Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: FinTech and Alternative Finance
Buying a Canadian MSB and Reviewing FINTRAC RPAA and Financial Due Diligence
Nov 12, 2026
Buying a Canadian money services business starts with identifying what the buyer will acquire: a legal entity, a registration history, contracts, records and possibly an active operation. The value of that package depends on whether it supports the services the new owner intends to provide.
A FINTRAC registration entry is an important starting point. It does not establish the company’s financial condition, the quality of its compliance programme or the availability of banking relationships after an acquisition. A payment business may also need a separate assessment under the Retail Payment Activities Act, or RPAA.
For investors evaluating a Canadian MSB company for sale, due diligence should connect registration status, actual activities, transaction structure and financial evidence before the parties agree a completion timetable.
Verify the Canadian MSB registration and legal entity
Begin with the target’s exact legal name, incorporation details, registration number and current status. Match the entity in the corporate documents to the entity in FINTRAC’s Money Services Business Registry.
FINTRAC explicitly states that registration does not mean it endorses or licenses a business. It also states that it does not issue licences or certificates of registration. A sales presentation using the phrase “FINTRAC licence” should therefore be clarified against the actual registration record.
The registry distinguishes registered, expired, ceased and revoked statuses. FINTRAC says it updates the registry monthly, so record the date of the check and obtain relevant recent correspondence from the target as well. Where a renewal is being processed, review the submission evidence and the applicable status treatment.
Registration is not a complete acquisition report. The next step is to establish what the company has actually done and what the buyer intends to change.
Compare the registered business with the proposed service model
A buyer researching a Money Service Business in Canada should define the intended services before treating an existing company as a suitable launch vehicle.
Describe the customer groups, countries, currencies, delivery channels and movement of funds. For a crypto-related product, specify where conversion, custody, fiat collection and payouts occur, and which entity provides each service.
Compare that description with the target’s registration information, existing contracts and operating records. A business registered for certain activities may have little or no transaction history, while an active operator may have obligations and unresolved cases that require a detailed handover.
FINTRAC’s guidance requires registration information to be kept up to date and changes to be notified within 30 days. It also states that registration is valid for two years and must be renewed before expiry. Identify the updates and renewal work relevant to the proposed transaction.
The deal’s structure needs its own assessment. Ask Canadian counsel to determine the consequences of buying shares, purchasing assets or changing the entity through which services will be provided.
Assess RPAA scope separately from FINTRAC registration
FINTRAC registration and Bank of Canada payment-service-provider registration address different requirements. Determine the target’s position under each framework.
The Bank of Canada’s registration guidance sets out four elements: performing a payment function as a service that is not incidental to another business; undertaking the relevant retail payment activity; meeting the geographical scope; and falling outside applicable exclusions.
Its identified payment functions include maintaining an end-user account, holding end-user funds, initiating electronic funds transfers, handling payment instructions and providing clearing or settlement services. The assessment concerns the actual functions and circumstances.
See: Guide: PSP Registration with Bank of Canada (RPAA)
Ask advisers to map who performs each function in the target’s payment chain. The presence of a bank or another registered provider does not, by itself, settle the target’s own position.
For a product marketed as crypto-focused, examine its fiat payment activities as part of that assessment. Keep the conclusion and its reasoning in the transaction file, alongside any Bank of Canada application, registration or correspondence.
Check whether acquisition of control triggers PSP re-registration
For a target that is a registered PSP, the transaction timetable may depend on RPAA acquisition-of-control requirements.
The Bank of Canada’s supervisory policy explains that, where the section 24 requirement applies, the target PSP must submit a new registration application reflecting the planned acquisition and become re-registered before completion. Simply filing an application does not satisfy the requirement to be re-registered.
The acquisition-of-control assessment depends on the transaction and legal structure. Counsel should also assess the applicable exclusions and any prescribed-change rules rather than treating every purchase as identical.
Build the required process into the agreement and completion plan. Identify who prepares the application, which information the buyer must supply and what evidence will permit the parties to close.
The Bank cautions that review timing varies and should not be expected to accelerate because an application was submitted too late. Commercial deadlines should allow for that dependency.
This is a distinct process from updating FINTRAC information. Keep the two workstreams visible, with separate owners and completion evidence.
Review compliance effectiveness and unresolved work
A compliance manual shows intended procedures. An acquisition review also needs evidence of how the programme has operated.
FINTRAC’s compliance-programme guidance requires an effectiveness review at least every two years. The review tests the relevant programme elements, including policies and procedures, risk assessment and training. Request the review plan, results, findings and documented follow-up.
Then assess the records behind the programme through an appropriately controlled diligence process. Relevant requests may include:
- Appointment and responsibilities of the compliance officer.
- Current policies, risk assessment and training records.
- Evidence that customer checks and ongoing review procedures are implemented.
- Outstanding findings, remediation work and relevant regulatory correspondence.
- Records demonstrating how staff resolve cases and retain decision histories.
Sensitive reports and investigations need legally appropriate disclosure arrangements. Do not assume that every record can be freely copied into a buyer’s data room.
For a dormant company, establish which processes must be activated or updated before customers can be served. For an active business, identify the cases and responsibilities that will remain open at completion.
Translate the findings into resources: staff time, external assistance, system work and the effect on launch readiness.
Reconcile revenue client balances and liabilities
Financial due diligence should explain what the business earns, what it owes and which cash is available to support operations.
Separate the value of customer transactions from earned revenue. Reconcile fees and conversion income to accounting records and provider statements, with clear treatment of refunds, reversals and other adjustments.
For an active target, examine customer balances and pending transactions alongside the corresponding assets and provider records. Investigate differences before agreeing the completion position.
Useful questions include:
- Revenue quality: Which customers and services generate income, and how concentrated is that income?
- Direct costs: Which provider charges, transaction costs and manual processes are needed to earn it?
- Outstanding liabilities: What tax, supplier, customer or contractual obligations remain?
- Restricted amounts: Which deposits, reserves or prefunded balances cannot freely finance operations?
- Post-completion cash needs: What funding is required for remediation, staffing and the proposed product?
