Canadian Fintech Investments Dominated by Crypto Industry for 2 Consecutive Years

A recent report by KPMG, an accounting organization, revealed that crypto and blockchain were the top investments in the financial technology (fintech) sector in Canada. Despite a significant drop in deal volumes and values in 2023, crypto still remains at the forefront. KPMG’s data showed that there were 31 deals in the blockchain and crypto space last year, surpassing any other vertical in fintech. The software-as-a-service (SaaS) industry followed closely with 24 deals, while the artificial intelligence (AI) and machine learning industry had 15 deals.

According to Edith Hitt, a partner at KPMG, investor interest in crypto-related fintech projects was partly driven by anticipation of the approval of a Bitcoin exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC). Hitt explained that the approval of a Bitcoin ETF in the US could lead to increased investment in Canadian fintechs and stimulate advancements in the digital assets space. She also highlighted that one of the largest fintech investments in Canada in 2023 was in a blockchain infrastructure firm, signaling a growing interest in the technology within the region.

Hitt further mentioned that investors might be looking ahead to the future, specifically considering the potential adoption of a central bank digital currency (CBDC) in Canada. She emphasized that if a CBDC were to be deployed, blockchain technology could be the necessary infrastructure to power the system. This could potentially be a catalyst for further growth in the Canadian fintech ecosystem. Doubts remain about the adoption of a CBDC in Canada. A discussion paper by the Bank of Canada in August 2023 highlighted potential difficulties in terms of adoption, as consumers currently do not face any barriers to traditional financial services.

A survey conducted on November 30th supported the central bank’s concerns. The survey found that people who were aware of CBDCs were more hesitant to use them compared to those who were unaware of the technology. This suggests that there may be a lack of incentive for consumers to adopt a CBDC in Canada. Despite this, the report by KPMG highlights the ongoing interest and investment in crypto and blockchain within the Canadian fintech sector.