Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Research
Canada Values IP But Capital Still Falls Short
Apr 15, 2026 | NCFA Feature | SME Finance And Alternative Funding
IP Finance Gap Between Value And Funding
In its April 2026 report on IP backed finance in Europe, the European Union Intellectual Property Office puts scale behind a problem that reaches well beyond Europe. IP intensive industries account for about 48% of EU GDP and around 31% of employment, yet the financing system still struggles to turn that asset base into lending and growth capital.
The report puts the EU SME credit gap at up to EUR 365 billion a year, with EUR 70-150 billion tied to IP rich firms (IPR).
Modern growth depends on intangible assets, while most lending systems still prefer hard collateral. It says better valuation, disclosure, and risk sharing could unlock EUR 30-120 billion annually.
IP Already Proves Its Economic Value
Firms that own and use IP tend to perform better, attract more capital, and scale faster.
EUIPO and EPO research cited in the report finds that IPR active SMEs are 21% more likely to go through a growth period and 10% more likely to become high growth firms.
The same body of research finds that companies with registered IPRs generate 41% more revenue per employee than non owners, with the advantage rising to 44% for SMEs.
See: Regulating for Growth by Understanding Innovation
Another report finding says startups with a patent or trademark filing have 2.6 times higher odds of winning seed funding than peers without filings. In this context, IP is less about a legal and and more a financing story.
Canada already understands that IP matters, but now the issue is execution. Can banks, investors, valuation experts, founders, and policymakers use IP in a consistent and trusted way when companies need capital to commercialize and scale?
The Missing Piece Is Finance Infrastructure
IP doesn't behave like ordinary collateral.
It is hard to compare, hard to price, and often hard to separate from the company that creates value from it.
Secondary markets remain thin. Recovery paths remain uncertain.
Financial statements often fail to show the full picture. Valuations cost too much for many smaller firms.
Transaction data remains sparse. Lenders respond the way lenders usually do when information stays patchy. They get conservative, apply steep discounts, or walk away.
That diagnosis fits Canada more than many people admit. Canada talks about commercialization, productivity, scale up capital, and keeping more firms anchored at home.
Those goals all get harder when a company’s most valuable assets sit in code, data, patents, brands, know how, and proprietary processes, but the financing system still wants equipment, real estate, and receivables.
Canada Has Building Blocks But Not A Full System
WIPO’s Canada country perspective on IP backed financing says Canada has already implemented dedicated IP backed lending programs that have provided significant funding to IP rich firms since 2020.
The country also built support around strategy and capability. ElevateIP helps startups and scaling firms build IP strategy earlier in their life cycle. The Patent Collective Program continues to receive federal support proposals that aim to strengthen specialized IP support for SMEs.
That said, Canada still looks early when viewed as a full financing system.
Even the clearest dedicated lending example has narrowed. BDC Capital’s IP backed financing page now says the fund is closed to new investments and directs companies toward its Growth and Transition Capital team instead. That doesn't erase progress, but it underlines a sticky truth holding us back.
Canada has ideas, pilots, and support programs but it still needs stronger financing systems to support IP.
What Europe Gets Right About The Next Step
The EUIPO report lays out five priorities that deserve attention in Canada too.
1. Make IP visible. Companies need a practical way to disclose IP and related intangible assets so lenders and investors can actually assess them.
2. Assign credible value. That means valuation standards, trained experts, and methods that smaller firms can afford.
3. Leverage that value into lending. Risk sharing tools, guarantees, and insurance can help lenders move before the market has decades of recovery data.
See: Global Open Finance Lessons for Canada’s Rulebook
4. Build the evidence base. Without transaction history, default data, recovery data, and clearer benchmarking, every deal stays bespoke and every lender stays cautious.
5. Reinforce coordination. The system only works when policy, valuation, finance, legal frameworks, and founder education line up.
None of that sounds flashy (or new to some extent) but it's important. Great financing markets often depend on boring infrastructure that people barely notice once it works. Canada has already made progress on IP awareness. The harder job now is to make IP finance repeatable, cheaper, and easier to trust.
Why This Gap Hits Canada’s Growth Ambition
Canada wants stronger productivity, more domestic scale ups, better commercialization, and more globally competitive firms. Those ambitions run straight into the financing problem the report describes.
If a company builds real value through software, data, designs, patents, and brands, but still cannot turn that value into growth capital on workable terms, the economy leaves a lot of productive capacity stranded. Some firms slow down. Some dilute too early. Some sell too early. Some move.
That is why the policy question has changed. Canada needs more practical answers on valuation, underwriting, recovery, disclosure, and coordination. It needs more evidence on what works. It needs more institutions that can bridge the gap between legal ownership and financeable value.
Closing Outlook
Europe’s new report doesn't hand Canada a turnkey model, but it does offer something useful. It shows the size of the opportunity, names the bottlenecks clearly, and lays out the missing pieces of a functioning market. For Canadian founders, lenders, and policymakers, that is the real takeaway. The challenge is no longer awareness. The challenge is building the tools that turn IP into capital.
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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NCFA Weekly Fintech Intelligence Apr 4-10, 2026
April 10, 2026 | NCFA Fintech Whisperer Weekly Intelligence | Digital Assets Blockchain And Tokenization, Regulation And Policy, Payments And Market Infrastructure, Artificial Intelligence And Data
Image: Freepik
This live weekly NCFA intelligence page tracks financial technology developments that significantly affect how fintechs build, sell, raise capital, and operate under scrutiny. Coverage prioritizes Canada and includes global events that directly influence competitive conditions, market access, and execution realities across fintech sectors. This page will be updated throughout the week with market movers in a live format and then each week we'll close the prior week's contents in prep for the upcoming week, and continue on a rolling basis. (Missed prior week's Fintech Whisperer? (December 6-12, 2025, December 13-19, 2025, January 1-9, 2026, January 10-16, 2026, January 17-23, 2026, January 24-30, 2026, January 31-February 6, 2026, February 7-13, 2026, February 14-20, 2026, February 21-27, 2026, February 28-March 6, 2026, March 7-13, 2026, March 14-20, 2026, March 21-27, 2026, March 28-April 3, 2026).
Weekly Fintech Market Intelligence Apr 4 - 10, 2026
Regulation And Policy
SEC Issues No Action Relief For Bank Of England Bail In Events
Apr 10, 2026, United States and United Kingdom
- SEC staff will not recommend enforcement if UK bail in transactions proceed without Securities Act registration when investors are forced to exchange affected securities into interim non transferable instruments and then into ordinary shares.