An illustrative target could report growing payment volume while retaining little contribution after provider charges and staff handling. The buyer needs the supporting records to understand the economics.
Customer funds should not be counted as unrestricted acquisition funding. Establish the applicable treatment of balances and liabilities with the transaction’s financial and legal advisers.
Confirm partner continuity and control over the technology
Bank accounts and integrations are valuable only within the conditions under which they can be used.
Review material bank, payment, custody, software and outsourced-service contracts. Identify notification, consent, due-diligence and termination provisions relevant to ownership, management or business-model changes.
Obtain the necessary partner assessment for the intended customer groups and flows. Keep a technical integration, an active contract and acceptance of the new business model as separate items in the diligence record.
Technology handover should cover:
- Rights to use the software and any custom development.
- Hosting, domains, administrative access and relevant credentials.
- Customer and transaction data, export formats and supporting documentation.
- Reconciliation records and responsibility for unresolved items.
- Ongoing support, maintenance and third-party subscriptions.
Ask the future operating team to demonstrate a representative transaction and an exception. Their ability to locate the relevant records can reveal whether the buyer will inherit a usable process or significant reconstruction work.
Tie the acquisition decision to documented closing conditions
The diligence outcome should be a decision supported by evidence and a plan for unresolved dependencies.
Before signing, establish the target’s identity, registration position, service scope, financial condition and material partner dependencies. Identify the regulatory and contractual processes that affect completion.
Before closing, refresh evidence that could have changed. Confirm required registration outcomes, agreed partner actions, access deliverables, financial adjustments and ownership of open work.
Ask transaction counsel to address material findings through suitable agreement terms. Depending on the issue, this may involve pre-completion actions, warranties, indemnities, transition assistance or another negotiated mechanism.
Keep the operating budget connected to the timetable. A delay in a required registration process or partner decision can extend fixed costs while postponing revenue. Model that scenario before committing the full acquisition budget.
A Canadian MSB acquisition becomes easier to assess when its legal status, operating evidence and financial position are reviewed together. The objective is to know what the buyer can continue, what must change and what needs to be resolved before capital and control pass.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Why MSCI Is Removing Strategy From Its Indexes
November 12, 2026 | NCFA Fintech Market Insight | Digital Assets Blockchain And Tokenization, Capital Markets Infrastructure And Funding, Wealthtech Investing And Trading
Strategy still runs a software business, but Bitcoin now dominates its assets and capital raising. MSCI no longer treats that balance as an index eligible operating company.
November 11, 2026, MSCI confirmed Strategy’s removal from the MSCI USA and MSCI World indexes after the November 30 close under its new methodology for non operating companies. MSCI is one of the world’s largest index providers, and its benchmarks are followed by funds investing across global equity markets. Japan’s Metaplanet is also being removed from an MSCI index. MSCI has decided that Strategy no longer qualifies for its equity indexes because Bitcoin now dominates its assets and much of its capital raising. Strategy still sells software and reports operating revenue, but MSCI is drawing a line between a business that holds investment assets and one where those assets have become the main financial story.
Why Is MSCI Removing Strategy From Its Indexes?
MSCI first looked at a rule aimed specifically at digital asset treasury companies. It later dropped that proposal and change it's methodology to cover companies whose finances look more like investment vehicles. The final November 2026 methodology applies across sectors, not just to Bitcoin treasuries. If operating assets make up at least 50% of total assets, a company stays eligible under this part of the methodology. Below that level, MSCI applies five more tests covering operating assets, business expenses, operating cash flow, gains or losses from investment assets and dependence on outside financing.
Strategy was already an MSCI constituent, so it gets more generous thresholds than a company trying to enter an index. For the operating asset test, an existing constituent is flagged below 10% of total assets rather than below 20% for a non constituent. MSCI also requires an existing member to fail the overall screen in both of its two most recent annual reporting periods before removal.
They need operating assets equal to at least 10% of total assets, business expenses of at least 5% and positive operating cash flow. MSCI also looks at how much investment gains or losses dominate the business and how much outside capital is being raised to accumulate assets. Failing four of the five tests can make a company ineligible.
Strategy’s latest SEC filing says about 99% of total assets relate to its Bitcoin segment, while the software business generated $125.4 million of revenue in Q3 and $372.1 million through the first nine months of 2026. Strategy still has customers, employees and recurring software revenue, but Bitcoin has become so large relative to the rest of the company that MSCI no longer treats the shares like those of a conventional operating business. The rule also reaches beyond crypto. MSCI’s November deletions include Yellow Cake, whose business centres on uranium holdings. That shows MSCI is looking at how much of a company still comes from its operating business, not simply which investment asset it owns.
How Does Strategy Fund Its Bitcoin Purchases?
Strategy held 850,364 Bitcoin as of November 8, acquired for $64.16 billion at an average cost of $75,456 per Bitcoin. That position was not built from software profits. Strategy has repeatedly sold common shares, preferred shares and debt, then used much of the proceeds to buy Bitcoin. During the first nine months of 2026, it used $14.26 billion of securities proceeds to purchase Bitcoin. At September 30, it still had substantial common stock issuance capacity along with large preferred stock programs.
That is why the share price is so important to the model. If investors value Strategy well above the value of its Bitcoin holdings, issuing common stock can raise attractive amounts of new capital, which can then be used to buy more Bitcoin. Strategy’s own dashboard showed an mNAV of about 1.08 times in early November. The company defines mNAV as enterprise value divided by the value of its Bitcoin holdings and warns that it is not traditional net asset value. Strategy’s Q3 filing also says a lower premium reduced its Bitcoin yield during the quarter. In plain terms, common equity becomes less useful for buying more Bitcoin when investors stop paying as much above the value of the underlying holdings.
Most recently, Strategy raised about $283.8 million from common stock sales in the week ending November 8. It used $81.9 million to buy 1,036 Bitcoin, $188.3 million to repurchase STRC preferred stock and $13.6 million for cash. That means the capital raised through common equity now has more than one job. Some still goes to Bitcoin, while some supports preferred securities and cash needs, reducing how much new equity can be directed straight back into Bitcoin purchases.
