Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Entrepreneurs, Start-ups, Small Businesses
Can Canadian Fintechs Diversify Beyond The U.S. Faster?
August 24, 2026 | NCFA Insight | SME Finance And Business Banking, Cross Border Payments And FX, Competition And Market Structure, Public Sector Policy And Industrial Strategy
Canada Needs Faster Routes To Non-U.S. Revenue
On August 24, 2026, Canada-U.S. trade negotiations had collapsed with new 50% U.S. tariffs on certain Canadian products already in force from August 22. President Donald Trump then threatened to raise new additional 50% tariffs on all Canadian cars, trucks and auto parts beginning January 1, 2027. Canada plans retaliatory tariffs on some U.S. goods beginning September 8.
The breakdown adds fresh urgency to Canada’s push to build more trade outside the U.S. The federal government is already tilting export support in that direction. CanExport SMEs has approximately $31 million available for 2026 and 2027, with about $27.9 million available for non-U.S. market activities and $3.1 million for U.S. projects. The program says the allocation supports Canada’s objective of doubling non-U.S. exports over the next decade.
For fintech, software and other digital firms, the problem is how quickly Canadian companies can turn access to a foreign market into customers and recurring revenue. Europe, the UK, Singapore, Southeast Asia, Latin America, Africa and the Middle East already have local firms and international competitors with licences, integrations, distribution, customer relationships and years of operating experience.
Statistics Canada reported $70.3 billion of digitally delivered commercial services exports in 2023. Large firms increased those exports by 20.1%, while small and medium sized firms recorded a 7.6% decline. Canadian multinationals increased commercial services exports outside the U.S. by 21%, compared with 6.6% growth to the U.S. They also accounted for 75% of the increase in Canadian commercial services exports to non-U.S. markets.
NCFA's earlier digital export comparison shows Singapore ahead of Canada despite operating from a far smaller domestic economy. Singapore ranked 11th globally in the underlying 2023 data at US$153 billion, compared with Canada in 16th place at US$118 billion.
Canada doesn't just need another list of markets to enter. It needs more startups and SMEs able to win non-U.S. customers faster and build businesses that can keep competing once they get there.
Late Entry Raises The Cost Of Winning Non-U.S. Markets
Canada already has substantial export infrastructure. The Trade Commissioner Service connects companies with customers, partners and investors. Canadian Technology Accelerators provide business development support, strategic guidance and local introductions. CanExport reduces part of the cost of entering new markets, while Export Development Canada's Trade Impact Program provides financing, working capital, guarantees and credit insurance to companies dealing with trade uncertainty.
The Canadian Technology Accelerator also produces measurable results. A Global Affairs study found participating firms had 27% higher revenue one year after completing the program than otherwise similar companies. The positive differences in revenue, assets and payroll became larger over the following years.
But Global Affairs could not determine how much the firms actually became more international because the available data were insufficient. That leaves the commercial outcome Canada now needs to understand. How many firms supported expansion into London, Singapore or another non-U.S. market are still generating recurring revenue there two, three or five years later?
Canadian fintech history shows why market entry alone is a weak measure. Wealthsimple built a UK business for almost five years and reached about 16,000 customers before selling the operation and concentrating on Canada. Clearco expanded into several overseas markets before transferring its international business to Outfund as ecommerce growth slowed and financing conditions deteriorated.
Neither case proves Canadian fintechs cannot compete abroad. They show how demanding a foreign operation becomes when a company has to fund customer acquisition, staff, compliance, banking relationships, treasury, tax and product adaptation while continuing to compete at home.
VoPay is using another model. The Vancouver founded payments infrastructure company established a global headquarters in Doha in January 2026 while keeping its Canadian operations active. Qatar is being built as a major hub for expansion across the Middle East, Africa and Southeast Asia, with more than 400 planned hires across engineering, technology, security, compliance, data and platform operations. The company didn't abandon Canada, but a meaningful part of its next stage of international capability is being built outside the country.
For Canada, it's not a simple win or loss. VoPay remains rooted in Canada while using Qatar as a launch point into several non-U.S. regions. Using a regional hub can also reduce expansion risk by putting management and operating capability closer to target markets while the Canadian core continues to run. The policy question is where the next layer of technical talent, management, partnerships and enterprise value accumulates as Canadian companies expand internationally.
The U.S. capital pull starts much earlier. NCFA's productive participation analysis examined the Canadian founder drain into the U.S. technology ecosystem. Barn Ventures describes a founder conveyor in which U.S. investors and programs recruit Canadian talent from high school and university through company formation and later scale.
Barn's analysis of the Dominion List found 517 U.S. based companies with a Canadian founder had raised about US$414 billion. It found 73% headquartered in California and 56% in San Francisco. Barn also found the number of listed companies founded each year rose sharply after 2022, while acknowledging that the Dominion List is a curated catalogue rather than a census.
Large U.S. capital markets and Silicon Valley's technology ecosystem will always attract ambitious Canadian founders. Those organizations are doing what successful capital markets do. The Canadian problem becomes more serious when founders also conclude they need to leave to get the capital, customers, infrastructure or operating environment required to build a major company. Canada can then lose value at both ends. Some promising founders build in the U.S. before substantial enterprise value accumulates here.
Also, Canada's main export programs generally engage firms after they have built meaningful operating capacity or market traction. By then, their products, sales models and management experience may already have been shaped largely around Canada and the U.S., while competitors in non-U.S. markets have spent years building customers and local experience. That is why promising firms should encounter non-U.S. customers, regulators and market requirements earlier, before they reach the stage where most formal export support begins.
Financial infrastructure can add to that timing gap. NCFA's financial infrastructure history shows Canadian fintechs developing while Real-Time Rail, wider payments access and regulated consumer driven banking arrived multiple years later than comparable infrastructure in several major fintech markets.
That does not explain Wealthsimple's UK exit, Clearco's retrenchment or any other individual company decision. It also affects what Canadian firms learn at home. Years of working with real time payments, portable financial data, modern APIs and digital onboarding build practical experience that can help when companies expand into other markets.
If Canadian firms gain important financial capabilities later, they also have less time to turn them into competitive advantages before entering non-U.S. markets.
Canada Can Reach Non-U.S. Revenue Faster
The quickest response to Canada's urgent need to diversify beyond the U.S. is not more export information. Canada already has market intelligence, trade commissioners, financing programs and buyer introductions. The priority is to shorten the time between choosing a non-U.S. market and winning recurring revenue there. Canada can do many things differently to help achieve this.
1. Start earlier. Promising fintech and digital companies should encounter non-U.S. customers, regulators and financial institutions while their products are still developing. This doesn't mean sending every startup overseas. It means finding companies with strong technology and real differentiation early enough that requirements in several jurisdictions can influence what they build.
See: DPI Digital Finance Works. Why Is Canada Still Waiting?
A company that learns to work across several payment systems, data rules, onboarding requirements and regulatory environments before reaching scale develops a different skill set from one encountering that complexity for the first time after years focused on Canada and the U.S.
2. Push buyer introductions toward commercial conversion. Canada already connects companies with qualified contacts, potential customers and partners. But they need to track and measure how consistently those introductions turn into technical evaluations, paid pilots, contracts and recurring revenue. Trade Commissioners in priority non-U.S. markets are well placed to identify concrete buyer needs and concentrate Canadian firms with relevant products against those opportunities.
That also creates better intelligence. If Canadian fintechs repeatedly lose the same types of opportunities in London, Singapore or São Paulo, Canada can determine whether the problem is product fit, pricing, licensing, procurement, financing or a capability competitors already possess.