- The relief applies where firms rely on counsel that the Section 3(a)(9) exemption is available for these exchanges during a statutory resolution process.
- The position covers scenarios where securities or interests may be issued, transferred, cancelled, modified, or converted as part of a Bank of England bail in event.
- The statement also points to possible broader rulemaking, with the SEC considering a wider exemption framework for cross border bail in transactions.
Cross border bank resolution just got more executable. Legal friction around emergency bail in mechanics drops, especially where US investors hold affected securities. That gives global banks, broker dealers, and market infrastructure firms a clearer playbook for how securities conversions and investor treatment can run under stress. It also signals where the SEC may formalize exemptions, which matters for anyone structuring cross border capital, custody, or resolution workflows.
CIRO Sets 2027 Priorities Across Rule Harmonization Cyber And Market Oversight
Apr 7, 2026, Canada
- CIRO’s fiscal 2027 priorities run from Apr 1, 2026 to Mar 31, 2027 and include publishing a final harmonized rulebook for investment dealers and mutual fund dealers.
- CIRO also plans to expand InnovateSafe, strengthen cyber resilience through new data frameworks and exercises, and review complaint handling timelines.
- Other priorities include publishing its first annual Market Regulation report, reviewing UMIR, and operationalizing delegated registration responsibilities across Canada.
CIRO is setting the next year’s pressure points now. Dealers and vendors in compliance, cyber, complaints, registration, and market surveillance can see where regulatory work and operating expectations are headed.
US Treasury Designates BNY For Trump Accounts Program
Apr 6, 2026, United States
- US Treasury designated BNY as a financial agent to support the Trump Accounts program, a new federal account program for children created under the One Big Beautiful Bill Act.
- BNY will manage the initial accounts and help develop the Trump Accounts app.
- Robinhood will serve as brokerage and initial trustee, while Treasury will retain control over the app and operations for the initial accounts.
Treasury is putting a government account program into market through a named bank agent, a brokerage trustee, and an app structure it still controls. That creates a new federal operating model for account access, custody, and distribution.
Digital Assets, Blockchain And Tokenization
HKMA Grants First Stablecoin Issuer Licences In Hong Kong
Apr 10, 2026, Hong Kong
- The Hong Kong Monetary Authority granted stablecoin issuer licences under the Stablecoins Ordinance to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation Limited, with the licences taking effect on Apr 10.
- The approvals mark a new phase in the implementation of Hong Kong’s stablecoin regime.
- HKMA identified Anchorpoint as a joint venture of Standard Chartered Bank Hong Kong, HKT, and Animoca Brands.
- HKMA also maintains a public register of licensed stablecoin issuers as the source of record for approved entities.
This gives banks, payment firms, and digital asset operators a live regulatory perimeter for fiat backed stablecoins in one of Asia’s key financial centres. It also raises the pressure on other jurisdictions to show whether they want sandbox activity, bank led issuance, or a full licensing track.
Japan Cabinet Approves Crypto Into Financial Instruments Law
Apr 10, 2026, Japan
- Japan’s Cabinet approved a bill on Apr 10 to amend the Financial Instruments and Exchange Act and the Payment Services Act, including a review of the rules for crypto-assets.
- The FSA’s crypto working group had recommended moving crypto-assets from the Payment Services Act into the Financial Instruments and Exchange Act framework.
- The proposal treats crypto-assets as financial instruments distinct from securities rather than as payment instruments.
- The recommended package includes insider-trading and market-abuse rules, stronger information provision, and tougher penalties for unregistered business.
That raises the compliance bar for exchanges, issuers, and market operators, and it gives tokenized products a clearer path into a more tightly supervised investment framework.
ClearBank Europe Enters MiCAR Perimeter For Digital Asset Services
Apr 9, 2026, Europe
- ClearBank Europe said it completed a MiCAR notification and received confirmation from the Dutch Authority for the Financial Markets to operate as a Crypto Asset Service Provider.
- The bank said it will roll out Circle Mint and provide clients with access to Euro Coin and USD Coin in a regulated banking environment.
- ClearBank said the move is a milestone entry into digital currency infrastructure as part of its broader digital assets strategy.
A regulated bank is bringing stablecoin access into clearing infrastructure under MiCAR. That gives bank-led digital asset services a clearer route into the European market and narrows the gap between fiat clearing and tokenized money.
Swiss Banks Open CHF Stablecoin Sandbox
Apr 8, 2026, Switzerland
- UBS, PostFinance, Sygnum, Raiffeisen, Zürcher Kantonalbank, BCV, and Swiss Stablecoin AG launched a CHF stablecoin sandbox to test Swiss franc stablecoin use cases in 2026.
- The partners said they want to connect blockchain applications to the Swiss franc and strengthen Switzerland’s digital money ecosystem and financial center competitiveness.
- PostFinance said there is currently no regulated Swiss franc stablecoin with broad application in Switzerland, and described the sandbox as a controlled live environment with defined safeguards, a limited participant pool, and transaction limits.
Swiss banks are testing whether domestic currency stablecoins belong inside regulated payments and settlement infrastructure. That puts local currency control, settlement design, and bank relevance into the same build decision.
FDIC Opens Stablecoin Rulemaking Under GENIUS Act
Apr 7, 2026, United States
- The FDIC Board approved a proposed rule to implement GENIUS Act requirements for FDIC supervised permitted payment stablecoin issuers.
- The proposal covers reserve assets, redemption, capital, risk management, and certain stablecoin related custodial and safekeeping services provided by insured depository institutions.
- It also addresses pass through insurance for stablecoin reserve deposits and says tokenized deposits that meet the statutory definition of deposit would be treated the same as other deposits under the Federal Deposit Insurance Act.
The FDIC is starting to put bank level rules around stablecoin issuance, custody, reserve treatment, and tokenized deposits. Banks, vendors, and stablecoin infrastructure firms now have a clearer target for operating inside the insured deposit perimeter.
Artificial Intelligence And Data
Anthropic Restricts Mythos Cyber Model As Banks Face New AI Risk
Apr 10, 2026, United States
- Anthropic says Claude Mythos Preview is unusually capable at computer security tasks and is not being released broadly.
- The company launched Project Glasswing to give limited access so critical software can be secured before wider distribution.
- Reuters reported that U.S. Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell warned major bank CEOs about the model’s cyber risk.
