mean following the dollar, commodities, bonds, and stocks. Even if the cycle is changed or distorted, there will be rich information in looking at the totality of market assets together.
- Euro: And you may want to keep an eye on European markets and the Euro this winter, where policy decisions may drive a flight to safety into the US dollar, taking it even higher. But you already know the trading environment ahead will be rich with catalysts.
- Mini vs global financial systems: We have watched how various crypto businesses have failed recently. A couple of these were like mini-financial ecosystems. Now think about these issues on a global scale, and the potential outcomes start to become unimaginable.
Will bitcoin replace the dollar? (Nobody knows the answer)
- I don’t know. I don’t think anyone does, including the biggest prognosticators of this idea. There are a lot of people romanticizing the end of the dollar because it will make something they own go higher.
See: BIS Limits Banks to Hold 1% of Reserves in Bitcoin –> “Banks Won’t HOLDL”
- But thinking about this bitcoin/dollar narrative while realizing the implications of it should induce some queasiness. Because a change like this is never that simple or clean.
- So if you aren’t getting prepared, now is the time. Keep an eye on those other indicators and get ready for the unexpected.
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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, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The ‘Merge’ Is here | 3 ways scammers will try to fool you
CNBC Crypto World | MacKenzie Sigalos | Sep 14, 2022
Image: Unsplash/Zoltan Tasi
The 'Merge' Is Here and it May Just Stoke some Institutional Interest (or not)
- The reduced supply of the cryptocurrency, which some investors say could be a boon to the price, is the result of a new verification model that replaces miners with “validators.”
- The real investor draw is the slashing of energy usage, especially as bitcoin mining continues to face blowback for its growing power consumption. According to one estimate on the Ethereum Foundation’s blog, the merge will result in a reduction of at least 99.95% in total energy use.
- Bank of America said in a note on Sept. 9, that the significant reduction in energy consumption post-merge “may enable some institutional investors to purchase the token that were previously prohibited from purchasing tokens that run on blockchains leveraging proof of work (PoW) consensus mechanisms.”
See: (Expected) Life After the Merge
- Institutional money is key to the maturation of digital assets. Research firm Fundstrat wrote in a note that a successful merge would cement ethereum as the “premier blockchain network.”
- With the upgrade, ethereum won’t become faster, cheaper or more scalable. One developer even told CNBC that:
If the user experience feels the same, that will be one sign that the merge was a total success.
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Cointelegraph | Felix Ng | | Sep 13, 2022
Besides fake ETH 2.0 tokens and malicious token airdrops, crypto users should also be on the lookout for staking pools offering attractive staking yields.
Fraudulent staking pools
- Many Ether (ETH) holders, joining a staking pool will be their only way of reaping yield from staking rewards if they don’t have the 32 ETH required to become an independent validator.
- Pooled staking providers “carry their own risk” as it often requires users to deposit and give up control of their ETH. Upstart staking providers, which “may offer very attractive terms” could perform “sudden rug pulls” that would affect those participating in the pool.
See: Caution: Binance Chain Red Alarm System Flags 50 New Projects as Potential Scams
Upgrade scam
- One of the more imminent threats involves scammers attempting to trick users into signing fraudulent transactions or parting with their private keys under the guise of migrating to the new Ethereum chain.
- “We’ll likely see scammers try to get users to sign fraudulent transactions and/or leak private keys based on some false pretense that the user needs to do something to migrate chains.”
Fake airdrops
- Another likely attack vector will come in the form of “fake airdrops,” added Bassi — convincing users to sign transaction messages or visit phishing sites in order to receive a bogus airdrop.
- “Those airdrops will likely redirect users to a phishing site where they may be fleeced out of their ETH, private keys, and/or crafted transaction signing attempts.”
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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, 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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Bitcoin Outperforming Crypto Market Share as Ethereum Merge Nears
Arcane Research | Vetle Lunde and Jaran Mellerud | Sep 13, 2022
Bitcoin has seen a strong recovery of 8% over the last seven days, outperforming the rest of the crypto market and regaining some of its market dominance as we approach the long-awaited Ethereum merge.
- This will be a huge week in crypto. The Ethereum merge is scheduled to occur on September 15th, and market participants are hedging like never before.
- Relative to BTC, ETH has underperformed in the last week, falling from a peak of 0.085 ETHBTC to 0.077 today, while the ETHBTC correlation has declined in a relatively volatile environment.
- Traders are moving into bitcoin ahead of the merge
- Bitcoin’s outperformance has led the bitcoin dominance to soar by 1.8% over the past seven days. It’s currently sitting above 40% for the first time in almost one month.
- In late August and early September, the rest of the crypto market, particularly ETH, managed to steal market share from the underperforming BTC. The ETH dominance fell by 0.7% over the past seven days but is still close to its highest level since December 2021.