What Does MSCI Removal Actually Change For Strategy?
MSCI is changing how the shares are treated inside its indexes. Funds that closely track affected MSCI benchmarks will need to adjust their holdings after November 30, while active investors can still own the stock. Strategy remains listed on Nasdaq and is still part of the Nasdaq 100 as of November 2026.
Strategy says MSCI linked funds hold about 13 million MSTR shares, equal to 3.1% of basic shares outstanding. The company says this represents less than one normal trading day and “would not meaningfully affect Strategy.” Reuters reports that Strategy previously warned of about $2.8 billion in selling tied to MSCI exclusion. J.P. Morgan estimated potential outflows of up to $8.8 billion if other major index providers also exclude Strategy. That second number depends on other providers following MSCI and is not confirmed selling.
See: BlackRock IBQT Adds Bitcoin To Canadian ETF Portfolios
MSCI cannot decide what Nasdaq, S&P Dow Jones, FTSE Russell, STOXX or CRSP will do, and none has announced the same action. For Strategy, the main risk is that weaker demand for its shares could reduce the premium investors pay over the value of its Bitcoin. If that premium falls far enough, raising new common equity to buy more Bitcoin becomes less attractive. MSCI is not forcing Strategy to sell Bitcoin. It is making one part of its financing model less supportive.
What Should Bitcoin Treasury Companies Watch?
If you run a company with a large Bitcoin treasury, the key question is how big that treasury becomes compared with the operating business. Bitcoin Treasury Corp Files Preliminary $300M Prospectus describes a TSXV company that combines Bitcoin accumulation with Bitcoin lending and institutional services. That gives investors exposure to both Bitcoin and an operating business, rather than a company whose value depends mostly on the Bitcoin it holds.
MSCI’s decision shows why that balance can affect index eligibility. A company can stay listed and keep running its business, but still be removed from an index if its operating assets, cash flow and revenue become too small compared with its investment holdings and financing. Bitcoin treasury companies therefore need to watch more than how much Bitcoin they own and what they paid for it. Operating assets, cash flow and dependence on outside financing can also affect whether index providers continue to treat the stock like an operating company.
Talking Point
If your company is raising more and more capital to buy investment assets, you eventually have to ask what investors are really buying. Is it the operating business, the treasury, or a financing structure that gives them exposure to both? Strategy can keep buying Bitcoin after MSCI removes it, but one source of automatic demand for the shares is going away. If raising capital to accumulate assets becomes more important than selling products or services, index providers may start treating the stock differently even when the company itself has not changed legally.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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How Is Crypto Market Cap Calculated? What a Change in the Top Coins Really Tells You
Nov 12, 2026
Crypto market cap is calculated by multiplying an asset's reference price by its circulating supply. A token priced at $2 with 50 million units circulating has a market cap of $100 million. The calculation estimates the value of that supply at the reference price; it does not total the money investors deposited. To understand a change in the ranking, examine both inputs and the provider's definitions. A larger number can result from price changes, supply changes, or revised reporting.
Establish what the two inputs represent
The arithmetic is simple, but neither input is self-explanatory. “Price” may be a reference assembled from selected trading pairs and venues, rather than the last transaction on the exchange you use. A provider may exclude observations or convert quote currencies. Two services can publish different estimates because their source selection and methods differ.
Circulating supply is an estimate of units treated as available in the market under a provider's rules. It may differ from the number minted, the total recorded by a contract, or the maximum permitted under a protocol's current design. Locked balances, treasury allocations, burns, and scheduled releases require interpretation. A transparent methodology matters because identical arithmetic can still use different inputs.
CoinMarketCap's market-cap methodology, updated January 6, 2026, defines circulating market cap as reference price multiplied by circulating supply. Its fully diluted calculation uses maximum supply. Other providers and projects may use a different supply convention for a diluted valuation. Read the label rather than assuming that every “FDV” number has an identical denominator.
When reviewing the top cryptocurrencies by market cap, treat the list as an ordered set of estimates at an observation time. Check the price source, supply convention, and included assets where disclosed. A place in the table describes relative size under those rules. It says little by itself about liquidity, code quality, legal rights, or the quality of a future investment.
An unavailable supply estimate also matters. If a service leaves market cap blank, do not automatically treat the asset as worthless or calculate a replacement from maximum supply without labeling it. An unknown circulating input is a data limitation. Replacing it with a different supply measure changes the question being answered.
Separate price effects from supply effects
Consider a fictional token with a $2 reference price and 50 million circulating units. Its initial market cap is $100 million. The following table changes one or both inputs while holding the calculation method constant:
| Scenario | Reference price | Circulating units | Market cap | Change |
|---|---|---|---|---|
| Starting point | $2.00 | 50 million | $100 million | — |
| Price rises 10% | $2.20 | 50 million | $110 million | +10% |
| Supply rises 20% | $2.00 | 60 million | $120 million | +20% |
| Both occur | $2.20 | 60 million | $132 million | +32% |
The combined increase is 32%, rather than 30%, because the higher price applies to the larger supply. Multiplying 1.10 by 1.20 gives 1.32. This small interaction becomes important when a headline attributes the entire market-cap increase to rising prices.
Now take a holder who owns 100 units throughout the example. Their marked value rises from $200 to $220 when the price reaches $2.20. The market's circulating value rose 32%, but that holder's units rose 10% in price. A supply expansion does not automatically distribute additional units to every existing holder. The actual allocation rules would need to be checked separately.
A reporting revision produces another possibility. A provider may newly classify an existing allocation as circulating. Its displayed market cap can increase even if no units were minted or transferred at that moment. The correct description is a revised estimate, with its effective date and method, rather than a claim that new capital entered the asset.
For a substantial change, compare the old and new price and supply observations before explaining the result. If one input is missing, state that limitation. A chart of market cap alone cannot identify which factor changed, and the visual size of the jump cannot fill the gap.