- Anthropic says Mythos found a large number of severe vulnerabilities, including zero day vulnerabilities, across major software and browser environments.
Banks are now treating frontier AI as a cyber and resilience issue, not just a productivity tool. That puts model access, vendor controls, and critical system defence closer to the core of financial risk management.
Anthropic Reprices Third Party Claude Tool Use As Demand Rises
Apr 4, 2026, United States
- Boris Cherny, Anthropic’s head of Claude Code, said the company is being intentional about managing growth and that Claude subscriptions were not built for the usage patterns of third party tools such as OpenClaw.
- Anthropic’s Agent SDK docs say third party developers are not allowed to offer claude.ai login or claude.ai rate limits in their own products unless previously approved.
- The change pushes heavier third party usage toward API keys, pay as you go billing, or separate usage bundles instead of relying on bundled consumer style subscriptions.
Anthropic isn't closing the door on developers, but it's separating heavy third party agent usage from consumer subscription pricing. That raises the operating cost for external Claude tools and gives Anthropic tighter control over how third party workflows consume compute.
Payments And Market Infrastructure
Circle Launches Managed Stablecoin Settlement Stack
Apr 8, 2026, United States
- Circle launched CPN Managed Payments, a fully managed stablecoin settlement layer for PSPs, fintechs, banks, and global platforms.
- The product lets institutions interact in fiat while Circle handles USDC minting and burning, payment orchestration, compliance controls, and blockchain infrastructure.
- Operators can accept stablecoin based flows and then settle in stablecoins to a business wallet or in U.S. dollars and other fiat currencies.
Circle is packaging stablecoin settlement, compliance, and conversion into one managed payments layer. That lowers the barrier for institutions that want faster cross border settlement without taking on direct digital asset operations.
Visa Opens Global Infrastructure For AI Agent Commerce
Apr 8, 2026, Global
- Visa launched Intelligent Commerce Connect as part of its Intelligent Commerce portfolio to help merchants accept agentic transactions and let partners integrate more payment and acceptance flows through one setup.
- Visa said the product is already in pilot with partners including Aldar, AWS, Diddo, Highnote, Mesh, Payabli, and Sumvin, with broader rollout planned this year.
- Visa’s wider Intelligent Commerce stack sits on top of a network that spans 4.8 billion payment credentials, more than 150 million merchant locations, and over 300 billion transactions processed each year.
Visa is moving AI agent shopping from demos into payment rails. That gives merchants, issuers, and partners a clearer path to support agent led transactions inside mainstream checkout and acceptance infrastructure.
Paysafe Launches Pay With Crypto For US iGaming Deposits
Apr 7, 2026, United States
- Paysafe launched Pay with Crypto for U.S. iGaming operators and daily fantasy sports brands, powered by MoonPay.
- The product supports deposits using USDC, other stablecoins, and major cryptocurrencies, then converts funds into U.S. dollars to fund player accounts.
- Operators can settle almost instantly in stablecoins to a business crypto wallet or settle in U.S. dollars and other fiat currencies.
Crypto rails are moving behind mainstream checkout flows with conversion and settlement packaged into one payments stack. That lowers integration friction for operators and gives stablecoins another live payments entry point inside a regulated consumer flow.
Capital Markets And Market Infrastructure
LISE Opens ST GROUP IPO On EU DLT Market Infrastructure
Apr 9, 2026, Europe
- Subscriptions are open for the ST GROUP IPO on LISE from Apr 9 to Apr 20, with a possible extension to Apr 24.
- The fixed price is €18.25 per share, with a base offer of €2,608,837.50 and an extension amount of €3,000,154.00.
- LISE identifies itself as operator of an organized multilateral trading facility and a distributed ledger settlement system under Regulation (EU) 2022/858.
- The deal gives the EU DLT Pilot Regime one of its clearest live tests yet in primary equity issuance for smaller companies.
LISE is running a live capital raise under the EU DLT Pilot Regime which had a slow start, with real pricing, subscriptions, and settlement on new rails. If this holds up through allocation and trading, it strengthens the case that SMEs and smaller issuers could reach public capital through a simpler stack with fewer legacy layers.
Ctrl Alt Gets FCA Authorisation After Tokenizing $1.2B In Assets
Apr 8, 2026, United Kingdom
- Ctrl Alt received direct authorisation from the Financial Conduct Authority to provide regulated investment services.
- The firm previously operated as an Appointed Representative before moving to full FCA authorisation.
- Ctrl Alt has tokenized more than $1.2 billion in assets since 2022, according to the company.
- The firm says it serves financial institutions, asset managers, fintechs, and public sector clients.
A tokenization platform has crossed into full FCA authorisation with real operating scale. That places tokenized asset infrastructure inside the regulated investment perimeter rather than alongside it. As more firms follow, tokenization shifts from service layer into core market infrastructure.
TNS And Radianz Combine To Form Waypoint Trading Solutions
Apr 8, 2026, Global
- TNS combined its Financial Markets business with Radianz to launch Waypoint Trading Solutions as a single trading infrastructure business.
- Waypoint says it supports connectivity to more than 180 exchanges, over 6,500 financial market endpoints, and institutions across more than 70 countries.
- The combined platform brings together extranet connectivity, managed low latency exchange access, and managed market data operations in one stack.
Trading connectivity, hosting, and market data are consolidating into fewer managed platforms. That matters for firms trying to cut complexity, lower operational drag, and keep trading infrastructure closer to production grade service levels.
CIRO Updates Margin Rates List For Qualifying Index Products
Apr 7, 2026, Canada
- CIRO published an updated list of floating and tracking error margin rates for qualifying Canadian and U.S. index products.
- The update uses data through Mar 31, 2026, becomes effective Apr 10, 2026, and replaces the prior list issued on Feb 6, 2026.
- The list is distributed as a production input through CIRO’s website and MTRS 2.0 SFTP for dealer use in margining and controls.
This is a technical update, but it feeds directly into dealer risk models and operating controls. Trading, credit, and operations teams treat these lists as live reference data, not background guidance.
Conclusion
Control points are tightening. Stablecoin rules align closer with bank standards. AI commerce runs through existing payment rails. Trading and data infrastructure consolidate. LISE adds a live IPO under the EU DLT Pilot Regime. Tokenization now shows up in collateral, governance, and issuance. NCFA covered how tokenization is scaling in collateral and cash and how governance is moving onchain. This week adds primary issuance.
