Two recent headlines have caught this publication's attention: Canada’s Fintechs Are Surging—Against All Odds1; and Fintech's AI Premium2.
The first article states that: "Fintech funding in [Canada] outperformed the sector globally last year, which saw investment drop, and also surpassed other tech sectors in Canada that continue to have difficulty raising funds, such as cleantech." The second article highlights a key takeaway that: "AI-enabled fintech companies see a 242% premium at the early stage."
The headlines reflect general optimism in an industry that holds great promise, globally. So, what are some recent developments in Canada that could further propel—or hinder—the Canadian fintech industry?:
- Open Banking Legislation: (aka: consumer-driven banking). In its 2024 budget, the Government of Canada announced its plans to implement consumer-driven banking. This publication explored the proposed open banking framework here. In June, 2025, the commissioner of the Financial Consumer Agency of Canada confirmed that the launch of Open Banking in Canada remains a priority, but no timeline has been given. Obviously, open banking regulation would be a boon for fintechs in Canada.
- Legitimization of Cryptocurrency-trading Platforms: Canadian securities regulators have recently begun to permit cryptocurrency-trading platforms to register and operate in Canada. This is a sea change for Canada—and an accelerator for cryptocurrency, but the sector would benefit more from targeted legislation. Perhaps the recent international momentum in stablecoins, discussed below, will bolster progress in the Canadian cryptocurrency sector.
- Artificial Intelligence Legislation: As per the article referenced above, Fintech's AI Premium, AI will be a key ingredient for many fintech solutions. Unfortunately, Canada's proposed Artificial Intelligence and Data Act (AIDA), after a turbulent reception and intense criticism, was not passed into law. In the long run, it will likely prove a good thing that AIDA did not become law, and Blari Attard-Frost makes a compelling argument in her article for the Montreal AI Ethics Institute that "In the absence of clear and effective national AI regulation, Canadians can still regulate AI systems at smaller scales. Professional associations, unions, and community organizations in Canada and elsewhere have already created policies, guidelines, and best practices for regulating AI systems in workplaces and communities."3 Even so, Canada must try again and successfully pass a national AI law to foster innovation and encourage investment in AI, including AI enabled fintechs.
- Real-Time Rail: A new system built to enable near-instant financial transactions in Canada is currently under construction, known as the Real-Time Rail (RTR). The launch of this infrastructure should, like open banking, be a catalyst for fintech in Canada.
The foregoing does not constitute an exhaustive list of factors in the Canadian fintech ecosystem that will impact the trajectory of Canadian fintech industry. The good news is that there appears to be a general evolution towards a regulatory and infrastructural landscape that will promote fintech in Canada. The not so good news is that the pace of Canada's maturation is not matching the speed at which fintech is moving.
The GENIUS Act and the Canadian Stablecoin Landscape
The recently enacted Guiding and Establishing National Innovation for US Stablecoins Act (the GENIUS Act) represents a comprehensive US federal regulatory framework for the issuance and distribution of fiat-backed stablecoins. One primary aim of the GENIUS Act is to facilitate and encourage the expansion of the use of stablecoins in US and international payment transactions. The GENIUS Act provides regulatory clarity in the United States around the use of stablecoins in payments transactions, and with this additional regulatory certainty we are already seeing significant growth in this industry.
Notably, the GENIUS Act characterizes fiat-backed stablecoins that comply with its reserve, reporting and consumer protection requirements as payment instruments—not securities, derivatives or commodities. CSA Staff Notice 21-333 Crypto Asset Trading Platforms: Terms and Conditions for Trading Value-Referenced Crypto Assets with Clients4, among other things, categorizes most stablecoins as securities and/or derivatives for Canadian regulatory purposes. This regulatory position has thus far contributed to the limited adoption and use of stablecoins as payment instruments in Canada.
The passage of the GENIUS Act represents a significant pivot from the previous United States regulatory position under the Biden administration. The GENIUS Act brings the United States legislative approach broadly into alignment with the European Union—converging on the position that stablecoins being used as payment instruments are not considered securities from a regulatory perspective. We expect that this momentum towards a prudential regulatory approach for stablecoins will continue to build as additional jurisdictions, including China, Japan and South Korea5, consider implementing similar regulatory approaches. These developments, and the continued adoption of stablecoins in international trade transactions, will inevitably prompt a reconsideration of the existing regulatory approach in Canada and other countries where stablecoin regulation is primarily based on securities laws. In our view, there is no obvious policy reason why Canadian stablecoin legislation should deviate from this emerging international consensus.