Rounding can account for small discrepancies. A page might display a price of $2.20 while calculating with additional decimal places, or abbreviate a supply as “60M.” Multiplying the rounded labels may not reproduce the reported cap exactly. Use the available precision and describe the tolerance; a minor difference is not enough to infer an error in the underlying formula.
Understand what a ranking change leaves out
Rank is relative. An asset can move up while its own market cap falls if the assets above it fall further. It can also lose places while growing. A ranking therefore needs at least two observations and the values behind them; the change in position is not a return calculation.
Check membership changes before comparing positions across dates. If a provider adds an asset above an existing coin, that coin can drop one place without any change in its inputs. Removing an ineligible asset creates the reverse effect. A consistent comparison keeps the coverage set fixed or explicitly records additions and removals, rather than interpreting every rank change as a change in investor preference.
The biggest crypto gains view answers a different question by ranking positive 24-hour percentage price changes. A small asset with a large percentage move may remain far below a larger coin by market cap. Conversely, a modest percentage move in a large asset can produce a much larger change in estimated circulating value.
For a hypothetical comparison, a $10 billion asset rising 2% adds $200 million to its estimated cap if supply is unchanged. A $20 million asset rising 50% adds $10 million. The second leads the percentage comparison; the first contributes more to the absolute valuation change. Neither result establishes how much money was paid into either market.
The same distinction applies when examining crypto losers today. A decline in reference price marks the circulating supply lower, but it does not mean every unit traded at that price or every holder realized the loss. Realized outcomes depend on actual purchases, sales, costs, and other relevant transactions.
This is also why market cap is not cash available for withdrawal. A relatively small trade can establish a new marginal price that is then multiplied across the supply. Selling a large quantity may reach progressively lower bids. To assess execution, inspect the relevant market's spread and depth; the aggregate valuation does not provide a guaranteed sale price.
Use supply comparisons without turning them into forecasts
Circulating and diluted values can highlight an important question: how much supply is outside the current circulating estimate? Suppose the same fictional token has a maximum supply of 100 million units. At $2, a maximum-supply diluted valuation is $200 million, twice its initial circulating cap. That comparison identifies a supply difference, not a prediction that price must halve.
The path matters. Future units might be released gradually, remain subject to conditions, or become available to different groups at different times. Demand, token use, and market conditions can also change. Read the release schedule and allocation terms before describing a potential dilution event. An estimate based on today's price cannot forecast the price at each future release.
Burns deserve the same care. Reducing a supply measure lowers the calculated valuation at an unchanged price. It does not mathematically require the price to rise enough to offset that reduction. Whether a burn affects incentives, usage, or demand is an economic argument requiring evidence beyond the formula.
For a practical interpretation, assemble a short worksheet:
- Fix the observation time, currency, provider, and asset identity.
- Record price and circulating supply for each date being compared.
- Recalculate their product and explain any rounding difference.
- Attribute the change to price, supply, or methodology only where the records support that attribution.
- Keep diluted value, turnover, and any personal holding outcome separate from the circulating-cap calculation.
See: Coinbase Launches COIN50 Index of Top 50 Cryptos
An aggregate market total adds another methodological choice: which assets belong in the set. Wrapped representations, bridged assets, and similar claims can complicate economic exposure. A provider's inclusion policy should be understood before adding categories together. Otherwise, a larger total can reflect overlapping representations or changed coverage as well as genuine changes in the underlying values.
Conclusion
Market cap makes size comparisons possible by applying a reference price to circulating supply. Its usefulness depends on understanding both inputs. Recalculate a notable change, separate it from rank movement and turnover, and avoid translating valuation changes into cash flows. The formula provides a disciplined starting point; it cannot supply an investment conclusion on its own.
FAQ
Can I compare market caps quoted in different currencies?
Convert them to the same currency using a consistent exchange-rate time before comparing. Otherwise, a currency move can affect the apparent difference even when the assets' prices are unchanged in their original units. Preserve the original figures and conversion assumptions so someone else can reproduce the comparison.
Can a project with no fixed maximum have a diluted valuation?
It can publish an estimate using a defined supply or time horizon, but that convention must be explicit. There is no finite maximum-supply calculation when the applicable supply is unbounded. Do not compare differently defined diluted estimates as though they were identical measures.
Does a token redenomination create market value?
A purely proportional unit change should leave the product unchanged when price and supply are adjusted consistently. Replacing one unit with 100 units multiplies quantity by 100 and divides the equivalent price by 100. A temporary reporting mismatch can make the chart look otherwise.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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What Happens When AI Agents Start Trading Together?
November 11, 2026 | NCFA Fintech Market Insight | Artificial Intelligence And Data, Capital Markets Infrastructure And Funding, Risk Compliance And Regtech
Financial firms are putting AI agents into production well before giving them broad financial authority. That creates time to set identity, permissions and transaction controls before autonomous execution becomes common.
On November 11, 2026, Bank of England Financial Policy Committee external member Jonathan Hall used his final FPC speech to examine what happens when AI agents get more authority inside financial firms. A Bank of England and FCA survey of 196 firms found that 80% already deploy AI agents and another 14% plan to within 12 months. Only 2% reported agents with broad autonomy, and none of those were in trading and payments. Finance is adopting agents quickly, but firms are still keeping people and hard limits around the decisions that can change money, positions or customer outcomes.
AI Agents Are In Finance But They Are Not Trading Alone
The 2026 Bank of England and FCA survey separates four levels of authority:
- Decision support lets an agent recommend an action while a person decides and executes it.
- Constrained execution lets the agent act inside preset rules.
- Conditional autonomy gives the agent more freedom but still requires approval for some actions.
- Broad autonomy lets it initiate and execute actions with limited real time human involvement.
Among respondents, 80% reported decision support agents, 46% constrained execution and 22% conditional autonomy. Broad autonomy was just 2%. Trade and execution was much lower at 7%, 5%, 1% and 0%.
Payments came in at 7%, 5%, 2% and 0%. Even after planned deployments are included, no more than 9% expect agents within the next year to execute trades, approve customer outcomes, initiate or block payments, or change financial limits and controls.