NCFA offers various curated resources to help founders and investors stay current on developments that impact fintech markets, subscribe to NCFA weekly newsletter updates, view a rundown of current fintech news and insights, or dive into the latest fintech industry research.
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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Agentic AI At Home, At Work, Under Scrutiny
Apr 10, 2026 | NCFA Insight | Artificial Intelligence And Data, Regulation And Policy, Risk Compliance And Regtech
Agentic AI Moves Into Daily Life Workflows And Oversight
On March 31, 2026, the UK Digital Regulation Cooperation Forum published a foresight paper on the future of agentic AI. It offers one of the clearest regulatory reads yet on where agentic AI is heading as it moves into consumer tasks, enterprise workflows, and regulatory supervision.
The paper draws a clear line between systems that respond and systems that act. Agentic AI can plan, pull data, use tools, and carry out actions such as making payments on a user’s behalf. Once AI moves into real workflows, the focus shifts fast to consent, accountability, cybersecurity, consumer protection, and competition. That lines up with wider NCFA analysis of AI governance gaps and the cost of weak controls once software starts operating inside regulated systems.
At Home Agentic AI Becomes A Delegation Layer
Everyday life admin is one of the clearest use cases. Instead of bouncing across websites, forms, logins, and support queues, a user can ask an agent to sort bills, renew a policy, or book a trip. That turns software into a delegation layer between the customer and the market.
Three benefits stand out.
Lower search costs. Agents can turn simple requests into structured comparisons across providers and calculate total cost including fees.
Better deal discovery. They can monitor prices, surface better options, and apply savings automatically.
Easier switching and cancellation. They can pre-populate forms, track deadlines, and maintain records of consent.
For users facing access barriers, including disability or language constraints, these systems could also expand participation and accessibility. But that upside depends on trust. As NCFA noted in user backlash over AI data use, convenience can disappear quickly when people no longer understand how their data is being used or who controls it.
At Work The Business Case Starts To Get Real
Companies can use agentic AI across customer facing work and internal operations.
On the customer side, agents can handle support requests, guide onboarding, process refunds, and complete routine tasks before sending more complex cases to staff.
Inside the business, they can pull information from multiple systems, draft reports, create follow ups, route approvals, and take care of repetitive work that usually eats up time.
The report includes real data. A large study of AI in customer support found productivity gains of about 14% to 15% in issues resolved per hour, with the biggest improvements among less experienced staff. A UK Government Digital Service trial across 20,000 staff reported average time savings of 26 minutes per day.
These aren’t fully agentic systems, but they help explain why firms are moving in that direction.
There’s also a concrete example from Allianz. The company built a system using seven AI agents to automate food spoilage insurance claims. The agents pull evidence from multiple sources and work together on a single case.
That matters because it shows where agentic AI is likely to land first in regulated industries. Not in open ended autonomy, but in tightly defined workflows where speed, documentation, and consistency matter. It also supports NCFA’s earlier view on which fintech processes are most ready for agentic AI.
Regulators Won’t Just Regulate Agents They’ll Use Them
The DRCF isn’t only asking how to regulate agents. It’s also looking at how regulators can use them.
AI can help detect issues, review large volumes of documents, support analysis, and assist with drafting. The Competition and Markets Authority already uses AI tools to detect bid rigging linked to more than £300 billion in UK public procurement each year. The CMA has also deployed agentic AI to detect consumer harms like drip pricing at scale.
That matters for regulated finance. Once supervisors and watchdogs use AI to monitor conduct and review journeys, firms will need stronger controls, clearer evidence trails, and more reliable oversight. NCFA’s recent review of what regulated AI needs points in the same direction.
AI doesn’t just change the market. It changes how the market is watched.
The Risks Rise When Systems Start Acting
The same features that make agentic AI useful also create new pressure points.
Accountability gets harder. Multiple agents, tools, and providers can operate inside one workflow. When something breaks, responsibility can be difficult to trace.
Action bundling raises the stakes. A simple request can trigger multiple steps at once, including data access, consent, payment, and sharing. Users may not fully understand what they handed over or when control returns to them. That risk is especially relevant in finance, where NCFA recently looked at how AI payments challenge consent rules and liability.
As agents take over comparison and decision making, users may rely on rankings they can’t see. If those rankings reflect platform incentives or partnerships, outcomes can change without users realizing it.
That also changes competition. Firms may start competing to be selected by the agent, not by the customer.
Cyber Risk Scales Faster Than Most Firms Expect
Agentic AI can improve defense by helping teams triage threats and respond faster. At the same time, it expands the attack surface.
Prompt injection becomes more serious when agents act on untrusted input. Broad permissions increase exposure. If controls are weak, emails, browsing history, and customer records can be exposed.
A recent attack used agentic AI to carry out 80% to 90% of the attack lifecycle.
That lowers the cost of scale for attackers.
The report also points to emerging ideas like Know Your Agent identity and authorization frameworks as something to watch.
Competition Risk Goes Beyond Big Tech
Vendor lock in. As agents become embedded in workflows, firms may depend more heavily on one provider’s infrastructure, data, and orchestration layer. Without strong interoperability, markets could tilt toward a single vendor that captures most outcomes. That concern sits close to NCFA’s argument that smart data infrastructure redefines financial competition.
Algorithmic collusion. Research shows agents can converge on higher prices or coordinated behaviour in controlled settings without being told to do so.
These are experimental findings, not live markets. Still, the warning is clear. Without strong controls, hidden coordination becomes a conduct risk.
What Fintechs Should Take From This Now
The most useful part of this report isn’t prediction. It shows where regulators already expect pressure to build as agentic AI moves into real use. There’s no regulatory gap to wait for. Existing rules already apply. Firms are expected to manage these risks now, not later.
The upside is real. Agentic AI can reduce friction, compress workflows, and lower operating costs across the stack.
But the bigger change is structural. Once systems act, not just suggest, control becomes part of the product. Who authorizes actions, what gets logged, how decisions can be explained, and how users step in or push back all become core features.
That creates a new dividing line. Some firms will bolt agentic AI onto existing systems and hope their controls hold. Others will rebuild around visibility, control, and user trust. The second group will move faster, scale more cleanly, and face fewer problems as scrutiny rises. NCFA’s earlier piece on agentic AI in banking makes the same point from the deployment side.