3. Finance the period between market entry and recurring revenue. CanExport can provide up to $50,000 toward eligible international business development costs. EDC's Trade Impact Program has up to $5 billion of additional capacity over two years and supports working capital, guarantees, credit insurance and other financing tools. Those tools become more useful when they are organized around the economics of a specific foreign operation. Customer acquisition, regulatory work, FX, payments, local staff and management time can absorb capital before a new market supports itself.
For regulated fintechs, entering another country is like building a second company while the first keeps operating. Management needs to know what the foreign operation costs, what milestones justify further investment and when the economics no longer support continued expansion. That discipline protects the Canadian core while giving a promising foreign business enough runway to prove itself.
4. Measure whether companies win and stay. Canada should track the time from choosing a non-U.S. market to the first paying customer, how many assisted firms develop recurring revenue and how many are still operating there after two, three and five years.
The same scorecard can track local licences, staff and operating entities alongside the value that remains anchored in Canada. That includes Canadian employment, management functions, intellectual property, investment and capital recycled into the next generation of companies.
Those results would expose the bottlenecks quickly. A firm that receives many introductions but cannot win customers has a different problem from one that wins customers but cannot finance its expansion. A company delayed by licensing, payments or compliance needs a different response again.
See: UK Private Banks Commit £11 Billion To SME Export Lending
Canada's non-U.S. diversification push became urgent much faster than companies can build international experience. The fastest response is therefore partly to start earlier.
- Give promising firms exposure to several markets sooner
- Complete the financial infrastructure they need to build competitive products at home
- Convert foreign demand into paid business more aggressively
- Finance strong foreign opportunities long enough to establish whether they work
Then judge success by whether Canadian companies are winning customers outside the U.S., staying in those markets and keeping enough of the resulting value anchored in Canada.
Talking Point
Canada now needs to diversify beyond the U.S. faster than many of its technology companies have historically expanded internationally. Can it help promising fintechs build non-U.S. customers and operating experience early enough to win against established competitors while keeping more of the resulting enterprise value anchored in Canada?
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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Almost $4 Billion Shows What Lower Securities Friction Can Do
August 21, 2026 | NCFA Insight | Capital Markets And Market Infrastructure, Regulation And Policy, Competition And Market Structure
LIFE Financing Rose Eightfold After Canada Increased Exemption Limits
On August 18, 2026, the Canadian Securities Administrators published its 2025–2026 Year in Review. One capital formation result stands out. After regulators increased the limits for the Listed Issuer Financing Exemption, hundreds of listed issuers used it to raise almost $4 billion in the first year, at eight times the pace under the original limits.
That is unusually useful regulatory evidence. It doesn't prove the higher limits caused every additional financing, since issuer demand and market conditions also affect activity. But the market used the exemption far more heavily after regulators made it more practical. The result also strengthens a larger question NCFA recently explored around whether Canada can turn access into productive participation rather than stopping at permission on paper.
NCFA reviewed the expanded LIFE exemption when the CSA initially increased how much eligible listed companies could raise without preparing a prospectus for each financing.
The new usage data take that reform beyond policy design. Companies had a less burdensome financing route available and hundreds chose to use it.
Hundreds Of Listed Issuers Raised Almost $4 Billion Through LIFE
The LIFE exemption gives eligible reporting issuers a more efficient way to raise public capital while retaining specified disclosure and investor protections. This matters most when the fixed costs of a conventional financing become large relative to the amount a smaller company needs to raise. A financing route can exist legally and still see limited use if its cost, complexity or timing makes the economics unattractive.
The first year under the higher limits provides evidence that those economics are essential. Hundreds of issuers used LIFE and almost $4 billion was raised, compared with a much lower pace under the previous limits. The important result is not simply that Canada permitted more financing. Issuers actually used the additional room.
That gives regulators a stronger basis for the next round of evaluation. Which companies used LIFE, how large were the financings, what did it cost them to raise the money, how did investors fare and how much activity would have occurred through another route anyway? Those questions can help distinguish a rule that merely looks simpler from one that materially improves capital formation.
CSA Widens Investor Access And Cuts Reporting Costs For Smaller Issuers
The CSA is reducing different forms of friction elsewhere in the market. Eligible venture issuers with less than $10 million in annual revenue can voluntarily file financial results semiannually rather than quarterly under an interim regime. Regulators can use what they learn from that regime when considering permanent rules, making issuer cost and actual market use part of the feedback process.
The proposed self certified investor exemption approaches participation from the investor side. People who satisfy specified education or experience criteria could invest even if they don't meet the financial thresholds for accredited investors, with investments capped at $50,000 per calendar year across multiple businesses. The proposal would give Canadian issuers another potential source of private capital while widening access for investors regulators believe have enough knowledge or experience to understand the risks.
Accredited investor rules largely use wealth and income as proxies for the ability to bear risk, while the proposed exemption would also recognize relevant knowledge or experience. If adopted, its value should eventually be judged by more than the number of investors who become legally eligible. Issuer uptake, investment activity, losses, complaints and other investor outcomes would show whether wider access produces a useful market.
Project Tokenization Brings More Than 240 Organizations Into CSA Work
The same focus on actual market use is reaching new securities infrastructure. NCFA covered the launch of Project Tokenization when the CSA opened stakeholder engagement through the Collaboratory and identified a possible route toward live testing. The CSA now says the project has engaged more than 240 organizations spanning issuers, fintech companies, custodians, marketplaces, clearing agencies, professional firms and other participants.
The CSA Collaboratory gives novel products and market structures a way to engage regulators before launch and can support controlled testing where appropriate. That's important because tokenized securities depend on more than an issuer receiving permission to create a digital asset. Custody, ownership records, trading, settlement, compliance and investor protection all have to work well enough for a product to operate economically.
Tokenization is a more complex extension of the LIFE lesson. LIFE shows what happened after one capital raising constraint was relaxed. The U.S. is also reconsidering how securities rules apply to crypto asset capital raising, including proposals that could expand how much eligible issuers can raise under lighter offering requirements. In Canada, Project Tokenization can show whether regulators and market participants can identify which requirements are essential, which need adapting and which create enough cost or uncertainty to prevent otherwise viable infrastructure from being built here.
Ontario Plans To Join Canada's Securities Passport System
Ontario's commitment to join Canada's securities passport system tackles another longstanding source of friction. Our Ontario securities passport story traced how the province moved from pursuing a national regulator to joining the existing passport model. The CSA says Ontario's participation is intended to strengthen national harmonization, remove interprovincial barriers and reduce regulatory burden for companies doing business across Canada.
For firms operating nationally, duplicated provincial processes can become an operating cost even when the underlying securities requirements are similar. The useful evidence after Ontario joins will be whether companies encounter less duplication, lower compliance costs and easier national market access. Regulatory reform becomes much more informative when policymakers can compare what they changed with what companies and investors actually did afterward.
Lower friction does not mean removing protections wherever market participants find them expensive. The CSA issued 763 investor alerts, cautions and warnings during the year, more than 85% involving crypto assets, and facilitated the deactivation of 11,728 malicious investment websites representing 19,860 URLs.
Some rules clearly protect investors and market integrity. Others may now be costing the market more than they protect.
LIFE gives Canada a rare piece of evidence about that balance. Almost $4 billion and an eightfold increase in financing activity give regulators a reason to look for other places where better calibrated rules could produce more usable markets without sacrificing the protections that keep those markets credible.
Talking Point
If higher LIFE limits were followed by an eightfold increase in capital raised through the exemption, which other securities rules should Canada now test against actual issuer and investor behaviour?
