Key Points
- Despite a tumultuous year in the fintech investment landscape, blockchain and cryptocurrency have shown resilience in Canada, according to a report by KPMG.
- Despite the overall decline in deal volume and value in 2023, the blockchain and cryptocurrency sector secured 31 deals.
- Investor interest in fintech ventures related to crypto was partially driven by the anticipation of a potential US Bitcoin ETF.
- Investment in a blockchain infrastructure company in 2023 reflected growing interest in the technology itself.
- There are potential challenges to the sector’s future, including the introduction of central bank digital currencies (CBDCs) and public adoption hurdles.
Despite a year of uncertainty in the fintech investment landscape, blockchain and cryptocurrency have proven to be resilient in Canada. This is according to a recent report by KPMG. The future of the sector, however, is still unclear due to potential challenges such as the introduction of central bank digital currencies (CBDCs) and issues with public adoption.
On February 6th, KPMG’s Canadian fintech report was made public. It revealed an unexpected resilience within the blockchain and cryptocurrency industry. Even though the overall deal volume and value saw a significant decline in 2023, this sector stood out by securing 31 deals.
This achievement outperformed other notable contenders like software-as-a-service (24 deals) and artificial intelligence (15 deals). This reinforced the dominant position of crypto. An image accompanying the report visually represents these statistics.
Cryptocurrency Defies Odds In Canada
Investor interest in fintech ventures related to crypto was partially driven by the anticipation of a potential US Bitcoin ETF, as explained by Edith Hitt, a partner at KPMG. The potential impact of such an approval is undeniable. Hitt predicts that it could serve as a catalyst, “driving innovation and investment in digital assets” within the Canadian landscape.
In addition to pure crypto plays, a significant investment in a blockchain infrastructure company in 2023 demonstrated the growing interest in the underlying technology. This suggests that investors are strategically positioning themselves for the future, especially if Canada decides to launch its own CBDC. Cryptocurrency and blockchain technology could potentially form the backbone of such a digital currency, propelling further growth within the fintech ecosystem.
The Road to CBDC Implementation
However, the path towards CBDC implementation is not without challenges. The Bank of Canada has recognized potential roadblocks, including concerns about limited consumer incentives due to the existing accessibility of banking services. A recent survey revealed a surprising level of skepticism among Canadians towards using CBDCs. This raises concerns about widespread adoption.
Despite these challenges, the continued dominance of crypto in Canadian fintech signifies its inherent resilience and potential for future growth. This highlights the industry’s staying power amidst a constantly evolving financial landscape, according to Hitt.
Looking Ahead
While the report provides valuable insights from an industry-centric perspective, it is essential to consider diverse viewpoints on the potential risks and benefits associated with blockchain and cryptocurrencies. Regulatory decisions, advancements in technology, and broader economic trends will all play significant roles in shaping the sector’s future.
The future of crypto and blockchain in Canada is still unwritten. Although it currently holds the investment crown, weathering regulatory storms and fostering public trust will be critical for sustained growth within this dynamic and ever-evolving landscape. The article concludes with a featured image from Adobe Stock and a chart from TradingView.