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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Smart Data Infrastructure Redefines Financial Competition
Apr 8, 2026 | NCFA Feature | Open Banking Open Finance And Data Sharing
Data Infrastructure, Not Apps, Defines Competitive Advantage
On March 26, 2026, the UK Smart Data Strategy 2035 and the DRCF Smart Data Frameworks reports were published confirming that the UK's data sharing strategy is moving beyond banking into a cross sector system that covers finance, energy, telecoms, retail, property, transport, and more. The UK is planning to build it into national economic infrastructure.
The UK strategy estimates that just four smart data schemes could generate £71.2 billion in net social value from 2028 to 2043 and contribute £9.6 billion in annual GDP by 2043. It also sets a target of 5 or more active schemes by 2030 and 20 or more by 2035, backed by at least £36 million of public investment over four years. That puts smart data alongside AI, digital identity, and payments as part of the infrastructure layer that will determine how the next economy works.
This is not about better apps. It is about who controls access to data across the economy.
Open Banking Proves The Model
Open Banking already shows what happens when data becomes portable. The UK now has more than 17 million active consumers and businesses using Open Banking and processes more than 2 billion API calls a month. It's plain evidence that once standards, rules, and trust are in place, consumer and business behaviour changes.
See: UK Open Banking Update and Road to Open Finance
The UK now wants a connected system where data can move securely across sectors and support better switching, lower costs, stronger competition, and more tailored services. Once that happens, the data driven moat around financial services starts to break down. Financial data can be combined with energy usage, telecom activity, property records, identity, and business data to support new products and new operating models.
Three Global Models Are Now Competing
The DRCF report lays out three distinct models now emerging globally.
The first is the regulator mandated model. Australia and Brazil are the clearest examples. This approach forces participation, sets standards, and can create rapid ecosystem scale. Brazil shows what that looks like. The report says Brazil’s Open Finance system had onboarded more than 940 institutions, served 40 million customers, processed more than 100 billion API calls, and managed more than 60 million active consents by 2024.
But scale alone does not guarantee success. Australia’s Consumer Data Right shows the other side of the model. The DRCF report points to high compliance costs, data quality issues, weak consumer awareness, and limited use. One review cited in the report found uptake at just 0.31% of Australian customers. That is the warning for policymakers everywhere. Mandating infrastructure is not the same as creating compelling use cases.
The second is the market facilitated model, seen in the United States and Japan. This approach allows industry to move first and can encourage experimentation. It also creates fragmentation, uneven standards, and uncertainty over liability, consent, and pricing. In the United States, the DRCF report shows how quickly a market led system can tilt back toward incumbents when access rules are unsettled and pricing power becomes a commercial negotiation.
The third is the public infrastructure led model, seen most clearly in Estonia and Singapore. These systems are built on trusted digital identity and shared national rails. That reduces friction because identity, consent, and data access work together from the start. Singapore’s SGFinDex shows the commercial upside of that approach. By the end of 2024 it had grown to more than 400,000 users, built on Singpass and a central consent architecture that gives users a consolidated view of financial data.
The third is the public infrastructure led model, seen most clearly in Estonia and Singapore. These systems are built on trusted digital identity and shared national rails. That reduces friction because identity, consent, and data access work together from the start. Singapore’s SGFinDex shows the commercial upside of that approach. By the end of 2024 it had grown to more than 400,000 users, built on Singpass and a central consent architecture that gives users a consolidated view of financial data.
This model also shows up in markets building broader digital infrastructure stacks. India’s digital public infrastructure model combines identity, payments, and data layers at national scale, showing how shared rails can support faster adoption and wider service integration across sectors.
The best approach isn't the one with the best regulation. It'll be the one with the best interoperability.
Interoperability Control Point
The strongest line in the UK strategy document isn't sector expansion on its own. It is the push for cross sector coordination. The government plans a Smart Data Guidebook by early 2027, a refreshed Smart Data Council, future consultation on long term governance, and stronger links to digital identity, AI, the National Data Library, and trade digitization.
See: UK FCA Palantir Trial Puts Regulator Data At Risk
And it makes perfect sense given that siloed data schemes don't create a true data economy, they create compliance burden. Advantages are realized when data can move cleanly across sectors and support services that aren't stuck inside one scheme or industry.
If interoperability fails, smart data becomes compliance. If it works, it becomes infrastructure.
That's why the UK is treating smart data as national economic infrastructure. Cross sector data improves core financial functions such as affordability assessment, underwriting, and fraud detection, while enabling real time switching, automated reporting, and AI tools that act on behalf of consumers and SMEs with better insight and cleaner data.
Property And Energy
The UK strategy a sector specific example. In energy, the government says a smart data scheme could generate £9.5 billion in net social value between 2028 and 2043 and contribute £2.1 billion in GDP by 2043. In property, where the average home transaction still takes 120 days after an offer is accepted and about one in three transactions fail, the strategy cites modelling that suggests a homebuying smart data scheme could generate around £28.7 billion in net social value and £4.2 billion in annual GDP impact by 2043, depending on implementation.
For fintechs this is where financial services can embed into wider data flows. Mortgage journeys, affordability checks, insurance, transaction verification, and SME finance are all inside those ecosystems.
The biggest fintech opportunities may sit in data problems outside finance.
Consent And Trust Impact Adoption
Smart Data succeeds when users trust the consent controls and can see a clear benefit in saying yes. The DRCF report highlights the point well. Brazil’s experience shows how poorly framed consent can damage trust and expose systems to misuse. India’s Account Aggregator framework points in a better direction, using regulated consent managers that are data blind and focused on facilitating transfer rather than exploiting the data itself.
Trust isn't a compliance feature. It is a growth driver.
See: Open letter to the Honourable Mélanie Joly, Minister responsible for Statistics Canada
If users don't understand or feel comfortable with the legal design and consent flow, adoption stalls. If they do, entirely new categories of service become commercially viable. It's key for onboarding, conversion, and revenue and also for privacy law.
Canada Enters Implementation With A Strategic Choice Ahead
Canada is no longer just progressing toward Open Banking. Bill C-15 received Royal Assent on March 26, 2026, enacting the revised Consumer-Driven Banking Act and advancing Canada from framework design into implementation. The next steps now sit in regulation, technical standards, and launch preparation.
It now has the legal foundation for consumer-driven banking, with the Bank of Canada taking the oversight role for the framework while the Department of Finance continues policy and regulatory development.
Canada has already positioned consumer-driven banking as the first layer of a broader data mobility system. The federal framework says it will be the first iteration of an economy-wide right to data mobility in sectors that develop secure and interoperable frameworks, while a second phase will examine broader functionality and participant scope, including write access.
