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HomeTechnologyCrypto Leads Fintech Investments in Canada, Despite CBDC Skepticism: KPMG Report

Crypto Leads Fintech Investments in Canada, Despite CBDC Skepticism: KPMG Report

In a recent report published by KPMG on February 6, it was revealed that the crypto and blockchain sectors led the pack in the financial technology (fintech) investment landscape in Canada for the year 2023. Despite a significant downturn in overall deal volumes and values within the fintech industry, the blockchain and cryptocurrency domains stood out with a total of 31 deals, marking the highest in any fintech vertical. Following behind were the software-as-a-service (SaaS) sector with 24 deals and the artificial intelligence (AI) and machine learning (ML) sector with 15 deals.

Edith Hitt, a partner at KPMG, attributed the sustained investor interest in crypto-related fintech projects to the anticipation surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC). Hitt suggested that such an approval could significantly enhance investment in Canadian fintech companies and spur technological advancements within the digital assets space. She pointed out that one of the largest fintech investments in Canada in 2023 was made in a blockchain infrastructure company, indicating a growing regional interest in the technology.

Hitt also speculated on the future prospects of blockchain technology in Canada, particularly in relation to a possible Central Bank Digital Currency (CBDC). She posited that if Canada were to deploy a CBDC, blockchain could serve as the underlying infrastructure, potentially catalyzing growth within the Canadian fintech ecosystem.

However, the prospect of a CBDC in Canada is met with skepticism. A discussion paper released by the Bank of Canada in August 2023 highlighted potential challenges in CBDC adoption, noting that consumers might have little incentive to switch to a CBDC due to the absence of barriers to existing financial services. This skepticism was further supported by a survey conducted on November 30, which corroborated the central bank’s concerns regarding the lukewarm reception a CBDC might receive from the Canadian public. The findings underscore the complexities and uncertainties surrounding the adoption of new financial technologies, even as certain sectors like crypto and blockchain continue to attract significant investment.

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