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 Fintech Is Redefining Employee Health Benefits in Canada
August 21, 2026
Employee benefits have undergone a quiet technological transformation. Not long ago, managing a health benefits plan meant paper forms, printed receipts, mailed claims, and significant administrative work for employers and employees. Over time, insurance providers digitized much of the process. Employees could submit claims online, access their coverage through a website, and eventually manage their benefits from a mobile device.
Today, another shift is taking place. The rise of digital financial infrastructure is making it possible for businesses to rethink not only how benefits are administered, but also what type of benefit they provide in the first place. Instead of purchasing a traditional insurance plan and paying recurring premiums to an insurance provider, some businesses are choosing a Health Spending Account, where the employer establishes a healthcare spending budget and employees are reimbursed for eligible expenses. This development is closely connected to the broader evolution of fintech.
From Paper Forms to Digital Benefits
Traditional employee benefits were built around an insurance model. An employer purchased coverage from an insurer, employees received a defined set of benefits, and claims were processed through the insurance provider. For decades, much of the administration surrounding that process was paper-based. Employees might fill out claim forms, collect receipts, submit documentation, and wait for reimbursement.
The internet gradually changed that process. Insurance providers began offering online portals where employees could submit claims electronically, view coverage details, and track reimbursements. Electronic payments replaced cheques, while digital records replaced much of the paperwork that had previously been required to administer a benefits plan.
The underlying insurance product remained largely the same, but the infrastructure surrounding it became digital. This was an important first step in the digitization of employee benefits, but it also raised a bigger question: if technology can digitize the administration of benefits, can it also change the underlying model?
Beyond Digitizing Insurance
Fintech has repeatedly demonstrated that digitizing an existing process is only the beginning. Payments are a good example. Businesses moved from cash and cheques to credit cards, online banking, electronic funds transfers, and automated payments. Accounting moved from desktop software and paper records to cloud-based platforms, while lending increasingly moved online, with applications, underwriting, and funding taking place digitally.
These developments created something more important than convenience: new financial infrastructure. Once the infrastructure exists, businesses can build entirely new products and services on top of it.
See:
The same thing is happening with employee benefits. Modern benefits platforms can connect employers, employees, financial institutions, and payment systems through software. Claims can be submitted digitally, reviewed electronically, and reimbursed through electronic funds transfer. Once these pieces of infrastructure exist, businesses have more options than simply purchasing a traditional insurance product.
Separating the Benefit From the Insurance Product
This is where Health Spending Accounts become particularly interesting from a fintech perspective. A traditional health insurance plan transfers a defined set of healthcare risks to an insurance provider. The employer pays premiums in exchange for coverage according to the terms of the insurance policy.
An HSA takes a different approach. The employer establishes a defined healthcare spending allocation for employees, and employees submit eligible expenses for reimbursement, subject to the rules of the plan. Rather than purchasing an insurance product that provides a predetermined package of coverage, technology can provide the infrastructure needed to administer a defined healthcare budget.
This distinction opens up an entirely different model for employee benefits. The business can establish the amount it wants to make available, while employees have greater flexibility in how they use that benefit within the eligible expense rules.
Why This Wasn't Always Practical
The concept of giving employees a healthcare spending allowance is not new. What has changed is the infrastructure required to administer it efficiently.
Imagine an employer with 20 employees trying to manage an HSA using paper forms and cheques. Every claim would require documentation. Someone would need to review the expense, calculate the reimbursement, record the transaction, update the employee's available balance, and issue payment. The administrative burden could quickly outweigh the benefit of the flexibility.
Digital infrastructure changes that equation. An employee can submit a claim online, upload supporting documentation, and have the claim reviewed through a centralized platform. The employee's available balance can be updated electronically, while approved reimbursements can be sent directly to their bank account. What once required multiple manual steps can now be handled through a single digital workflow.
Payments Infrastructure Is a Key Piece of the Puzzle
The evolution of electronic payments has been particularly important in making this model practical. Electronic funds transfer (EFT), pre-authorized debits (PADs), and other digital payment infrastructure allow money to move between businesses and individuals without paper cheques or manual bank transfers.
For an HSA platform, this infrastructure can operate on both sides of the transaction. When an employee submits an eligible claim, reimbursement can be sent electronically to their bank account. On the employer side, funds can be automatically withdrawn when claims are approved, allowing the business to fund reimbursements without manually paying an invoice for every transaction.
See: Canada Real-Time Rail Rules And Access Intelligence Guide
The result is a much more automated financial workflow: an employee submits a claim, the claim is reviewed, reimbursement is approved, funds are transferred electronically, and the employer's account is automatically debited. The development of these payment rails is an important part of what makes a digital, claims-based benefits model feasible at scale.
From Fixed Premiums to Usage-Based Benefits
Digital HSA platforms also introduce a different way for businesses to think about benefit costs. With a traditional insurance plan, employers generally pay recurring premiums for coverage, regardless of how much employees ultimately use the plan. An HSA can instead operate on a claims-based model, where the employer establishes a budget but funds are used as eligible claims are submitted.
This can provide small businesses with greater visibility and control over healthcare spending. Rather than paying a fixed premium for a predefined package of coverage, a business can establish how much it is prepared to allocate toward employee healthcare and allow employees to use that allocation for eligible expenses.
This reflects a broader fintech trend toward usage-based financial products. Businesses increasingly expect technology to provide more transparency into where money is going and to reduce the friction involved in moving and managing funds.
Employee Choice Becomes Part of the Product
The digital transformation of benefits is also changing the employee experience. Traditional insurance plans are designed around predefined coverage. An employee may have coverage for certain services but little or no use for others.
An HSA can approach the problem differently. Instead of deciding exactly which healthcare services employees should use, the employer establishes a budget and employees decide how to use that budget among eligible expenses. One employee might use their allocation primarily for dental expenses, while another might have significant vision, physiotherapy, or prescription medication expenses.
This creates a more personalized benefit without requiring the employer to manually manage every reimbursement. The software handles the administrative infrastructure while the employee has greater choice over how to use the benefit.
Fintech Is Changing the Role of the Middleman
This shift reflects a broader pattern across financial technology. Fintech does not always eliminate traditional financial institutions, but it can change where value is created and which parts of a financial transaction require an intermediary.
Digital payment platforms have reduced the need for businesses to rely on traditional payment processes. Online lending platforms have created alternatives to traditional lending channels. Digital investment platforms have reduced some of the friction involved in accessing financial markets.
Similarly, digital benefits infrastructure gives businesses an alternative to relying exclusively on traditional insurance-based employee benefits. The opportunity is not simply to make insurance administration faster. It is to allow businesses to choose a fundamentally different way of delivering healthcare benefits.
This is an important distinction. The innovation is not necessarily that an insurance product has become easier to use online. It is that the availability of digital claims administration and payment infrastructure makes it possible for a business to consider a different financial model altogether.
The Opportunity for Small Businesses
This evolution is particularly relevant to small businesses. Large companies have traditionally had access to dedicated benefits teams, negotiated insurance plans, and significant administrative resources. A five-person business typically does not have those resources.
Digital platforms can make sophisticated financial and benefits infrastructure accessible to businesses that previously would not have had the resources or administrative capacity to manage it themselves. A small business can establish a defined benefit budget, provide employees with access to a digital claims platform, and use electronic payments without building the infrastructure internally.
That can change the competitive landscape. A small business may not be able to compete with a large corporation on salary alone, but it can potentially offer a flexible digital health benefit that employees can use according to their individual needs. Technology effectively lowers the administrative barrier to offering that benefit.