The real strategic question is not direction. It is design timing.
Canada can implement a narrower banking framework first and extend it later, or it can build interoperability, identity, and governance with a broader Smart Data system in mind from the start. That choice will determine how quickly Canada can evolve from consumer-driven banking into open finance and wider cross sector data mobility.
Why This Changes How Fintechs Compete
Smart Data benefits companies that can use permissioned data better than everyone else. That changes how fintechs think about distribution, underwriting, payments, financial advice, fraud controls, and AI.
See: Canada’s Artemis II Moment Challenges How We Build
Lenders gain richer inputs for decisioning. Payment firms gain new rails tied to identity and consent. Wealth and financial wellness firms gain more insight for aggregation and guidance. AI driven services gain access to cleaner, structured, permissioned data inside trust frameworks that users can understand and control.
Data access becomes the new distribution layer.
Incumbents still hold large datasets and strong customer relationships. But once data becomes portable, that advantage weakens if it's not matched by better service, lower friction, and stronger execution.
Conclusion
Open Banking proved that consented data sharing can change financial services. Smart Data raises the stakes by extending that logic across the wider economy and tying it directly to growth, AI, and national competitiveness.
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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Google Brings Quantum Crypto Migration Closer
Apr 3, 2026 | NCFA Insight | Digital Assets, Blockchain And Tokenization
New Quantum Research Shortens Timeline For Post Quantum Planning
On Mar 31, 2026, Google Quantum AI published new research on crypto security that says future quantum computers may break the elliptic curve cryptography used by cryptocurrencies with fewer qubits and gates than many people expected.
The research follows a recent hardware breakthrough of Google’s Willow quantum chip with a more practical claim about what future hardware could mean for today’s crypto security. Google’s research looks at the hard math that protects the public and private keys used by Bitcoin and Ethereum. It compiled two attack circuits, one using fewer than 1,200 logical qubits and 90 million Toffoli gates, and another using fewer than 1,450 logical qubits and 70 million Toffoli gates.
Based on the paper’s assumptions, Google estimates those circuits could run in a few minutes on a machine with fewer than 500,000 physical qubits, which is about 20 times less than earlier estimates. Google is saying the hardware threshold for breaking the cryptography behind today’s crypto keys may be much lower than the industry thought.
Bottom line is that the crypto industry may have less time than it thought to get ready for Quantum.
Bitcoin Looks More Exposed Than Ethereum
The paper doesn't treat every chain the same. Google says Bitcoin is more exposed to an attack during a transaction because public keys can become visible before settlement is final and the network approx. 10 minutes block gives an attacker more time to act. While Ethereum’s shorter block timing makes that specific early path less practical under the same assumptions.
See: BTQ Technologies Announces Quantum Safe Bitcoin Demo
The takeaway is that quantum pressure will hit networks differently, with exposure depending on key handling, wallet design, settlement timing, and how hard it is for a chain to coordinate an upgrade once the clock starts ticking.
Migration Needs to Start Early
Digital asset exchanges, custodians, wallet firms, and infrastructure providers can’t swap out cryptography overnight. They’ll need code changes, testing, governance, user education, and in some cases a messy transition across older systems that were never built for this kind of change.
Some firms have a much harder job than others. A Bitcoin holder reusing addresses and sitting on older wallet structures faces a different migration problem from a user operating through newer wallet tooling and faster transaction environments.
A custodian protecting large balances across older signing infrastructure has a bigger operational problem than a newer platform with cleaner architecture and fewer legacy constraints.
What Operators Should Do Now
- Wallet providers should reduce unnecessary key exposure and push users away from address reuse where wallet design and user flows still allow it
- Custodians should identify which signing flows, recovery processes, and long lived assets will be hardest to move
- Exchanges should review deposit and withdrawal design, especially where old wallet structures or slow user migration could turn into a bottleneck
- Protocol communities should stop treating this as a distant research file and start mapping what an orderly upgrade would actually require
See: DeFi Lending Data Exposes Leverage And Liquidation Risks
None of that is glamorous. However, it's the kind of work that determines who is will adapt clearly versus scrambling later on when the heat turns up at the risk of a user or investor base.
Takeaway
Google is already working towards a 2030 post quantum migration across its own systems. Google isn't getting their crystal ball out with a specific deadline for the crypto threat, but they do show it's no longer a distant research file for major infrastructure players. Teams that start early will have options. Teams that wait may end up trying to fix cryptography, user migration, and governance at the same time.
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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NCFA Weekly Fintech Intelligence Mar 28-Apr 3, 2026
April 3, 2026 | NCFA Fintech Whisperer Weekly Intelligence | Capital Markets And Market Infrastructure, Payments And Market Infrastructure, Digital Assets Blockchain And Tokenization, Regulation And Policy
Image: Freepik
This live weekly NCFA intelligence page tracks financial technology developments that significantly affect how fintechs build, sell, raise capital, and operate under scrutiny. Coverage prioritizes Canada and includes global events that directly influence competitive conditions, market access, and execution realities across fintech sectors. This page will be updated throughout the week with market movers in a live format and then each week we'll close the prior week's contents in prep for the upcoming week, and continue on a rolling basis. (Missed prior week's Fintech Whisperer? (December 6-12, 2025, December 13-19, 2025, January 1-9, 2026, January 10-16, 2026, January 17-23, 2026, January 24-30, 2026, January 31-February 6, 2026, February 7-13, 2026, February 14-20, 2026, February 21-27, 2026, February 28-March 6, 2026, March 7-13, 2026, March 14-20, 2026, March 21-27, 2026).
Weekly Fintech Market Intelligence Mar 28 - Apr 3, 2026
Capital Markets And Market Infrastructure
SEC Sets Options Market Structure Roundtable For April 16
Apr 2, 2026, United States
- The SEC scheduled a public roundtable on options market structure for Apr 16, 2026 and published the full agenda and panelists.
- The agenda includes a data presentation from the Division of Trading and Markets Office of Analytics and Research, followed by panels on quote driven competition, customer experience, and growth challenges in listed options.
- The SEC named participants from exchanges, brokers, market makers, academics, and industry groups, including NYSE, Nasdaq, OCC, Citadel Securities, Interactive Brokers, Robinhood Securities, Schwab, and SIFMA.