Canadian firms are already testing that boundary. Questrade MCP lets selected customers give an AI agent access to approved brokerage and market data and prepare an order. The customer still has to approve the trade before it is submitted, so it's not autonomous trading. It's a live example of a financial company giving an agent useful access without handing over final authority.
Shared AI Could Make Financial Firms Sell At The Same Time
Thousands of agents using similar technology can become a market risk. The survey found that the three largest cloud and compute providers account for 79% of reported provider relationships. The three largest model API and hosting providers account for 54%.
Several banks, funds or trading firms could use different applications while relying on the same models, cloud providers or data. If those agents read the same market conditions and respond by selling assets, reducing exposure or pulling back liquidity at roughly the same time, many individually reasonable decisions could hit the market together.
See: AI Agents Enter Governed Financial Workflows
Hall focuses on three things. How concentrated are the firms providing financial services? How similar is their behaviour in normal markets? How similar does it become when markets are under pressure? On whether AI will increase that concentration or correlation, he says “at this point we don’t know, but there is a risk that it will.”
Currently, AI agents are not currently causing market wide instability at scale. The concern comes from growing adoption, common technology providers and the possibility that greater autonomy could make reactions faster and more alike. The Bank of Canada’s 2026 Financial System Survey found that nearly all respondents use AI, mostly at limited or moderate levels, and continue to rely on human judgment for decisions carrying significant financial, legal or reputational consequences.
Project Logos Will Test Whether AI Agents Herd Under Stress
Project Logos is testing the behaviour regulators cannot yet observe at scale in live markets. The BIS Innovation Hub, Bank of England and Deutsche Bundesbank are building a simulated financial market where traditional rules based portfolio managers operate beside LLM based agents. Investor agents allocate capital while both groups make portfolio decisions over time.
Researchers can then quantify whether AI portfolio managers respond differently from traditional automated strategies, whether small changes in models or prompts alter their decisions, and whether their behaviour becomes more correlated when markets deteriorate. Project Logos remains ongoing.
Hall also mentions laboratory research where agents developed unexpected group behaviour, including collusion, and a separate experiment where agents communicated after encountering blocked tasks. Those results show that multi agent behaviour can produce outcomes that were not explicitly planned. They don't however show AI agents colluding in live financial markets.
See: FCA Emerging Technology Horizon Scan 2026
Further, financial market rules already prohibit manipulation, which can make detection harder if agents learn to coordinate indirectly through price, volume, timing or rapid trading. Hall specifically raises tacit collusion and momentum ignition as behaviours that may be difficult to control through permissions alone.
Give AI Agents Only The Financial Authority They Need
Companies don't need to wait for autonomous trading to become common before tightening controls. The practical starting point is to separate an agent’s capability from its authority. A model may be able to initiate a payment, change an account or place an order. That doesn't mean the company should give it permission to do so.
Hall calls for unique agent identities, narrow access, secure credentials, transaction limits, sandboxing and monitoring. Those controls let a firm identify which agent acted, restrict the systems it can reach, cap what it can do and revoke access when something goes wrong. Firms remain responsible for the agent’s actions.
OSFI’s July 2026 agentic AI guidance tells Canadian financial institutions to give agents unique identities, limit what they can access, require approval for higher risk actions and keep records of what each agent does. OSFI also wants firms to test failures and outages, understand which outside services support critical work and keep manual backups when those services fail.
AI Agents Expose Weak Links in Financial Authorization shows how the same problem plays out across financial systems. One task can pass through an AI model, cloud service, API, bank, custodian or payment system. Each system that can change money, ownership or customer instructions needs to know what the agent is allowed to do and who approved it.
Companies also need to know whether their AI suppliers are really independent. Two vendors can look separate while relying on the same model or cloud provider. A firm may have strong controls inside its own business and still depend on the same outside infrastructure as competitors and counterparties.
Talking Point
Financial firms should treat AI autonomy as an authorization decision, not a software feature. Start with the job the agent needs to perform, give it only the data and tools required, cap financial actions and require another approval before higher impact decisions change money, ownership or customer outcomes. Record what the agent does, test how it behaves when systems fail and keep a manual way to stop or complete critical work.
The same review should cover outside dependencies. Know which models, clouds and APIs support important workflows and where several suppliers depend on the same infrastructure. An agent can work exactly as designed inside one company and still add to market stress if many firms use similar technology and react the same way at once.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canada’s VC Totals Are Reliant On Mega Deals
November 10, 2026 | NCFA Fintech Market Insight | Capital Markets Infrastructure And Funding, Entrepreneurs Startups Small Businesses, Equity Crowdfunding And Alternative Funding
A small group of large rounds is carrying Canadian venture totals while deal count and growth stage financing remain well below recent norms.
On November 10, 2026, the Canadian Venture Capital and Private Equity Association published its Q3 2026 venture capital report. Canadian companies raised $4.3 billion across 397 deals through September, only 1% less capital than a year earlier. But 23 rounds of $50 million or more represented just 6% of disclosed deals and absorbed 58% of all venture capital invested. Deal count has also fallen every year since 2021. The national total is holding up far better than the number of companies getting financed.
Six Big Rounds Carried 59% Of Q3 Venture Capital
Q3 produced $1.35 billion across 129 deals. Capital was 1% higher than Q2, but deal count fell 15%.
Six rounds above $50 million accounted for $793 million, or 59% of the quarter’s capital. That's a decent quarter for the companies that closed those rounds, but a weak quarter for everyone else.
Mega rounds above $50 million totalled $2.5 billion across 23 transactions through Q3.
See: RBC C$1.4B Tech Push Targets Canadian Scaleups
They represented 58% of all venture dollars while making up only 6% of disclosed deals. Canada can post a fairly stable capital total even when financing reaches fewer companies.
Deal count is down to 397 from 640 in the same period in 2021 and sits 26% below the five year average of 534 deals.
A national total does not tell a company whether investors are writing more first cheques, whether follow on capital is available, or whether its next round has become easier to close. Earlier this year, H1 data showed fewer companies getting funded even as total capital increased. Q3 extends that pattern.