The Next Stage of Digital Benefits
The evolution of employee benefits follows a familiar fintech pattern. First, the paper process was digitized. Then the user experience moved online. Now the underlying financial model itself is being reconsidered.
Health Spending Accounts are one example of what becomes possible when digital claims administration, cloud software, automated payments, and electronic banking infrastructure come together. For businesses considering this approach, understanding how Health Spending Accounts work is an important step in evaluating whether a digital, claims-based benefit model makes sense for their workforce.
The important development is not simply that employees can submit a claim from their phone instead of filling out a form. It is that technology has made it possible to rethink the relationship between employers, employees, insurers, and healthcare spending altogether.
As fintech continues to develop, more financial products may follow the same path: from paper, to digital, to fundamentally different. Employee benefits may be one of the clearest examples of that transition already underway.
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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Bank of Canada Finds Hiring Weakness In AI Exposed Jobs
August 20, 2026 | NCFA Insight | Artificial Intelligence And Data, Public Sector Policy And Industrial Strategy
Weaker Hiring In Jobs With Greater AI Exposure
On August 20, 2026, Bank of Canada research on AI and Canadian hiring shows that people coming from occupations with greater artificial intelligence exposure are having a harder time finding work than people coming from less exposed occupations. During 2015 to 2019, the estimated job finding rate at the fully exposed end of the Bank's model was 2.2 percentage points lower than at the unexposed end. In 2025, it was 13.9 points lower. The comparable difference in job separation rates barely changed.
The Bank isn't saying AI alone caused the gap. The pandemic, immigration, trade changes and weaker labour market conditions also affected hiring. What stands out is where the difference appears. People in more exposed occupations aren't leaving or losing jobs much faster, but those trying to find work are having more difficulty getting hired.
Getting Hired May Weaken Before Jobs Disappear
The occupations near the top of the Bank's exposure ranking are heavy on information work. Data entry clerks, receptionists, payroll administrators and accounting clerks, banking and insurance clerks, records management staff, customer service representatives and office support workers all rank highly. Jobs that depend more on physical work, specialized human skills or judgment generally rank lower.
The Bank estimates the relationship using Statistics Canada Labour Force Survey data and occupation level AI exposure scores. No workers in the data sit at exactly 0% or 100% exposure, so those endpoints are estimates rather than two observed groups of workers. The Bank describes the comparison as an upper bound.
Statistics Canada research on AI and employment provides an important check. Employment generally grew from November 2022 through December 2025 across occupations with different levels of potential AI exposure. Vacancies in highly exposed occupations where AI may replace more tasks also fell at a similar rate to vacancies in occupations with lower exposure.
See AI Usage Data Shows Early Labour Market Strain
Those findings can coexist. Overall employment can hold up while people trying to enter or reenter some occupations take longer to get hired. The Bank also finds that younger workers are more concentrated than older workers in several occupations with moderate or high AI exposure. That puts more attention on entry points into the labour market, not just on whether established workers are being laid off.
Companies Can Reduce Hiring Without Large Layoffs
A company doesn't need a large round of layoffs to use less labour. It can replace fewer people who leave, open fewer junior positions or use the same team to handle more work. The Bank's August data show why layoff announcements alone are a poor measure of the employment effect.
A separate Bank of Canada survey of Canadian firms points in the same direction. Firms expected AI to have little effect on employment over the following year but modest net negative effects over three years. They expected the impact to build over time rather than arrive as an immediate employment shock.
New Bank of Canada evidence on business AI adoption adds another layer. More than two-thirds of surveyed business leaders said they personally use AI in a typical work week, but only 8% of businesses reported significant AI use in core operations. Over the next three years, 23% expect AI to reduce employment while 11% expect a positive employment effect. That suggests hiring effects could emerge before broad operational transformation is complete, leaving a sizeable gap between using AI tools and redesigning businesses around them.
If AI lets companies produce more with existing teams, labour demand can weaken first through vacancies, replacement hiring and junior recruitment. If those measures deteriorate in the occupations where AI use is rising fastest, the case for an AI related employment effect gets stronger. If they recover with the rest of the labour market, it gets weaker.
See Can Headline Inflation Hide AI Job Losses?
The Bank of Canada July AI employment paper approached the issue through an economic model rather than observed labour market outcomes. It separates AI that helps workers produce more from automation that transfers tasks away from workers. Both reduce labour demand in the model, with the larger effect coming when machines take over tasks. The August research adds observed Canadian labour data without proving that AI caused the hiring gap.
Finance Shows How The Job Mix Can Change
Finance is a useful place to watch because AI use is already high and several financial jobs rank among the Bank's more exposed occupations. Statistics Canada found that 40.4% of finance and insurance businesses used AI to produce goods or deliver services during the previous 12 months, more than twice the 19.2% Canadian business average.
The Bank's 2026 Financial System Survey shows a similar pattern among major financial organizations. Nearly all 54 respondents reported using AI, although most still described adoption as limited or moderate. They generally use it to complete existing tasks faster while keeping people responsible for critical decisions carrying financial, legal or reputational consequences.
Financial firms also have an implementation problem. In the Bank survey, 58% of respondents reported difficulty integrating AI into existing systems and workflows. Another 56% cited weak AI literacy among current employees or difficulty hiring and retaining people with specific AI expertise.
Governed financial AI workflows show why both things can happen at once. Software can collect information, compare records, prepare research, identify accounting breaks and assemble know your customer files before a person reviews the work or makes the decision. A firm may need less manual work around a process while placing more value on employees who understand the business well enough to challenge the output.
That becomes especially important for junior roles. Employees have traditionally learned finance by preparing files, reconciling records, reviewing documents, gathering evidence and completing first pass analysis before taking responsibility for harder decisions. AI's hidden costs in replacing junior workers include weakening some of those early career training routes. If AI removes more of that routine work, firms may eventually need fewer junior hires while still competing for experienced analysts, operators, compliance professionals and risk managers.
Current evidence doesn't show that this has happened across Canadian finance. It does show high AI use, exposed information work and shortages of people with the skills to implement and oversee the technology. For founders, financial institutions and investors, the employment question is therefore bigger than how many jobs AI eliminates. It's also about which jobs companies stop adding, which skills become more valuable and how firms build experienced people when some of the work that trained them is automated.
Talking Point
If AI reduces the number of people companies need to hire before it reduces existing headcount, how quickly will Canada's employment data show the change?
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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Choosing a Partner to Build Financial Software That Actually Ships
Aug 20 2026
Custom fintech software development has shifted from a competitive edge into a plain survival requirement and any founder who watched a promising payment idea die inside a bank's legacy stack knows why. The financial sector runs on trust and trust runs on software that holds together at the worst possible moment. A wallet freezes mid-transfer. A lending engine miscalculates a rate. Users walk away and regulators start asking pointed questions. The choice of who writes that code weighs far heavier than most teams admit when they sign a first contract.
Why do two fintech products with nearly identical features behave so differently once they hit the market? The gap usually hides inside the engineering. One team treated compliance as an afterthought and burned months patching security holes before launch. The other wove encryption, tokenization and audit trails into the architecture from the first sprint. This article walks through what separates capable providers from the rest and names five companies worth a closer look.
What Custom Fintech Software Really Means
Ready-made financial tools solve generic problems for generic users. Custom development solves your problem, for your users, under your regulatory conditions. The contrast surfaces in details no template can foresee. A specific cross-border corridor. An unusual credit-scoring model. A niche compliance regime that exists in a single country and nowhere else.