The SEC is putting options infrastructure, customer outcomes, and market growth on the table in one public process. That gives exchanges, brokers, market makers, and vendors a clear read on where scrutiny may build next.
FCA And Bank Open Taskforce On Transaction And Post Trade Reporting
Apr 2, 2026, United Kingdom
- The FCA and Bank of England are seeking members for a new taskforce to shape their long term approach to harmonising transaction and post trade reporting.
- The taskforce will run through three working groups covering policy, strategy, and architecture.
- Its scope includes opportunities to harmonise reporting under UK MiFIR, UK EMIR, and UK SFTR, simplify reporting data, and assess how modern technology and data architecture can streamline the reporting stack.
- Appointments are for an initial 18 month period, with applications due by Apr 23, 2026.
The UK is opening a formal industry track to reduce duplication across major wholesale market reporting regimes. That puts reporting design, data standards, and regtech architecture back into play for firms that want lower operational drag in post trade infrastructure.
TSXV Removes Sponsor Requirement For Listings
Mar 31, 2026, Canada
- TSX Venture Exchange removed its requirement for a Sponsor, effective immediately.
- The Exchange removed Policy 2.2, Form 2G, Form 2H, Form 2I, and Appendix 2A from its Corporate Finance Manual.
- The change removes a longstanding listing process requirement tied to sponsor reports, transaction disclosure forms, and review procedure guidance.
Lower listing friction can help venture issuers reduce cost and timing pressure, but it does not remove the need for disclosure readiness, investor demand, exchange review, governance, and financing fit. Founders, issuers, dealers, advisors, and investors should track whether public venture market access becomes more usable or whether market conditions remain the bigger constraint.
Payments And Money Movement
ECB Sets A Comprehensive Payments Strategy For Europe
Mar 31, 2026, Europe
- The strategy moves beyond retail and now pulls wholesale, business to business, and cross border payments into one framework.
- Central bank money stays at the core of wholesale settlement, while tokenized deposits and stablecoins sit alongside it under strict design and regulatory conditions.
- The digital euro, Pontes, Appia, and cross border work now connect into one direction instead of running as separate tracks.
- Business payment execution still has gaps, especially where verification of payee isn’t fully embedded in ERP systems and where one mismatch can stall an entire batch.
Europe is locking in how this market runs. Central bank money anchors it. Private players still have room, but they’ll need to fit inside tighter rules and real interoperability. If you’re building for enterprise payments or settlement, this isn’t abstract anymore. You’ll need to design for it now.
Risk Compliance And Regtech
Japan FSA Revises AML And Terror Finance Guidelines
Mar 31, 2026, Japan
- Japan’s Financial Services Agency revised its AML and combating the financing of terrorism guidelines on Mar 31, 2026.
- The guidelines make board involvement explicit, requiring AML/CFT to be treated as a strategic issue with governance, reporting, staffing, and resource allocation led from the top.
- The revision sets operating expectations across enterprise wide risk assessment, customer due diligence, transaction monitoring, sanctions screening, outsourcing, data governance, IT systems, and group wide controls.
- The guidelines also tell firms to examine the use of new technologies, including AI, block chain, and RPA, to improve AML/CFT controls.
Japan is raising the AML/CFT baseline from policy and procedure into board level execution. Banks, brokers, payment firms, and regtech vendors now have a clearer supervisory benchmark for how risk assessment, controls, data, and technology need to work together.
AUSTRAC Finalises AML And Travel Rule Transition Timetable
Mar 30, 2026, Australia
- AUSTRAC finalised the transitional and amendment rules for Australia’s AML/CTF reforms and said the changes now set practical timeframes for businesses to update systems and processes.
- The travel rule applies to businesses that transfer or receive money, virtual assets, or property on behalf of customers, including financial institutions, remittance providers, and virtual asset service providers.
- Reporting entities have a 3 year transition period from Mar 31, 2026 to Mar 30, 2029 to move from current customer identification procedures to the new initial customer due diligence framework.
- Obligations for new virtual asset services, including travel rule requirements, are deferred until Jul 1, 2026.
Australia has moved AML reform into implementation with fixed dates and operating deadlines. Banks, remitters, VASPs, and regtech vendors now have a live timetable for travel rule compliance, customer due diligence changes, and system updates.
Digital Assets, Blockchain And Tokenization
CSA Opens Project Tokenization With Calgary And Toronto Workshops
Mar 31, 2026, Canada
- The CSA launched Project Tokenization in the Collaboratory to examine tokenized financial products and how tokenization fits within Canadian securities laws.
- The first phase covers stakeholder engagement, issue mapping, and targeted research, with later phases that could include a discussion paper or live testing of tokenized instruments and infrastructure.
- Workshops are scheduled for Apr 9 in Calgary and Jun 11 in Toronto, with an open intake for fintechs, issuers, financial institutions, custodians, marketplaces, and clearing agencies.
Canada now has a regulator run tokenization track with dates, intake, and a possible path to live testing. Builders have a direct way to shape how tokenized securities and market infrastructure are handled before rules harden.
Regulation And Policy
Canada Reopens Financial Services Channel With China
Apr 3, 2026, Canada and China
- Canada and China agreed to improve two way trade and investment, including in financial services.
- The visit produced a joint statement launching a Canada China Financial Working Group.
- Both sides also agreed to hold a high level economic and financial dialogue later in 2026.
Canada is putting financial services back into the trade relationship with China through a formal working channel. That creates a live policy lane for banks, financial institutions, and cross border market access discussions at a time when trade diversification is becoming more urgent.
CFTC Sues Three States Over Prediction Market Jurisdiction
Apr 2, 2026, United States
- The CFTC filed lawsuits against Arizona, Connecticut, and Illinois to challenge state actions against CFTC registered designated contract markets.
- The agency says Congress gave the CFTC exclusive jurisdiction over lawful event contracts under the Commodity Exchange Act.
- The CFTC expects to move forward with regulation after its recent prediction markets rulemaking notice.
The fight over prediction markets is now moving through both courts and rulemaking. That gives exchanges, brokers, and market operators a clearer read on where federal authority is likely to be enforced next.
OSFI Pins June 2026 Launch For Modernized Approvals Framework
Mar 30, 2026, Canada
- The remarks confirm a modernized approvals framework scheduled to launch in June 2026 to create efficiencies in how OSFI reviews banking applications.
- The discussion also references draft CAR revisions that propose lowering the risk weight on some business loans from 85% to 75% for small and medium sized businesses.
