Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Responding to U.S. Financial Risk with Canadian Strength
Innovation Strategy | May 30, 2025
Image: Freepik/jannoon028
Canada Must Lead With Bold Innovation as U.S. Finance Shows Cracks
On May 31, 2025 the Economist ran an article called, "American finance always unique is now uniquely dangerous' unveiling how America’s financial system has evolved into a source of global instability. Private capital giants are creating a new class all to themselves and changing markets, powered by scale, opacity, and political uncertainty. For Canada, it's both a warning and more importantly our strategic moment. Instead of copying the American finance model, Canada can define it's own but strengthening capital independence by building trust-first finance, and accelerating high impact innovation with homegrown channels and tools.
A Fragile and Changing Superpower, Sends a Strong Signal
The article explains how U.S. firms like Apollo, BlackRock, Blackstone, Citadel, and Jane Street have grown at unprecedented rates:
- Three private market giants now manage 2.6 trillion dollars in assets. That is nearly five times more than a decade ago
- Apollo lent $200 billion in 2024 alone. That outpaces new loan growth from major U.S. banks
- Jane Street’s trading revenue in 2024 matched Morgan Stanley’s
These firms operate at speed and scale, are highly interconnected and deeply exposed to volatility. They are providing the capital that fuels the economy, but are also increasing systemic risk. The Economist article points out that in the next crisis, investors may just wake up to a financial system they no longer recognize. Instead of looking at what this expressly means for America, let's turn our focus to what it means for Canada.
Canada’s Strategic Opportunity
Instead of emulating what's unfolding in U.S. financial markets with a dose of more regulation, Canada can lead by building a financial model that is more open, independent, and focused on real impact and outcomes. Five areas of focus stand out:
1. Mobilize Domestic Capital with Purpose
Canada already has strong public institutions that support innovation. BDC, the Strategic Innovation Fund, NRC IRAP, and superclusters like DIGITAL are doing important work. But from seeing how the innovation economy operates first hand for years, these efforts often move in parallel, not in sync, so capital doesn't always reach the ventures that it should.
See: How Fintechs Are Unlocking Value in Private Markets
Canada needs a unified capital deployment strategy that links public funds, pension capital, credit unions, and private investors to the frontier innovations, such as AI, advanced fintech, clean energy, quantum computing, and digital infrastructure. What often seems missing is not just the capital or the infrastructure but national coordination, faster decision making, and larger bold scale.
New tools are needed, such as public-private innovation funds, industry specific capital acceleration platforms, and patient capital vehicles too that are designed to support mid to longer term commercial growth. Instead of launching more pilots, Canada must focus on coast to coast deployment frameworks and national collaboration that get more capital into the hands productive Canadian founders building the future.
2. Build Trust-Based Capital Markets
Trust and transparency are two o f Canada’s greatest financial strengths but it only really matters when the rules are clear, the channels and processes are coordinated, and the government supports the program, then investors understand and are more open to participating.
Canada’s experience with equity crowdfunding is a good example of what happens when the above does not happen. Despite strong public and sector interest, fragmented provincial rules were rolled out, delaying adoption and making it difficult for platforms to operate nationally. Costs and confusion rose, and participation stalled. Even after the rules were unified under National Instrument 45-110 in 2021, much of the early momentum was lost, and it took years of slower growth to finally get wind in the sails and establish new milestones (a testament to a few dedicated and innovative entrepreneurs).
Even the best ideas need clear frameworks and national coordination to encourage public trust and participation. Everyday investors sit on the sidelines when the process is confusing or inconsistent.
See: UK Launches PISCES to Modernize Capital Markets
This same risk applies to newer models like tokenized assets, which have the potential to bring more transparency and better tracking to private markets. These tools only work if they are supported by smart, unified policy frameworks that offer investors clarity and confidence.
Canada does not need more regulation. It needs simpler, better aligned systems that connect investors and innovators in a way that builds confidence at every level.
3. Focus Innovation on Real World Impact
Canada should direct innovation capital to sectors that solve urgent national challenges. This includes enabling fintech to scale small business lending, improve insurance access, close affordable housing gaps, support clean energy transitions, and improve public service delivery by way of examples. The goal is not just economic return but national capacity building. Growth capital should help deliver long term social and economic value in Canada.
Achieving this means aligning investment programs, public procurement, and partnership models with outcomes that matter to Canadians. It also helps ensure that successful Canadian innovations are commercialized and scaled at home, not forced abroad due to lack of local support.
4. Build Sovereign Digital Infrastructure
For innovation to scale safely and securely, Canada must invest in its own digital foundations. This includes national infrastructure for real time rails and modern payments, open banking/finance, digital identity, and interoperable data access. These systems are strategic. As global finance becomes more centralized and politicized, Canada needs open, Canadian-controlled infrastructure that supports innovation without dependency on foreign platforms or proprietary systems.
See: CSA Expands LIFE Exemption to Boost Public Capital Raising
With the right digital infrastructure strategy in place, Canadian fintech and digital companies can grow on their own terms, compete globally, and deliver public value with greater trust and resilience.
5. Stay Open and Independent
Canada’s financial system should remain open to global capital but it shouldn't be overly dependent or reliant on any one market or political cycle. Diversifying capital sources, building a Canada-first tech capacity, and expanding international partnerships will help domestic innovators can grow on Canadian terms. Strategic independence is a competitive advantage.
Why It Matters
The U.S. financial system is evolving quickly and funding innovation at scale in new ways, with new risks creating instability.
See: Larry Fink’s 2025 Fintech Vision for Capital Markets
Canada should not be overly reliant on the U.S. for capital. It should focus on building a domestic model that backs Canadian innovators with capital, trust, strategic focus, and a clear national purpose. It is time to stop chasing someone else’s model and start shaping our own.
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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