Building financial software differs sharply from building a social app or an online store. Money carries legal weight. A glitch in a shopping cart irritates a buyer for an afternoon. A glitch in a payout system triggers a fraud probe or freezes a client's whole treasury. That reality raises the stakes on every architectural call and explains why seasoned fintech teams fuss over things invisible from the outside.
The Regulatory Weight Nobody Escapes
Every serious platform here lives beneath a thick layer of rules. PCI DSS governs how card data moves. AML and KYC dictate how identities get checked. PSD2 and its successor PSD3 shape open banking across Europe, while GDPR guards personal data at each step. Skip any of these and a launch turns into a lawsuit waiting to happen.
See: Canada’s Open Banking Regulatory Intelligence Guide
A strong partner treats those standards as design inputs, never as obstacles. Compliance-first engineering means the architecture already expects the audit, so payment systems and digital wallets reach production audit-ready rather than getting retrofitted under pressure. That single habit rescues months and protects reputations.
Five Companies Building Fintech Software Worth Watching
The list below reflects providers with real depth in financial technology. Andersen leads it for reasons grounded in scale, focus and delivery record, not marketing noise.
| Rank | Company | Core strength | Notable focus |
| 1 | Andersen | Full-cycle fintech delivery | Banking, payments, lending, DeFi |
| 2 | EPAM | Enterprise-scale engineering | Large financial institutions |
| 3 | Luxoft | Capital markets systems | Trading and risk platforms |
| 4 | Softjourn | Payment and card processing | Prepaid and gift-card tech |
| 5 | Intellias | Digital banking products | Mobile-first finance apps |
1. Andersen
Andersen tops the list as a fintech software development company building tailored platforms for banks, neobanks, startups and established institutions. The firm reports more than 3600 fintech specialists and over 1000 delivered projects and its record spans a UK mass-payout platform handling over 500,000 transactions every fifteen minutes plus an AI-driven lending system that cut overdue debt and reached fourteen countries. Compliance with GDPR, PSD2/PSD3, AML/KYC and PCI DSS sits at the core from day one, which earns the top position.
2. EPAM
EPAM built its name on large, complex engineering programs for global enterprises, with financial services near the center of that work. Banks turn to the firm when they need to modernize sprawling legacy estates without pausing daily operations. Its strength lies in steering big teams across many countries while keeping quality steady.
3. Luxoft
Luxoft carved a strong niche in capital markets and trading technology long before fintech became a buzzword. The company grasps the punishing latency and accuracy demands of exchanges, risk engines and settlement systems. Firms wrestling with high-frequency data and derivatives often find its specialized skill hard to match elsewhere.
4. Softjourn
Softjourn concentrates on payments, card processing and prepaid technology, a space where small slips cause outsized damage. Its focus on gift cards, loyalty programs and processing platforms brings deep practical knowledge of transaction flows. Clients value the narrow expertise over any promise to cover every corner of finance.
5. Intellias
Intellias closes the list with a track record in digital banking and mobile-first products. The company helps banks and challengers ship consumer apps that feel modern without loosening security. Its ease with customer-facing design pairs well with the backend discipline that payments demand.
How to Read This List for Your Own Decision
A ranking is a starting point rather than a verdict. Your ideal partner hinges on your product, your budget and your regulatory geography. Weigh these factors before you commit:
- Domain depth in your exact niche, whether lending, wallets, or trading
- Regulatory fluency in the jurisdictions where you truly operate
- Delivery model that matches your appetite for control against speed
- Scaling flexibility so the team grows or shrinks without chaos
- Long-term support that keeps the platform stable after launch
Andersen meets each of these across its published record, which is exactly why it holds the leading spot.
Conclusion
Financial software carries a weight that ordinary applications never feel and the partner you pick decides whether your product earns trust or leaks it. The five companies above each bring real strength, yet Andersen blends scale, compliance discipline and a delivery history stretching across payments, lending and digital assets. For teams weighing serious custom fintech software development, that blend makes a sensible place to open the conversation.
FAQ
Can a startup afford custom fintech development, or does it belong only to banks?
Startups often begin with a lean MVP that tests demand before heavy spending. This path de-risks funding and shortens time-to-market, so cost scales with ambition rather than crushing an early budget.
Why does compliance push the price up so much?
Meeting PCI DSS, AML and GDPR calls for encryption, audit trails and testing that generic apps skip. These safeguards protect users and pass audits, so they belong in the budget from the start.
How long before a fintech product reaches the market?
Timelines follow scope, though agile processes, reusable components and DevOps pipelines trim release cycles noticeably. A focused MVP ships far sooner than a full enterprise platform.
What happens to my software after launch?
Serious providers offer continuous monitoring, security updates and compliance audits as user numbers climb. Andersen, for one, folds maintenance into the full lifecycle rather than bolting it on later.
Is blockchain a must for a modern fintech app?
Not always. Blockchain fits digital assets, DeFi and transparent settlement, yet plenty of strong products run happily on cloud and API architecture without it.
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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Can Canada Turn Access Into Productive Participation?
August 21, 2026 | Last Updated: Oct 7, 2026 | NCFA Story Intelligence | Competition And Market Structure, Capital Markets And Market Infrastructure, Open Banking Open Finance And Data Sharing
Can Canada Turn Access Into Productive Participation?
Talent, Capital, Payments, Data And Retail Markets Are Converging Into A 2030 Growth Test
On August 21, 2026, Canada's founder drain returned to the national debate with a harder number attached to it. The Dominion List, a curated catalogue rather than a census, now tracks 517 U.S.-based companies with a Canadian-linked founder. Together they have raised roughly US$414 billion. About 88% of the founder links include education at a Canadian university, and 56% of the companies are headquartered in San Francisco.
The pace in the list also accelerated during the AI boom. Jesse Rodgers' Barn Ventures analysis counts 60 newly founded U.S. companies with Canadian-linked founders in 2023, 93 in 2024 and 87 in 2025, compared with roughly 20 to 30 a year from 2016 through 2022. The dataset is curated and recent companies may be easier to capture, so it should not be treated as a population estimate. The direction is still difficult to ignore.
Canada clearly produces ambitious builders. The strategic question is whether enough of them can find the capital, customers, infrastructure, investors and operating density needed to build more of the resulting value here. That makes founder retention part of a wider participation problem, not a standalone brain-drain story.
Canada Produces The Builders. The U.S. Captures More Of The Compounding
Canadian universities are producing founders at global scale. The Dominion List links 88% of its founder records to Canadian universities. Waterloo alone accounts for 216 founders across 180 U.S.-based companies in the current dataset, while Toronto, McGill, UBC and Queen's are also major feeders.
The value capture concentrates somewhere else. The 517 companies in the list have raised about US$414 billion. Fifty-six are valued at US$1 billion or more, 19 are public and 59 have been acquired. San Francisco alone hosts 287 of them.
Talent Is Only Productive Capacity If The System Activates It
Canada's problem is not producing ambitious people. It is converting more of that talent into companies, jobs, ownership and follow-on investment that compound inside the Canadian economy.
U.S. founder programs start earlier and remove more friction. Barn Ventures maps programs that reach students before graduation, then layer in early capital, founder communities, recruiting, immigration support and dense investor networks. The argument is that the U.S. offer is a system rather than one accelerator or one cheque.
Canada's response cannot be one more accelerator. Keeping more founders does not mean preventing mobility or copying Silicon Valley. It means giving more builders credible reasons to start, finance, hire and scale from Canada before the strongest networks and ownership structures form elsewhere.