- The remarks tie resilience to growth capacity through calibrated capital treatment when risk weights match underlying exposure risk.
A defined approvals launch date plus explicit capital calibration examples give new entrants and regulated partners a clearer timeline for federal licensing planning and balance sheet capacity conversations.
Consumer Protection And Market Conduct
UK Regulators Form Taskforce On Motor Finance Claims Practices
Mar 30, 2026, United Kingdom
- The FCA, Solicitors Regulation Authority, Information Commissioner’s Office, and Advertising Standards Authority have formed a joint taskforce focused on poor motor finance claims practices.
- The taskforce targets claims management companies and law firms involved in misleading conduct, weak data practices, and problematic advertising.
Claims-driven customer acquisition now faces coordinated scrutiny across conduct, privacy, and marketing rules at the same time. Firms that depend on lead generation, claims funnels, or partner-driven acquisition will need tighter controls across the full chain, not just cleaner front-end marketing.
Conclusion
The competitive edge is moving away from pure speed and toward execution inside the rules. This week’s signals show regulators and market operators getting more specific about how reporting works, how tokenized products may enter the market, how approvals work, and how customer facing conduct gets judged. That creates real openings for fintechs that can align product design with compliance, data architecture, and institutional grade operations earlier. It also raises the cost for firms still treating regulation as something to solve after launch.
NCFA offers various curated resources to help founders and investors stay current on developments that impact fintech markets, subscribe to NCFA weekly newsletter updates, view a rundown of current fintech news and insights, or dive into the latest fintech industry research.
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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DeFi Lending Data Exposes Leverage And Liquidation Risks
Apr 3, 2026 | NCFA Fintech Market Insight | Digital Assets Blockchain And Tokenization
Aave V3 data shows where returns and losses concentrate
On April 2, 2026, a DeFi lending risk analysis using Aave V3 data from the Bank of Canada analyzes transaction data on Ethereum to find a market that works operationally, but depends on narrow revenue pools, heavy overcollateralization, and fast liquidation when collateral prices fall.
The paper focuses on Aave V3 because it is the largest decentralized lending protocol by total value locked. It cites about $34 billion secured in smart contracts, roughly 25% of all DeFi TVL and about 50% of lending sector TVL. The data analyzed runs from January 27, 2023 to May 6, 2025, which gives the study enough depth to study how the model behaves in live market conditions and not just theory.
Returns Concentrate In A Small Set Of Aave V3 Assets
The earnings base is much narrower than the deposit base. On Aave V3, WETH, USDT, and USDC generate nearly 83% of total protocol earning in the sample. That doesn't mean the same pattern holds across the entire DeFi lending market, but it does show the largest lending protocol still relies heavily on a small set of assets to produce revenue.
See: Bank of Canada Paper: Fragility of DeFi Lending
Supply alone does not tell you much. Utilization does. A token can hold a large share of deposits and still contribute very little if borrowing demand stays weak. So careful about judging a lending model by total deposits alone. Look at it by which assets actually generate borrow demand, spread income, and recurring usage.
The comparison with banking makes the constraint clearer. In 2024, Aave V3 posts an estimated 0.64% net interest margin, versus 2.48% for major US banks and 1.69% for major Canadian banks.
Aave V3 also shows a 40.0% loan to deposit ratio, compared with 61.2% for major US banks and 74.2% for major Canadian banks. The model runs with lower overhead, but it also runs with tighter economics and lower capital efficiency.
Leverage Used By Small Group Of Users
Repeated borrowing and redepositing of the same collateral accounts for about 20.46% of total borrowed volume and 8.20% of borrowing transactions on Aave V3.
Only about 2% of active users engage in this behaviour, but that small group borrows more often, takes larger positions, uses more flash loans, and runs closer to liquidation.
See: Ledn Bitcoin Backed ABS Deal Enters Institutional Markets
Risk isn't evenly spread across the user base, but with a relatively small group of sophisticated users who amplify exposure through repeated borrow and redeposit loops. A protocol can look healthy at the aggregate level while vulnerability builds inside a small cluster of accounts.
Liquidations Hit In Waves
The largest liquidation wave in the sample reached about $258 million, and the top ten waves account for roughly 80% of total liquidated volume.
WETH, wstETH, WBTC, and weETH account for about 90% of total liquidated value. Collateral diversity on paper is not the same as resilience in practice. When account stress rises, losses still cluster around a small set of core assets.
Price Drops Trigger Most Losses
For all liquidated users, 84.40% of health factor deterioration comes from collateral price declines. For the largest borrowers, that rises to 97.28%. Interest rate changes play only a minor role in the hour before liquidation. So do borrower actions like repaying, withdrawing, borrowing, or supplying more assets.
See: ECB Sets A Roadmap For Tokenized Finance Infrastructure
Immediate risk is mostly market driven. If collateral drops hard enough, the position breaks. Everything else is secondary.
Borrower Losses Add Up Fast
Liquidation fees range from about 5% to 10% of liquidated value. When missed upside from post liquidation price recovery is added, combined borrower losses can reach roughly 10% to 30%.
Automation protects lenders and preserves solvency, but it forces borrowers out at the worst possible time. That raises a harder design question. How do you reduce forced exits before volatility does the damage?
Better Risk Design Needs Broader Collateral
The authors highlight tokenized real world assets as a way to broaden the collateral base and improve stability. They point to decentralized identity frameworks to support better underwriting.
They also raise the question of prudential tools such as leverage limits, capital requirements, or liquidity thresholds.
See: Slate Raises $1.3M for Embedded Lending in Canada
Concentration risk in DeFi isn't just exposure to a single token. It's dependence on a narrow collateral base, a narrow earnings base, and a narrow set of highly leveraged users. Broader collateral, stronger underwriting signals, and tighter limits can each address a different part of that problem.
What This Means For Builders And Market Operators
Focus on where revenue actually comes from. If earnings depend on a small number of assets, growth is more fragile than it looks.
Track who drives leverage, not just how many users exist. A small group can shape downside risk.
Improve collateral quality, not just collateral variety. Adding assets does not reduce risk if stress still runs through the same core tokens.
Build liquidation buffers into the product. Earlier warnings, better position visibility, and automated risk controls can reduce forced selling.
The strategic takeaway is DeFi lending demand isn't the issue, but rather risk concentration is. The platforms that stand out will spread exposure across better collateral, reduce reliance on highly leveraged users, and design systems that hold up when prices drop. That's how the model can mature from access to durable growth.
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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