Growth Stage Financing Is Still The Weakest Link
Early stage companies raised $1.74 billion across 99 deals through Q3, up 17% in capital from the same period a year earlier. Most of that money arrived in the first half. Q3 alone fell to $380 million across 24 deals, the lowest quarterly early stage total since 2021.
Later stage capital rose 8% to $1.36 billion.
Growth stage investment fell to $396 million across six rounds, down 55% from the same point in 2025 and 66% below its five year average.
Seed investment is also heavily concentrated. One $124 million Veeda AI round represented 47% of all Q3 seed capital.
Large companies can still attract substantial rounds, and early companies can still find capital. The middle round is harder. Companies need enough money to expand sales, hire senior teams, enter new markets and finance longer operating runways without selling too early or depending on a small group of investors.
RBCx found Canadian VC fundraising concentrated sharply in 2025, with the five largest funds capturing 83% of capital raised. When fund capital and company financing both concentrate, several impressive rounds can coexist with fewer financing options for most founders.
Private Equity Shows How Much Big Deals Can Distort The Headline
The Q3 private equity report shows the same concentration at a much larger scale. Canadian PE investment reached $27.5 billion across 372 deals through September, already above every full year total from 2021 through 2024. Yet deal count is 24% below the same period in 2025.
Q3 alone generated $13.7 billion across 116 transactions. Three deals worth at least $1 billion accounted for $12.8 billion, or 93% of all capital invested in the quarter. Five privatizations accounted for $16.25 billion of year to date PE capital. Those totals say little about financing conditions across the broader private company market.
Capital committed to a major privatization doesn't help a growth company raise its next round simply because both are counted as private capital. Founders need to know who can lead the round, how many investors can write the cheque, what terms they will offer and whether enough follow on capital is available to keep growing. Aggregate dollars do not answer those questions.
M&A Is Providing Liquidity While Venture IPOs Remain Shut
Financing is only part of the picture. CVCA recorded 28 venture exits through Q3, including 26 acquisitions with $744 million in disclosed value. There were no venture backed IPOs.
See: Canada Launches $1.75B Venture and Growth Capital Plan
For founders and investors, that means acquisition remains the main route to liquidity. More M&A can return capital to funds and founders, but it also means fewer Canadian venture backed companies are reaching public markets. Combined with weak growth stage financing and heavy reliance on mega rounds, the numbers show a market that can still fund and exit strong companies without providing broad access to capital across the full company lifecycle.
Takeaway
Canada’s problem isn't simply how much venture capital is available. It's whether enough investors have enough capital to support companies from one stage to the next. Fundraising has concentrated among fewer VC firms, emerging managers have less capital, growth stage financing remains weak and limited exits have slowed the recycling of money back into new funds. A healthier market needs more financing capacity across the full company lifecycle, not just a handful of very large rounds.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Why Canada Is Making It Cheaper to Leave Your Bank
November 11, 2026 | NCFA Story Intelligence | Competition And Market Structure, Wealthtech Investing And Trading, Regulation And Policy
Canada is cutting bank fees and switching barriers after years of weak competition, high concentration and poor productivity.
On November 7, 2026, the federal government proposed something Canadian investors have complained about for years. Banks would no longer be allowed to charge most investment account transfer fees, which typically cost about $150 per account. Ottawa also wants clearer transfer information and tighter timelines for moving investments to another financial institution.
The fee matters because leaving can already be slow and frustrating. Receiving firms often reimburse the outgoing charge to win the account. That means a fee collected by the institution losing the customer can become part of the acquisition cost for the institution trying to win that customer.
Canada's six largest banks hold roughly 93% of banking assets. The Competition Bureau was warning about barriers facing fintech competitors in 2017. Ottawa began reviewing open banking in 2018. A federal advisory committee later recommended an operating system by January 2023 and warned that government should not delay.
January 2023 came and went.
Real Time Rail also slipped years beyond its first expected launch. Meanwhile, Canada's productivity performance kept falling behind major peers. In 2024, the Bank of Canada called the problem an emergency. By 2025, Senior Deputy Governor Carolyn Rogers was directly connecting productivity, competition and Canada's highly concentrated banking sector. She also said the debate had become more urgent after U.S. trade policy delivered a major economic shock to Canada.
Then more barriers started coming down.
Payment companies came under supervision. Payments Canada opened membership to more firms. Consumer driven banking advanced. NSF fees were capped. Real Time Rail finally launched. Budget 2026 targeted bank entry, ownership and regulatory competition. Now Ottawa wants to make investment accounts cheaper and faster to leave.
The $150 exit fee is the latest part of a much longer story about how difficult Canada has made it for customers to switch and for competitors to win them.
Canada had already been debating these barriers for years. In 2017, the Competition Bureau called for stronger competition and innovation in financial services. NCFA agreed that regulatory burdens could favour large incumbents and pointed to the UK's more aggressive support for fintech and new competitors.
Customers faced their own friction. Bundled products, recurring payments, transfer charges, branch relationships and the hassle of changing providers all made staying easier than leaving. In a concentrated market, those small frictions can add up to a powerful advantage.
Ottawa launched the open banking review in 2018 while Canadians were already connecting outside apps to bank accounts through screen scraping. Privacy, security, liability and technical standards required real work, but the January 2023 target still passed without an operating system.
Interac was selected as the RTR exchange provider in 2021 when launch was expected in 2022. The rail did not reach production until November 2026, leaving Canadian firms to build around older settlement infrastructure for several more years.
In March 2024, Bank of Canada Senior Deputy Governor Carolyn Rogers said Canada's productivity problem had reached emergency status. Canada was producing far less output per hour than the United States and had lost relative ground against major peers over several decades.
By October 2025, Rogers was talking directly about competition. She pointed to Canada's concentrated banking market, said stronger competitive pressure can improve productivity and warned that new U.S. trade policies had made the need to perform better at home more urgent.
Bank of Canada supervision of payment service providers began on September 8, 2025. Expanded Payments Canada eligibility followed later that month. By October 2026, 22 new members had joined after access opened, including fintechs, payment companies and credit unions that couldn't qualify under the old rules.