See:
IMF Magazine: Money Revolution in the Age of Crypto and CBDCs
Blockdata: State of Crypto Banks in 2022
Canadian Crypto Industry is Working Towards Legitimacy
Top 8 Countries Most Interested in Ethereum's The Merge
- Sentiment is improving, but traders are still cautious
- The Fear and Greed Index has managed to climb out from the ‘extreme fear’ area. A significant component of the index calculation is market momentum and volume, and recently we have seen growing spot volumes in a positive market.
- The bitcoin spot volume surges to yearly highs
- The 7-day average bitcoin spot volume has surged to a yearly high of $11.4 billion.
- Most of this trading activity happened on Binance, which has completely taken over the bitcoin spot market due to its fee removal this summer. Binance’s zero-trading fee policy has made new high-frequency trading strategies profitable and attracted these types of traders to Binance’s bitcoin pairs.
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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, 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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Lyn Alden Analysis: A Look at the Lightening Network
Lyn Alden | August 2022
This article examines the relationship between a monetary asset being a store of value vs being a medium of exchange. Specifically, it focuses on the scaling method of the Bitcoin network as its main example, but also takes a broad look at the history of trade-offs in the cryptocurrency space as well to see why a layered approach makes the most sense.
The primary goal of this article is to examine the topic of how bitcoin has evolved as a medium of exchange, and more broadly to analyze the order in which new monetary assets can be accepted as a store of value and a medium of exchange. As a big part of that, I’ll include an analysis of the Lightning network, which is a small but fast-growing payments layer that is interwoven into the Bitcoin network. Here are the sections of this article:
- Summary Points
- Store of Value vs Medium of Exchange
- Bitcoin and Lightning: Scaling in Layers
- How the Lightning Network Works
- Lightning Network Critiques
- Concluding Thoughts
Intro
This article is long, so I’ll summarize the main points up front here, and then spend the rest of the article diving into the details.
-A truly decentralized and permissionless payment network requires its own underlying self-custodial digital bearer asset. If instead it runs on top of the fiat currency system or relies on external custodial arrangements at its foundation, then it is neither decentralized nor permissionless.
See: The Most Efficient Payment System In The World: Bitcoin And The Lightning Network
-In order to create a truly new digital bearer asset that is useful for payments in the long run, it must also be an attractive store of value, so that a meaningful percentage of the population begins to persistently hold it as some percentage of their liquid net worth and be willing to accept it for goods and services.
-In other words, in order to create a decentralized version of Visa, beneath that you must first create a decentralized version of Fedwire, and along with that you must first create a decentralized version of digital gold. It’s hard to envision any other path succeeding.
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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, 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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Federal Reserve Speech, Michael Barr: Making the Financial System Safer and Fairer
Federal Reserve | Sep 7, 2022
Vice Chair for Supervision Michael S. Barr at the Brookings Institution, Washington, D.C.
Safer and Fairer
- When I say that one of my top goals is to make the financial system safer, it is because keeping it safe involves an active and never-ending effort to analyze risks and make necessary adjustments. There is no responsible alternative to this approach because the stakes are far too high to do otherwise. I am also committed to making it fairer.
- Fairness is fundamental to financial oversight, and I am committed to using the tools of regulation, supervision, and enforcement so that businesses and households have access to the services they need, the information necessary to make their financial decisions, and protection from unfair treatment. Safety and fairness may seem like distinct goals, but they are intertwined. Financial instability unfairly harms those who are economically vulnerable, so making the financial system safer is making it fairer.
Select Highlights
Capital
- An important principle of the capital framework is that it must evolve through a continuous process of incorporating new risks that may emerge.
- A second principle is that the capital framework should be risk focused. Different activities pose different potential for loss, and the capital regime should calibrate requirements to account for the risks of specific activities.
See: Federal Reserve: Crypto and DeFi Insights from Recent Turbulence Through a Financial Stability Lens
- A third principle is that requirements should be tiered. As firms increase in systemic importance, the social cost of their failure grows. Regulations should be designed to require firms to internalize the costs that their potential failure would impose on the broader financial system and thus on businesses and households. This means that firms face higher costs through more stringent regulations as they grow in complexity, size, and interconnectedness. And rightly, that community banks face simpler regulations.
Stablecoins as Private Money
- Stablecoins, like other unregulated private money, could pose financial stability risks.
- History shows that in the absence of appropriate regulation, private money is subject to destabilizing runs, financial instability, and the potential for widespread economic harm.
- In the nineteenth and early twentieth centuries, before the advent of prudential bank regulation and deposit insurance and before action was taken to ensure private money creation by banks was appropriately regulated, repeated crises did substantial damage to the U.S. economy.
See: Gary Gensler, Chairman of the SEC Speech
- I believe Congress should work expeditiously to pass much-needed legislation to bring stablecoins, particularly those designed to serve as a means of payment, inside the prudential regulatory perimeter. I look forward to continued partnership with other regulatory agencies and Congress to address the risks of stablecoins.
Innovation, Access, and Consumer Protection
- In the past, I have described the three essential elements of fairness in the financial system as a three-legged stool because all three are necessary for any aspect of fairness to work. The three are (1) financial capability, (2) financial access, and (3) consumer protection.
