Blockchain and Crypto Investments Dominate Canada's Fintech Sector, KPMG Reports
Summary:
The KPMG report reveals that the blockchain and crypto sectors led investments in the Canadian financial technology industry in 2023. Despite an overall decline in deal volume and value, these sectors recorded 31 deals, outweighing others in the fintech sphere. Edith Hitt, a KPMG partner, suggested the anticipated approval of a Bitcoin ETF in the US could bring more investments to Canadian fintech firms. Furthermore, the potential introduction of a central bank digital currency (CBDC) in Canada could see blockchain technology as its foundational structure, presenting another possible growth opportunity for the country's fintech industry.
In a recent report produced by audit conglomerate KPMG, it was outlined that the leading number of investments within the fiscal tech sector in Canada came from the crypto and blockchain fields. Although overall deal volume and value saw a considerable decline in 2023, data from KPMG indicated blockchain and crypto remained the foremost sectors, landing 31 deals in the past year and surpassing all other fintech verticals. Following closely were the Software-as-a-Service (SaaS) sector with 24 transactions and the artificial intelligence and machine learning sector with 15 deals.
Edith Hitt, a partner at KPMG, stated in the report that the heightened interest from investors for fintech initiatives linked to crypto was partly due to the expected approval of the spot Bitcoin ETF by the US Securities and Exchange Commission (SEC). Hitt suggested that the potential approval of a Bitcoin ETF in the US could fuel investments into Canadian fintech firms and drive progress in the digital assets scene.
Hitt also added that a significant fintech investment in Canada in 2023 was aimed at a blockchain technology company, illustrating growing interest in the field in the country. According to Hitt, investors might be looking towards a future where a central bank digital currency (CBDC) could come to fruition in Canada.
Hitt posited that should a CBDC become a reality in Canada, blockchain technology could, in theory, be the necessary infrastructure to operate the system, providing a potential growth impetus for Canada's fintech ecosystem.
However, despite the mention of a potential CBDC, its acceptance in Canada is still uncertain. A report by the Bank of Canada in August 2023 suggested a possible difficulty in adopting a CBDC in the nation, as consumers have "minimal incentive" for using a CBDC due to the lack of obstacles in accessing financial services. A survey conducted on November 30th confirmed this hypothesis, revealing that those familiar with CBDCs were more hesitant to use them than those oblivious to such technology.
Published At
2/7/2024 2:35:00 PM
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