The Participation Problem Starts Before The Financing Round
Capital matters, but so do density, access, customers, infrastructure and the speed of getting from talent to a company with traction. Founder retention makes the wider participation thesis concrete because Canada can create the input and still lose much of the compounding.
The U.S. Keeps Reopening The Participation Question
The Forum looks across the financing lifecycle. NCFA's review of the SEC Small Business Forum shows why the process is useful for Canada. The 2026 Forum program again moved from early-stage financing to growth capital and smaller public markets.
The same frictions keep returning in new forms. Finders, investor eligibility, offering limits, fund structures, secondary liquidity and small-public-company economics remain active issues because one reform can solve one bottleneck while exposing another.
The Market Is Never Finished 45 years of feedback
The transferable lesson is not a U.S. securities rule. It is the habit of bringing market participants back into the process and testing whether a framework is producing the market it was intended to create.
Canada already has detailed market evidence. CVCA tracks venture and private equity, while NACO tracks angel investing. Regulators and departments publish market studies, consultations and program data. Canada does not lack information about every part of the financing system.
Canada is also actively intervening. The federal government is preparing another C$1 billion venture and growth capital program. The Competition Bureau is studying SME financing. Payments, data access and retail private markets are also being redesigned.
The Canadian Opportunity Is To Connect Policy With Market Function
Canada already has consultations, programs and market data. The harder test is whether each reform produces enough real participation to change who can compete, invest and scale.
Canada Is Opening More Than Capital Markets
Institutional venture capital is getting a larger engine. The Venture and Growth Capital Catalyst Initiative is designed to attract more private and institutional capital into Canadian venture funds, strengthen fund managers and support high-growth companies from pre-seed through growth.
SME financing is being tested against a broader business population. NCFA's SME financing competition review examines lender entry, expansion, switching friction and the market position of alternative finance providers. The Competition Bureau market study is the primary verification source.
More Capital Does Not Answer Who Can Participate
Growth VCCI can deepen capital for companies that fit venture mandates. It does not automatically finance every viable manufacturer, service company or local employer whose growth profile, asset base or financing need sits outside institutional venture economics.
Financial data is moving toward regulated access. NCFA's Canada Open Banking Rules intelligence tracks accreditation, liability, data scope, security and technical standards as consumer-driven banking moves toward operation. Finance Canada's proposed regulations provide the primary policy source.
Core payment infrastructure is opening to a wider membership base. PSPs and more credit unions can join Payments Canada, while the Real-Time Rail rules and access are moving toward the planned Q4 2026 launch. Payments Canada remains the primary launch and system source. Wider eligibility gives PSPs and credit unions a clearer route into core payment infrastructure.
The Door Opens, Then Economics Decide Who Walks Through
Formal access changes who is allowed to participate. Competition changes only when entrants can absorb compliance, technology, integration and operating costs and still build products customers want.
Fintechs can gain more control over the customer experience. More direct access to data, payments and settlement can reduce dependence on incumbent-controlled infrastructure and give challengers more control over pricing, product design and service delivery.
Smaller financial institutions can compete through shared capabilities. Credit unions and regional firms may not need to build every payments, AI, compliance, data or digital-asset capability internally if specialized providers can deliver those functions at workable scale.
Participation Can Change The Cost Of Competing
The payoff is not a longer list of fintech entrants. It is more providers controlling enough of their infrastructure and economics to put sustained pressure on incumbents.
Retail Investors Are Entering Private Markets Through Two Doors
Managed access gives households professional selection. Ontario's long-term asset fund work could give retail investors diversified exposure to venture capital, private equity, private debt, infrastructure and other long-duration assets through professionally managed funds. The OSC LaunchPad notice verifies the project and its retail-access objective.
Direct access gives households the company decision. Equity crowdfunding lets an investor choose an individual company. It can connect businesses with customers, employees and supporters, but it also concentrates risk and usually offers little liquidity.
Private-Market Access Is Splitting Into Two Models
Managed access can broaden exposure to private-market returns. Direct access can broaden the number of people deciding which companies receive their money. Both can widen participation, but they create different markets.
Canada is building the managed channel for wider retail use. Managed structures can bring diversification, diligence, portfolio construction and product-level controls around valuation and liquidity. They can also preserve professional gatekeeping over where retail capital is deployed.
Canada's direct channel remains comparatively constrained. NI 45-110 allows a Canadian issuer to raise up to C$1.5 million in 12 months. Ordinary investors are generally limited to C$2,500 per offering, or C$10,000 when a registered dealer determines suitability.
Risk Appetite Is Also A Wealth Participation Question
If more company value is created while businesses remain private, wider retail access affects more than issuer financing. It influences which households can accept productive risk and participate earlier in private-market returns.
Canadian direct demand can reach the existing ceiling. Blossom, Edison Motors and Gander have used community capital alongside accredited, offering memorandum or other financing. Their raises show direct retail capital can complement professional capital rather than replace it.
International peers provide more room for direct participation. Australia permits eligible issuers to raise A$5 million in 12 months and caps retail investment at A$10,000 per company annually. U.S. Regulation Crowdfunding allows eligible issuers to raise up to US$5 million.
Legal Access Can Still Produce A Thin Market
Canada's smaller market does not prove regulation caused weak activity. Issuer quality, investor demand, distribution, awareness, liquidity and platform execution also matter. It does show why market-opening rules should eventually be judged by whether enough issuers, investors and intermediaries can participate economically.
By 2030, Participation Should Show Up In The Market
One future produces more viable participants. New payment participants build useful services. Open-banking firms turn permissioned data into products customers adopt. Smaller institutions buy modern capabilities instead of rebuilding them. More businesses find financing that fits their stage and economics.
The other future opens rules without changing market power very much. Accreditation, integration, compliance, distribution and technology remain expensive enough that the largest institutions and professional managers capture most new activity. Formal access widens while competitive intensity changes only at the margin.
By 2030, The Difference Will Be Visible In Who Built Scale
The evidence will be practical. Entrants that survive. Products customers use. Capital reaching different kinds of companies. Investors using managed and direct routes. Smaller institutions offering capabilities once reserved for much larger competitors.
Better participation can improve the inputs to productivity. More financing choices, faster settlement, stronger data access and better financial tools can give businesses more capacity to invest, automate, hire, commercialize and serve customers.
Stronger companies can create the next round of participation. Businesses that build revenue, productivity and international reach create more investable opportunities. When more founders build and exit from Canada, employees, angel investors and repeat entrepreneurs can recycle capital, experience and networks into the next generation.
That recycling question is now moving into tax policy. The Bet on Canada campaign, launched in October 2026 by Canadian innovation, venture and professional groups, is calling for stronger incentives to reinvest gains from successful Canadian companies into the next generation of domestic businesses, including broader capital gains rollover treatment.
Productive Participation Could Become Self-Reinforcing
More viable participants can increase competition. Better competition can improve products, distribution and capital allocation. Better tools and financing can support more investment. Stronger companies can create more opportunities for households and institutions to participate again.
The U.S. process expects the friction to change. Market participants return because new rules, market conditions and business models keep changing the problem. A recommendation can be implemented and still leave a new bottleneck elsewhere.
Canada will need the same feedback discipline across more than capital. As payments, data, private markets and financing become more open, policymakers will need to know who entered, who could not, which businesses became sustainable and where access failed to generate enough economic activity.
The Next Policy Question Comes After Access
Canada has spent years opening doors. The next phase is finding out which openings create viable markets. That means judging regulation and public programs by the participation, competition and productive activity they generate while preserving the protections that made wider access possible.