- In terms of financial capability, an important component is transparency in the cost of services, which means making sure consumers have the information they need to make good decisions.
Continue to the full article --> here
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, 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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Gary Gensler, Chairman of the SEC Speech
SEC | Sep 8, 2022
Image: Unsplash/Clu Soh
Select Highlights and Quotes:
Joseph Kennedy, the first Chairman of the SEC, had a saying: “No honest business need fear the SEC.
Not liking the message isn’t the same thing as not receiving it.
Crypto Tokens
- Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities (Howey test). Offers and sales of these thousands of crypto security tokens are covered under the securities laws. Some tokens may not meet the definition of a security — what I’ll call crypto non-security tokens. These likely represent only a small number of tokens, even though they may represent a significant portion of the crypto market’s aggregate value.
- Some in the crypto industry have called for greater “guidance” with respect to crypto tokens.
- For the past five years, though, the Commission has spoken with a pretty clear voice here: through the DAO Report, the Munchee Order, and dozens of Enforcement actions, all voted on by the Commission. Chairman Clayton often spoke to the applicability of the securities laws in the crypto space.
- Investors deserve disclosure to help them sort between the investments that they think will flourish and those that they think will flounder. Investors deserve to be protected against fraud and manipulation. The law requires these protections.
Stablecoins
- Stablecoins have features similar to, and potentially competing with, money market funds, other securities, and bank deposits, and raise important policy issues.
- As discussed in the President’s Working Group Report on Stablecoins, it is important to ensure that we have appropriate safety and soundness protections, investor protections, and safeguards against illicit activity.
See: ECB Publishes Macroprudential Bulletin on Stablecoins, Climate Risk, and DeFi
- Some stablecoins purportedly are backed by reserves of U.S. dollars. Other stablecoins, so-called algorithmic stablecoins, are not backed fully by fiat moneys and bear heightened risks related to whatever mechanisms are used purportedly to maintain a stable value.
- Depending on their attributes, such as whether these instruments pay interest, directly or indirectly, through affiliates or otherwise; what mechanisms are used to maintain value; or how the tokens are offered, sold, and used within the crypto ecosystem, they may be shares of a money market fund or another kind of security. If so, they would need to register and provide important investor protections.
Intermediaries
- Crypto intermediaries — whether they call themselves centralized or decentralized (e.g., DeFi) — often are an amalgam of services that typically are separated from each other in the rest of the securities markets: exchange functions, broker-dealer functions, custodial and clearing functions, and lending functions.
- These platforms match orders in crypto security tokens of multiple buyers and sellers using established non-discretionary methods. If that sounds legalistic, that’s because it is — these are the regulatory criteria for being an exchange.
See: SEC Charges 3 In Crypto Insider Trading Scheme
- Crypto investors should benefit from exchange rulebooks that protect against fraud, manipulation, front-running, wash sales, and other misconduct.
- Crypto intermediaries also engage in the business of effecting transactions in crypto security tokens for the account of others, which makes them brokers, or engage in the business of buying and selling crypto security tokens for their own account, which makes them dealers.
- Finally, many crypto intermediaries provide lending functions for a return.[19] Make no mistake: If a lending platform is offering and selling securities, it too comes under SEC jurisdiction.
- If you fall into any of these buckets, come in, talk to us, and register.
Continue to the full article --> here
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, 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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Kraken On-Chain Analysis (Aug 2022): Mixed Signals
Kraken Blog | Sep 8, 2022
Overview
- Over the last few months, the crypto industry faced numerous headwinds.
- These included the death spiral of the Terra ecosystem, the insolvency of over-leveraged hedge fund Three Arrows Capital, and major crypto lending platforms – like Celsius, BlockFi, Voyager and Vauld – taking drastic measures to accommodate “extreme market conditions.”
- Due to these developments, market participants have been forced to deleverage, contributing to downward market pressures since May. That trend broke in late July as cryptoassets rebounded, but August brought a pullback once again as the macroeconomic environment remained difficult.
See: Suspected Sanctions Breach? The UK Forces Crypto Exchanges to Immediately Report
- Between the challenging crypto market and the difficult macroeconomic environment, it’s tough to anticipate what lies ahead. However, on-chain data can help identify the signal amid the noise by providing evidence of trends in network usage and demand.
- A lot has happened so far in 2022 and on-chain data suggests mixed demand and usage activity across cryptoassets. However, this month, overall activity trended negative. Still, the emerging pattern indicates ETH demand could continue to rise throughout 2022 if all goes well with The Merge.
- On-chain fundamentals:
- Our findings suggest that BTC’s on-chain demand and usage fell as YTD and MoM volume and fees declined.
- On the other hand, ETH outperformed this month, as Merge anticipation helped it post MoM growth in dominance, on-chain volume and fees in August. ALGO continued to perform poorly across the board on a monthly and YTD basis, except in daily active addresses, which rose +69% in August.
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Read the 14 page Docsend report --> here
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, 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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