Consumer driven banking advanced through 2026 while new open banking rules started turning accreditation, consent, security and data access into practical requirements. On November 9, Real Time Rail went live after years of delay.
Federal rules cut NSF fees to a maximum of $10 on March 12, 2026. Typical charges had been about $45 to $48. The rules also block repeat NSF charges within two business days on the same personal deposit account and prohibit the fee when the shortfall is under $10.
By November, Budget 2026 widened the competition push with proposals covering faster bank entry, a secondary competition objective for OSFI, ownership rules, credit union funding and customer switching.
Finance Canada estimates about 17,000 transfers would be covered in the first year of its model. It assumes no increase in transfer volumes because there isn't enough evidence yet to know how customers or institutions will respond once the barrier is removed.
Banks could also respond by improving offers to keep customers. Easier switching doesn't require everyone to leave to create pressure. The possibility of leaving more easily can give the customer more leverage before the account ever goes anywhere.
Canada's Recent Financial Competition Reset
The recent changes reach almost every part of the customer relationship. Some open the system to more competitors. Others lower fees, make switching easier or give customers more control over their money and data.
- Payment companies entered formal supervision. Bank of Canada oversight under the RPAA began in September 2025, giving regulated PSPs a clearer place inside Canada's payment system.
- Payments Canada membership opened. Federal reform made more PSPs, credit unions and other qualifying firms eligible to join. Twenty two new members joined in the first year.
- Consumer driven banking advanced. Canada's open banking rules are turning data access, consent, security and accreditation into operating requirements.
- NSF fees fell to a maximum of $10. The March 2026 cap cut a charge that had commonly been about $45 to $48 and added restrictions on repeat fees.
- Real Time Rail finally launched. After years of delay, RTR went live on November 9, bringing 24/7 clearing and settlement to participating institutions.
- Fintech investment powers are finally being activated. Parliament approved broader technology investment powers in 2018, but operating rules took another eight years to arrive. The long wait for fintech investment reform shows how slowly even approved changes can reach the market.
- Bank entry could get faster. Budget 2026 proposes a maximum one year decision timeline for new banks, trust companies and insurers.
- OSFI could get a competition objective. The same Budget 2026 package proposes adding competition as a secondary statutory objective alongside prudential stability.
- Growing banks could face fewer ownership limits. Ottawa proposes raising the bank equity threshold that triggers widely held ownership requirements from $12 billion to $25 billion and giving some foreign bank subsidiaries more flexibility.
- Federal credit unions could get more room to raise capital. Proposed changes would widen who can invest and make growth easier.
- Deposit insurance could rise to $250,000. A higher limit could make it easier for customers and businesses to keep larger deposits with smaller federally insured institutions.
- Bank fees could become easier to see. Budget 2026 proposes an annual statement showing total chequing and savings account fees after FCAC found that banking costs can be difficult to see and compare.
- Branch closures could make switching cheaper. Budget 2026 proposes waiving certain closing or transfer fees during prescribed branch closure periods.
- Mortgage competition is also getting attention. Budget 2026 proposes stronger rate disclosure and other measures aimed at giving borrowers more choice.
- Investment account exit fees are now directly in Ottawa's sights. The November 7 proposal would prohibit most bank transfer fees, improve disclosure and put clearer timelines around account transfers.
Canada is now changing who can enter, who can reach payment infrastructure, who can use customer data, what institutions can charge, how quickly money can travel and how easily a customer can leave.
For years, these problems could be treated as separate files. Open banking sat in one department. Payments modernization sat somewhere else. Banking fees were a consumer issue. Productivity was an economic problem. Competition had its own consultations.
They are harder to separate now.
Canada needs firms to invest faster, grow further and compete in a tougher economy. A financial system that makes entry, customer acquisition and switching more expensive than they need to be works against that goal.
The country knew about many of these barriers years ago. What has changed is how many of them are finally coming down at the same time.
Talking Point
Canada's recent competition reforms aren't about handing fintechs or challenger banks an advantage. They're about removing advantages that can protect an incumbent relationship before price, service, product quality or trust gets a chance to decide who wins the customer.
The results should become visible. Transfers should get faster if the rules work. Receiving firms should spend less reimbursing exit fees. New payment participants should be able to offer services they couldn't offer before. Incumbents may respond with better prices, products and service.
The bigger question is whether all of that produces the competitive pressure Canada has been missing.
What Happens Next?
- Will the investment transfer proposal survive consultation without major changes?
- Will account transfers become measurably faster once the timing rules take effect?
- Will receiving institutions spend less reimbursing outgoing transfer fees?
- Will consumer driven banking lead to more switching, not just easier comparison?
- Will new Payments Canada members turn access into lower costs, better products or new services?
- Will RTR adoption spread beyond the first launch participants?
- Will the proposed OSFI competition objective and one year entry timeline bring more viable financial institutions into the market?
- Will incumbents respond to easier switching with better prices, products and service?
What Did You Think?
Canada knew about many of these competition and productivity problems years ago. Why did it take this long for so many financial barriers to come under pressure at once?
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CSA Tokenization Report Shows Where Canada May Scale First
November 10, 2026 | NCFA Fintech Market Insight | Digital Assets Blockchain And Tokenization, Capital Markets Infrastructure And Funding, Regulation And Policy
Funds, Collateral And Settlement Lead Canada’s Near Term Tokenization Opportunity
On November 10, 2026, the Canadian Securities Administrators published its Project Tokenization Phase 1 findings, setting out where Canadian market participants see the strongest commercial opportunities for tokenization and what regulators plan to test next. The report draws on 233 organizations, 21 bilateral meetings and 80 survey responses, along with workshops attended by 281 people in Calgary and 491 in Toronto. Participants put investment funds, private assets, collateral, treasury and settlement infrastructure ahead of public stocks as the strongest near term opportunities.
The report also cuts through one of tokenization’s biggest sales pitches. Blockchain can change how an asset is recorded, transferred or settled, but it doesn't automatically create liquidity, investor demand, broader eligibility or stronger ownership rights. Those outcomes still depend on the product, market, legal structure and infrastructure around it.