Participation is not a complete explanation for Canada's productivity problem. Management capability, commercialization, industrial structure, R&D, domestic demand, risk appetite and global scale all matter. The value of the thesis is that Canada is now opening enough capital, data, payments and investor channels at the same time to test whether participation becomes a measurable growth mechanism.
Talking Point
Canada already produces globally competitive talent and holds deep pools of capital, technology and institutional capacity. The opportunity between now and 2030 is to connect more of those assets before founders, ownership and future value compound somewhere else. If today's reforms create viable participation rather than permission alone, Canada could end the decade with more competitors, more investable companies and more ways for households and institutions to share in productive 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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SEC Regulation Crypto Assets and US$75M Fundraising Rules
August 18, 2026 | NCFA Feature | Regulation And Policy, Digital Assets, Capital Markets And Market Infrastructure
New Offering Rules, Crypto Resales And Investment Contract Exit
On August 18, 2026, the U.S. Securities and Exchange Commission proposed Regulation Crypto Assets (download 402 page PDF Proposed Regulation Crypto Assets document), a tailored securities framework for certain investment contracts involving crypto assets. The 402-page proposal would create a startup exemption of up to US$5 million over four years, a larger fundraising exemption with US$20 million and US$75 million tiers, crypto-specific disclosures, new SEC forms, secondary-market provisions, state-law preemption and a process for determining when an investment contract has ended.
The scope is narrower than the name might suggest. Regulation Crypto Assets would apply to what the SEC calls a covered investment contract. A crypto asset must be subject to the investment contract, the crypto asset itself must not be a security and no other asset can be subject to that contract.
That builds on the SEC's March 2026 crypto interpretation. The March action addressed when transactions involving a non-security crypto asset can create an investment contract and when that relationship can end. Regulation Crypto Assets would add an operating framework around that lifecycle.
The proposal is significant because it goes beyond creating two new fundraising limits. The SEC is designing rules for how certain crypto investment contracts could be offered, disclosed, distributed and resold, and how the underlying crypto asset could eventually separate from the investment contract.
What Regulation Crypto Assets Does And Does Not Cover
The proposed Regulation Crypto Assets isn't a comprehensive U.S. crypto rulebook. It doesn't create the general regulatory regime for payment stablecoins, programmable payments, crypto custody, crypto lending, mining or conventional securities that happen to be tokenized. Those activities may fall under other federal or state laws, other regulators or separate SEC work.
Payment stablecoins are a good example. Regulation Crypto Assets says permitted payment stablecoins could be accepted as consideration in a covered offering and would count toward its offering limit. It does not establish the rules for issuing payment stablecoins.
That work is proceeding separately under the federal GENIUS Act. On August 17, one day before the SEC proposal, the U.S. Treasury issued a proposed payment stablecoin rule covering implementation of the separate federal framework for their issuance, offering and sale.
Other crypto activities can intersect with Regulation Crypto Assets without becoming generally regulated by it. The proposed Startup Exemption contemplates certain distributions connected with development and use of a crypto network, including circumstances involving airdrops, staking, governance, gas fees and testing. The legal question remains whether the particular transaction involves a covered investment contract.
The proposal also doesn't create a new legal category for tokenized stocks or bonds. Tokenized conventional securities remain securities. Regulation Crypto Assets instead addresses a narrower case where the crypto asset itself isn't a security but is subject to an investment contract.
It's important for founders, investors, lawyers and trading platforms to know that a crypto asset, an investment contract involving that asset and a tokenized security, can look technologically similar while carrying very different securities-law consequences.
The US$5M Startup Route Removes Several Reg CF Frictions
The proposed Startup Exemption could be used for no more than four years after an issuer's initial Form NOR filing. The issuer and its affiliates could conduct covered transactions up to an aggregate US$5 million during that period and couldn't simply restart the four-year clock for the same or a substantially similar crypto asset.
The issuer definition is unusually flexible. The proposal would allow an entity, an individual or a group of individuals or entities to qualify, subject to the other conditions. That accommodates crypto projects that may begin with a development team before they resemble a conventional corporate securities issuer.
The fundraising mechanics are also important. The proposed startup route would permit general solicitation, impose no individual investment limit on retail purchasers and require neither financial statements nor use of a registered intermediary. Covered investment contracts sold through the exemption would not be restricted securities under federal law and would not carry a separate rule-based holding period.
Disclosure doesn't disappear. Before conducting covered transactions, the issuer would file Form NOR on EDGAR and make the disclosures required by Rule 103 publicly available free of charge.
Those disclosures are designed around the investment contract and crypto network. They include offering terms, management and conflicts, the crypto asset, development plans, network or application security, source code where applicable, token economics and allocations, governance, the related crypto ecosystem and material risks. The information must remain publicly available, with material changes addressed under the proposal's update requirements.
Bad-actor disqualifications would apply as well, and issuers would remain subject to federal antifraud and antimanipulation rules. This is a different compliance model, not an absence of securities regulation.
The most revealing comparison is Regulation Crowdfunding. Reg CF also permits up to US$5 million, but over a 12-month period. It requires a registered broker-dealer or funding portal, financial disclosure and investment limits for non-accredited investors, while securities generally face a one-year resale restriction.
The SEC makes that comparison itself. Its economic analysis estimates average Reg CF intermediary fees at approximately 6.6%, with a 6% median, and identifies the absence of mandatory financial statements and an intermediary as potential cost savings under the crypto Startup Exemption.
There is little evidence that current Reg CF rules have produced a large crypto financing market. SEC data identify 42 crypto-related Reg CF offerings by 41 issuers between 2016 and 2024. Reported proceeds totalled approximately US$13.6 million, with an average of US$545,300 among offerings for which proceeds were reported. The SEC cautions that the proceeds total is incomplete and likely represents a lower bound.
The proposal is therefore testing more than a higher ceiling. It asks whether removing particular intermediary, financial reporting, investor and resale frictions would make a public capital route more workable for qualifying crypto projects.
Tier 1 Fundraising Exemption US$20M With Ongoing Reporting
Larger projects could instead use the proposed Fundraising Exemption. Tier 1 would permit up to US$20 million in 12 months. The issuer would have to file Form 1-CRYPTO and couldn't sell covered investment contracts until the SEC qualified the offering statement.
The offering circular would combine the crypto-specific Rule 103 disclosures with financial information about the issuer. Tier 1 financial statements generally wouldn't require an audit, but the issuer would still enter an ongoing reporting regime using annual Form 1-KC, semiannual Form 1-SC and Form 1-UC for specified current events.
Retail investors would also face a restriction that doesn't apply under the Startup Exemption. A non-accredited investor generally couldn't purchase more than 10% of the greater of annual income or net worth. For a non-natural person, the test would use revenue or net assets.
Tier 2 Fundraising Exemption US$75M With Audited Financials
Tier 2 would permit up to US$75 million in 12 months. Like Tier 1, it would require Form 1-CRYPTO, SEC qualification before sales, ongoing reporting and the 10% non-accredited investor limit. The key additional financial requirement is that Tier 2 statements would have to be audited by an independent accountant under the proposed standards.
The larger Fundraising Exemption also comes with a strong U.S. nexus. The issuer would have to be an entity organized under U.S. law, a majority of its executive officers or directors would need to be U.S. citizens or residents, more than half of its assets would need to be in the United States and its business would have to be administered principally there.
Canada appears explicitly in the SEC's request for comment. Question 86 asks whether Canadian issuers, or other foreign issuers, should be permitted to rely on the Fundraising Exemption.
