Canadian fintech firms are poised for a promising close to 2025, as investor enthusiasm for digital assets and artificial intelligence continues to bolster the sector. According to a revealing report from KPMG Canada, these startups attracted a hefty $1.62 billion in the first half of the year, a beacon of resilience against a backdrop of global funding deceleration.
A Resilient Market Amid Global Slowdown
KPMG Canada’s Pulse of Fintech report underscores the unwavering commitment of Canadian investors to the confluence of finance and cutting-edge technology. While the international fintech landscape grapples with a funding drought, Canadian ventures, particularly those crafting blockchain frameworks and AI-driven financial instruments, remain in favor. “If we look at the first half of 2025, it’s clear that digital assets have re-emerged as a magnet for investor interest, despite the broader contraction in venture investment values,” noted Edith Hitt, a KPMG Canada partner.
AI’s rise was anticipated, given its transformative impact in recent years. Yet, the pivot towards digital assets in Canada might surprise some, considering the crypto market’s notorious volatility. But the narrative is shifting, buoyed by U.S. regulatory developments and the sector’s growing legitimacy. “Crypto’s resurgence coming out of 2024 was reinforced by a more constructive regulatory tone in the U.S., the dismissal of the Coinbase lawsuit, and tangible mainstream adoption in stablecoin use cases,” Hitt elaborated. This aligns with insights from Bank of America’s analysis, which highlights how stablecoins and tokenization are exerting pressure on traditional financial instruments like money market funds.
Investor Caution and Market Dynamics
Despite this optimism, not all signals point towards unbridled growth. The $1.62 billion figure, impressive as it is, marks a decline from the $2.4 billion invested during the same period in 2024. This dip is attributed to macroeconomic pressures such as tariffs and escalating interest rates, which have cast a shadow over investor sentiment.
Yet, this downturn doesn’t spell doom for Canadian fintech. Dubie Cunningham, another KPMG partner, emphasizes that substantial ‘dry powder’—investment capital waiting to be deployed—remains. Investors are increasingly discerning, seeking “quality companies” and showing a keen interest in “maturing mid-to-large stage private equity deals,” she explained.
The Road Ahead: A Bullish Outlook
KPMG’s report suggests that the momentum in digital assets and AI investments will persist into the latter half of 2025 and beyond. The U.S. administration’s favorable stance and more lenient regulatory environment for cryptoassets are key drivers of this trend. “Investor interest in digital will remain strong in the second half of the year and into 2026,” Hitt predicts, with infrastructure, payment systems, and tokenization platforms taking center stage. This is further echoed by developments in the UK, where Robinhood’s introduction of AI market insights signals a potential shift towards greater crypto integration.
The AI domain is also poised for further expansion. “As more fintechs increasingly adopt and deploy agentic AI solutions across areas like personal finance, investment management, fraud detection and lending,” Hitt notes, the sector is set to gain even more traction.
As Canadian fintechs navigate these evolving landscapes, the focus will be on scaling compliant, integrated solutions that can withstand regulatory scrutiny. The second half of 2025 might just be the proving ground for these innovations. Yet, questions linger: Will the regulatory climate remain as accommodating? Can fintechs sustain their growth amidst economic headwinds? Only time will tell, but one thing’s certain—this is a space to watch closely.
Source
This article is based on: KPMG Says Investor Interest in Digital Assets Will Drive Strong Second Half for Canadian Fintechs
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
