Crypto and blockchain topped the number of investments within the financial technology space in Canada, according to a report by accounting organization KPMG.
On Feb. 6, KPMG published a Canadian fintech report, highlighting that while deal volumes and values dropped significantly in 2023, crypto still remains at the top of the charts. KPMG’s data showed that the blockchain and crypto space had 31 deals last year, having the most deals compared to any other vertical in fintech. The software-as-a-service (SaaS) industry followed with 24 deals, while the artificial intelligence (AI) and machine learning industry had 15 deals.
KPMG partner Edith Hitt said in the report that investor interest in crypto-related fintech projects was driven partly by the anticipation of the spot Bitcoin exchange-traded fund (ETF) approvals by the United States Securities and Exchange Commission (SEC). Hitt explained:
“The approval of a Bitcoin ETF in the United States could help boost investment in Canadian fintechs and help drive new technological advancements in the digital assets space.”
The executive also added that one of the biggest fintech investments in Canada in 2023 was in a blockchain infrastructure firm. Hitt believes this signals a growing interest in the technology within the region. Hitt added that investors might be “thinking ahead to the future,” where a central bank digital currency (CBDC) might become a reality in Canada.
Hitt explained that if a CBDC gets deployed in Canada, blockchain technology might “potentially” be the infrastructure necessary to power the system. The executive added that this could be another growth catalyst for the fintech ecosystem in Canada.
While Hitt pointed toward a potential CBDC, its adoption in Canada still faces doubts. In August 2023, a discussion paper by the Bank of Canada found that a CBDC might have difficulties in terms of adoption within the country. The central bank found that consumers would have a “weak incentive” to use a CBDC since they don’t have any barriers to financial services.
On Nov. 30, a survey confirmed the central bank’s hypothesis. Within the report interpreting the survey results, the central bank found that people aware of CBDCs were more reluctant to use them than those unaware of the technology.