Canada's Fintech Sector: Crypto & AI Fuel $1.6B Funding
Canadian fintech companies secured $1.62 billion in funding during the first half of 2025, with blockchain and artificial intelligence (AI) ventures leading the way. KPMG Canada's Pulse of Fintech report highlights sustained investor interest in these sectors, even amidst a global slowdown in fintech funding.
Crypto's Resurgence and AI's Continued Growth
According to the report, digital assets have re-emerged as a key area for investment, despite broader contractions in venture capital. This renewed interest is attributed to a more favorable regulatory environment in the U.S. and increased mainstream adoption of stablecoins.
"If we look at the first half of 2025, it's clear that digital assets have re-emerged as a magnet for investor interest," said Edith Hitt, a partner at KPMG Canada.
While AI investments remain robust, the resurgence of crypto funding is notable given the perceived risk associated with the digital asset market. The shift is partly driven by increased regulatory clarity and institutional acceptance.
Factors Driving Crypto Investment:
- Constructive regulatory tone in the U.S.
- Dismissal of the Coinbase lawsuit
- Tangible mainstream adoption in stablecoin use cases
Cautious Optimism Amidst Macroeconomic Headwinds
Despite the substantial funding, the $1.62 billion figure represents a year-over-year decrease compared to the $2.4 billion invested in the same period last year and the $7.5 billion in the second half of 2024. This decline is attributed to macroeconomic factors such as tariffs and higher interest rates.
However, Dubie Cunningham, a Partner at KPMG in Canada’s Banking and Capital Markets Practice, noted that investors are not shying away from fintech but are seeking “quality companies” and “maturing mid-to-large stage private equity deals.” The industry has considerable “dry powder” waiting to be deployed.
Looking Ahead: A Strong Second Half
KPMG Canada predicts that the trend of investing in AI and digital assets will persist into the second half of 2025 and beyond.
"Investor interest in digital will remain strong in the second half of the year and into 2026, driven by the U.S. administration’s bullish view and lighter regulatory touch on cryptoassets,” Hitt stated. The focus will be on infrastructure, payments rails, and tokenization platforms that can scale in compliant, integrated ways.
AI adoption is also expected to accelerate, with fintechs increasingly deploying agentic AI solutions across various sectors, including personal finance, investment management, fraud detection, and lending.