The State of FinTech: Commercial and Regulatory Update

The fintech sector remains strong in Canada, with new regulations and innovative technologies continuously emerging. With change being a constant, it’s important for companies in the industry to stay up to date on the latest legal and business trends.

Below are some key highlights from our recent fintech webinar that you should be aware of.

1. FinTech Exits. According to data obtained from the PitchBook deal database in December 2022, fintech exits have been on the decline. In 2021, there were 83 Canadian fintech exits for a combined value of C$7‑billion. In 2022, there were approximately 51 exits for a combined value of C$125-million. This signifies an increase in distressed sales and that high-value companies are biding their time for better days.

2. Retail Payment Regime. The Canadian Retail Payment Activities Act (RPAA) was introduced in 2021 to monitor payment service providers (PSPs) that have a place of business in Canada. Regulated by the Bank of Canada, the RPAA aims to safeguard end-user funds, implement an operational risk management regime and engage in incident reporting. The RPAA’s regulations came into force on February 10, 2023. Registration will begin in 2024, with legislation to come into effect in 2025.

3. Canada’s Bill C-27. If passed, Bill C-27, the Digital Charter Implementation Act, 2022, the section on processing personal information in the Personal Information Protection and Electronic Documents Act will be replaced with the Consumer Privacy Protection Act. It will also establish a data tribunal under the Personal Information and Data Protection Tribunal Act and implement the Artificial Intelligence Data Act.

4. Quebec’s Law 25. Most of the requirements of Law 25, The Privacy Legislation Modernization Act, will come into effect on September 22, 2023. These include enhanced obligations on private-sector organizations (e.g., establishing a privacy governance framework and new data-subject rights, consent and transparency-related obligations) and stronger enforcement powers, including administrative monetary penalties of up to C$10-million or, if greater, an amount corresponding to 2% of the organization’s worldwide turnover for the preceding fiscal year.

5. Trading Digital Assets. On December 12, 2022, the Canadian Securities Administrators announced they will be strengthening their regulation of crypto-asset trading platforms by expanding their current requirements under preregistration undertakings relating to client asset custody and segregation.

Have more than five minutes? Contact any member of our FinTech group to learn more or watch our webinar on this topic.