That is more than a passing jurisdictional detail. Regulation A already allows qualifying Canadian issuers, while the proposed Regulation Crypto Assets fundraising route currently does not. Whether the SEC changes that provision could affect how useful the US$20 million and US$75 million routes become for Canadian crypto companies.
Resale And State Rules Could Expand Crypto Distribution
The proposal's treatment of secondary transfers may prove almost as important as its fundraising limits. The SEC says existing exemptions can impede the network effects of crypto assets when they restrict who can participate or how quickly securities can be resold.
Both proposed exemptions would therefore allow issuers to sell covered investment contracts that are not restricted securities under federal law. Investors wouldn't face the federal holding periods associated with restricted securities, although contractual restrictions and other applicable laws could still affect a transfer.
That differs from common Regulation D offerings and from Reg CF's first-year resale limits. The SEC's rationale is specific to crypto networks. Wider ownership and use can contribute to how a network operates and how the crypto asset derives value, so distribution restrictions can affect more than investor liquidity.
See: Canada's Stablecoin Regulatory Framework
Rule 500 would address another obstacle by proposing federal preemption of certain state registration and qualification requirements. It would treat purchasers in qualifying Regulation Crypto Assets transactions as qualified purchasers for that purpose and extend the treatment to specified secondary-market transactions.
The preemption isn't unlimited. Secondary-market treatment would depend on the issuer remaining current with the disclosure, filing or reporting requirements attached to the applicable exemption. States would also retain antifraud authority, powers over unlawful broker or dealer conduct, notice filing requirements and applicable fees.
For trading platforms and intermediaries, the proposal introduces an additional status question. They may need to distinguish between the underlying non-security crypto asset, an outstanding covered investment contract involving it and an asset for which that investment-contract relationship has ended.
The Safe Harbor Creates An Investment Contract Exit
Rule 400 addresses one of the most distinctive features of the proposal. The SEC's existing securities rules generally deal with financial instruments whose fundamental legal character doesn't change over time. A crypto asset can present a different problem because an investment contract surrounding it may end while the crypto asset continues to exist and circulate.
The proposed safe harbor would apply when the issuer has completed or permanently ceased all essential managerial efforts that it represented or promised under the covered investment contract. The issuer also couldn't be making, or intending to make, new promises to perform those essential managerial efforts.
An issuer seeking to use the safe harbor would file Form TR. The filing would include a certification and an analysis supporting the conclusion that the required managerial efforts have ended.
Meeting those conditions would mean the crypto asset is deemed no longer subject to that investment contract for the relevant definitions of a security under the Securities Act and Exchange Act. That doesn't mean Form TR can convert a security into a non-security simply because an issuer files it. The substantive conditions still have to be satisfied, and the SEC can challenge an issuer's analysis.
Nor does the proposal replace Howey or the March interpretation. The safe harbor creates one defined route for dealing with the end of an investment contract. The SEC acknowledges that a covered investment contract could also cease to exist outside the safe harbor under the applicable securities-law analysis.
That lifecycle helps explain why the proposal is more consequential than a new exemption schedule.
The SEC is contemplating a regulatory sequence in which a project can finance development through an investment contract, distribute the associated crypto asset widely and potentially reach a point where the investment contract itself no longer exists.
Canada Could Face A Wider Crypto And Funding Gap
Canada has dealt with token offerings for years. Canadian securities regulators issued guidance on cryptocurrency offerings in 2017 and followed with more detailed token offering guidance in 2018. The CSA has made clear that coins or tokens can involve investment contracts and distributions of securities depending on their economic substance and how they are offered.
There have also been Canadian security-token initiatives and exempt-market token offerings. The difference isn't that Canada has avoided token issuance. Canada has generally applied its existing securities laws, prospectus exemptions and registration framework rather than creating a dedicated crypto lifecycle regime comparable to Regulation Crypto Assets. That difference also fits Canada's wider capital formation gap.
Capital formation makes that difference more important. Canada's NI 45-110 startup crowdfunding exemption currently permits an eligible issuer to raise up to C$1.5 million over 12 months. An investor generally can invest up to C$2,500 in an offering, or C$10,000 when a registered dealer determines that the investment is suitable, and the offering must take place through a funding portal.
The Canadian market is also much smaller. FrontFundr reports that it processed C$4.79 million from 4,320 investors under NI 45-110 in 2025 and accounted for 93% of activity under the exemption. Because that 93% figure comes from FrontFundr rather than an official national regulatory dataset, it should be treated as a platform estimate rather than an official Canadian market total.
There is stronger evidence that the C$1.5 million ceiling is becoming binding for some issuers. Edison Motors raised C$1.491 million under NI 45-110 in 2025, roughly 99% of the limit. Blossom Social raised C$1.450 million, approximately 97%.
See: Reg CF At 10 Shows Equity Crowdfunding Works
The more direct U.S. comparison is Regulation Crowdfunding. Reg CF already allows eligible companies to raise up to US$5 million in 12 months, but requires an SEC-registered intermediary, limits investments by non-accredited investors and generally restricts resale for one year. The proposed US$5 million crypto Startup Exemption would use the same headline ceiling with a different compliance model.
The larger crypto Fundraising Exemption is more directly comparable with Regulation A. Existing Reg A already uses US$20 million Tier 1 and US$75 million Tier 2 limits, with additional audit, investor-protection and ongoing-reporting requirements at Tier 2.
Canada is a different comparison. NI 45-110 isn't a crypto-specific equivalent to Regulation Crypto Assets, but it is Canada's nationally harmonized startup crowdfunding route. It remains capped at C$1.5 million over 12 months, with a funding-portal requirement and investor limits of C$2,500 per offering or C$10,000 with suitability advice from a registered dealer.
NCFA has been advocating for a C$5 million or higher issuer cap for years, arguing that the C$1.5 million ceiling can limit the usefulness of the exemption for growing companies. That concern is now easier to test against actual market activity, with some Canadian crowdfunding campaigns reaching close to the current ceiling.
The relevant policy question is therefore wider than whether Canada has an identical crypto exemption. The U.S. already offers Reg CF and Regulation A for different stages of capital raising and is now proposing a separate crypto-specific framework built around fundraising, token distribution, resale and the eventual end of an investment contract.
That matters because Canada's capital formation system already has funding gaps, while some Canadian crowdfunding campaigns are reaching the NI 45-110 ceiling. Regulation Crypto Assets could add another financing and regulatory option to the U.S. market without a directly comparable Canadian crypto-specific route.
The proposed US$75 million Tier 2 also raises a separate competitiveness issue. The SEC is asking whether Canadian issuers should eventually be eligible for the Fundraising Exemption. If they are included, qualifying Canadian crypto companies could gain access to a much larger U.S. pathway. If they remain excluded, access to U.S. capital could become another factor projects consider when deciding where to organize and raise funds.
None of this means Canadian regulators should copy the SEC. It does strengthen the case for examining Canada's startup financing limits, token-offering rules and capital-market pathways together rather than as separate policy files.
For Canada, the challenge is whether existing rules can protect investors while giving legitimate companies enough financing capacity and regulatory flexibility to build here. If the U.S. adds specialized crypto fundraising routes on top of Reg CF and Regulation A, that competitive comparison becomes more difficult to ignore.
Talking Point
If the U.S. adds a dedicated crypto capital-formation and investment-contract lifecycle regime on top of Reg CF and Regulation A, while Canada still relies on existing exemptions and a C$1.5 million startup crowdfunding cap, how long can Canada treat crypto regulation and capital-formation reform as separate policy questions?
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