The CSA now plans to take specific projects into Phase 2 through a 120 day public call for proposals. Firms may be able to use existing regulatory processes, tailored regulatory treatment or bounded testing in a controlled environment. The findings are stakeholder views, not CSA policy positions or regulatory conclusions.
Where Tokenization Is Most Likely To Work First In Canada
The strongest near term business cases are capital markets operations, not tokenized public stocks. Participants saw more immediate value in fixing expensive processes inside funds, private markets, collateral and settlement. That includes subscriptions, redemptions, recordkeeping, asset servicing and the transfer of collateral between institutions.
Investment funds ranked among the most commercially viable uses, particularly money market funds. A tokenized fund can automate parts of administration and make transfers between eligible investors easier while keeping the fund inside existing securities rules. Private equity, private credit and real estate also attracted interest, although putting an illiquid asset on a ledger doesn't suddenly create buyers or an active secondary market.
Collateral looks particularly practical. Financial institutions constantly transfer assets to secure loans, derivatives and other exposures, often through systems that require reconciliation across several firms. Participants said tokenized collateral could reduce friction, improve visibility and speed up those transfers. That supports earlier evidence on collateral and cash, where the business case comes from improving costly financial plumbing rather than creating another digital asset.
Public equities are further back in the queue. The report recognizes that tokenized shares are technically possible, but participants generally saw them as less commercially mature than funds and certain private assets. Existing stock markets already execute and settle efficiently, so a tokenized version has to offer more than different recordkeeping. Wider adoption still depends on distribution, settlement, infrastructure, demand and enough liquidity to support real trading.
Why A Token Doesn't Automatically Create Liquidity Or Ownership
The report states the point plainly, “Tokenization should be distinguished from the outcomes it may enable.” A blockchain can make an asset programmable or easier to transfer without changing who legally owns it, who can buy it or how much demand exists.
The report identifies three common structures.
- In an issuer sponsored model, the token can form part of the issuer’s official ownership system and represent the actual security. Participants generally saw this as providing the clearest ownership rights.
- A third party custodial model gives investors an interest tied to securities held by an intermediary.
- A synthetic model can provide price exposure without giving the investor ownership of the underlying security.
See: How Tokenization Became A Business Investors Can Measure
Those structures can look similar while giving investors very different rights. Voting, dividends, corporate actions, redemption and insolvency protection can all depend on how the token is built and who stands behind it. Participants specifically warned that retail investors may struggle to distinguish between products that appear similar but carry different claims and risks.
Tokenization isn't just a blockchain story once real money and investor rights are involved. Tokenization is already becoming measurable through assets, transactions, custody, servicing, distribution and regulated infrastructure. Once real money and investor rights are involved, the value depends less on creating the token itself and more on whether ownership, administration and market structure work around it.
What Still Stops Tokenized Markets From Reaching Commercial Scale
Settlement is one of the biggest constraints. A security can exist on a blockchain, but a fully digital transaction also needs money that can settle against it. Participants discussed stablecoins, tokenized bank deposits and wholesale central bank money, but no single settlement asset emerged as the answer. They also flagged uncertainty over which regulator should oversee different parts of that cash leg.
Project Samara gives Canada a real use case test. In March, Project Samara tested a C$100 million EDC bond using distributed ledger technology and tokenized wholesale Canadian dollars. The experiment handled issuance, trading and settlement, showing that a real Canadian security can operate on this type of infrastructure. It didn't answer everything. Participants still identified unresolved questions around netting, liquidity, governance, settlement finality and scale.
See: SEC Grants 5 Year Exemption for Tokenized Stocks
Faster settlement also comes with a tradeoff. Atomic settlement can reduce counterparty risk because the security and cash settle together. But if every transaction has to be funded separately instead of being netted against other obligations, firms may need to keep more cash available. A system that settles faster can therefore use liquidity less efficiently than existing wholesale infrastructure.
And then there's the legal record. A blockchain transaction may be irreversible without being legally final, so technical finality isn't necessarily legal finality. Participants questioned whether the ledger or another register should serve as the authoritative ownership record. Custody brings its own questions around private keys, asset segregation and recovery. The infrastructure also has to work with banks, custodians, administrators and the Canadian Depository for Securities.
Canada’s largest banks are also testing Canadian dollar tokenized deposits, which could eventually give tokenized markets another settlement option. But digital cash can't solve the settlement problem on its own. The legal treatment, access rules, interoperability and operating structure still have to work.
What Phase 2 Could Change For Canadian Tokenization Projects
Some participants said Canadian institutions have invested less in tokenization than international peers, while firms and regulators still lack enough hands on experience. They didn't conclude that Canada is behind, but they repeatedly called for clearer ways to get viable projects beyond isolated pilots.
Phase 2 gives regulators specific projects to evaluate instead of discussing tokenization in an abstract out of reach way. The CSA plans to accept proposals for 120 days from firms building tokenized products, infrastructure, services and business models. Regulators will look at the issues each proposal raises, its stage of development, industry participation and whether it can produce lessons that apply beyond one company.
See: Canada’s Big Six Collaborate on CAD Tokenized Deposits
A mature proposal could remain inside existing securities rules, require tailored regulatory treatment or qualify for bounded testing. The CSA describes bounded testing as a controlled process with defined limits, safeguards, reporting and decision points. It isn't automatic regulatory relief, and submitting a proposal does not guarantee that the CSA will create a testing framework for it.
Firms don't need another pilot proving that blockchain can represent a bond or fund. They need to know whether a workable product can get from technical proof to legal certainty, regulated distribution and production use without years of uncertainty. As of November 11, the CSA's Collaboratory still lists Project Tokenization at the Phase 1 findings stage, so the proposal intake itself is the next concrete regulatory milestone.
Talking Point
Canada shouldn't measure tokenization progress by how many pilots it can launch. The better test is whether Phase 2 can clear specific legal and operating barriers for use cases that already show a credible business case. If funds, collateral or settlement can save money and reduce friction, regulators should focus on what stands between those projects and production.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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