When Airbnb launched in 2008, it sold itself as a way for ordinary people to rent out a spare room and make some extra money. The pitch was simple: travelers get authentic local experiences, hosts earn income from unused space, and everyone wins.

Seventeen years later, that vision looks quaint. Short-term rentals have fundamentally altered housing supply in Canadian cities, converting thousands of long-term rental units into de facto hotel rooms. What started as homeowners renting out basement suites evolved into a commercial operation that reshaped neighborhoods, priced out residents, and forced cities to scramble for regulatory responses.

The numbers tell a story most Canadians have felt but couldn't quite quantify. Let's trace how short-term rentals quietly transformed Canadian housing markets.

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The Early Years: 2008-2015

Airbnb entered Canada quietly, establishing presence in Vancouver, Toronto, and Montreal by the early 2010s. In those early years, most listings were exactly what the company advertised: spare rooms, basement apartments, or entire homes while owners were traveling.

By 2015, listings were spreading rapidly across Canada, concentrated primarily in Toronto, Vancouver, and Montreal. The numbers were small enough that cities largely ignored them. Existing hotel regulations didn't seem to apply. Zoning bylaws hadn't contemplated this business model. Short-term rentals existed in a regulatory grey zone.

But the growth trajectory was already steep. Listings were doubling year over year in major markets. Investors noticed something interesting: a downtown condo rented short-term could generate significantly more revenue than a traditional year-long lease. The math was compelling.

Take a one-bedroom condo in downtown Toronto. In 2014, it might rent long-term for $1,600 per month, generating $19,200 annually. That same unit on Airbnb, priced at $120 per night with 65% occupancy (about 237 nights), could generate $28,440. Even accounting for cleaning costs, platform fees, and vacancies, the short-term rental often came out ahead by 30% to 40%.

Word spread. What started as individuals renting spare rooms became investors buying condos specifically for short-term rental income. Real estate investment groups launched funds targeting Airbnb properties. The transformation had begun.

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The Explosion: 2016-2019

Between 2016 and 2019, short-term rentals exploded across Canadian cities.

By April 2019, Toronto had approximately 21,000 active Airbnb listings, with a significant portion being entire homes or apartments rather than spare rooms. Vancouver had several thousand listings. Montreal climbed past 10,000. Even smaller markets like Halifax, Victoria, and Kelowna saw hundreds or thousands of units shift to short-term rentals.

The composition of these listings revealed the shift from sharing economy to commercial operation. Studies found that a significant portion of listings were controlled by hosts with multiple properties, suggesting commercial rather than occasional use.

Data from platforms like AirDNA showed clear patterns. In Toronto's downtown core, entire condo buildings had 15% to 20% of units operating as short-term rentals. Neighborhoods near tourist attractions saw even higher concentrations. Vancouver's Coal Harbour, Toronto's Entertainment District, and Montreal's Plateau became hotspots.

The impact on long-term rental supply was real but hard to measure precisely. How many of these units would have been traditional rentals otherwise? Researchers attempted various calculations.

CMHC research estimated that thousands of units in Toronto that could serve as long-term rentals were being used for short-term purposes. In a city with a rental vacancy rate under 1.5%, removing even a few thousand units mattered significantly.

Vancouver's numbers told a similar story. McGill researchers estimated that short-term rentals had removed substantial units from Vancouver's long-term rental market by 2017, contributing to rent increases across the city. Montreal had similar conversions, particularly in tourist-heavy neighborhoods.

The rental market context made these conversions painful. Canadian cities were already facing housing affordability crises. Vacancy rates in Toronto and Vancouver hovered around or below 1.5% through this period, well below the 3% level considered balanced. Every unit converted to short-term rental tightened supply further.

Rents climbed accordingly. While attributing rent increases solely to Airbnb oversimplifies complex housing markets, the timing was notable. Toronto rents increased substantially between 2016 and 2019, with strong double-digit growth. Vancouver saw similar patterns. Montreal, starting from a lower base, experienced even steeper percentage increases in neighborhoods with high short-term rental concentrations.

Residents noticed the changes beyond just pricing. Buildings that had been residential communities became transient spaces. Neighbors changed weekly. Security doors stayed propped open for guest access. Noise complaints increased. The character of neighborhoods shifted, particularly in downtown cores.

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The Investor Calculus: Why It Made Financial Sense

Understanding why so many units converted to short-term rentals requires looking at the financial math from an investor's perspective.

Let's work through a typical scenario using 2017-2018 Toronto numbers as an illustrative example.

Traditional Long-Term Rental:

• One-bedroom condo purchase price: $500,000
• Down payment (20%): $100,000
• Mortgage: $400,000 at 3% over 25 years
• Monthly mortgage payment: $1,893
• Property taxes: $250/month
• Condo fees: $400/month
• Insurance: $50/month
• Total monthly costs: $2,593
• Monthly rent income: $1,900
• Monthly cash flow: -$693 (negative)

In this scenario, the investor loses money monthly but bets on property appreciation. This was common in Toronto and Vancouver through the 2010s. Investors accepted negative cash flow because they expected the property to appreciate 5% to 10% annually, building equity that would eventually pay off.

Short-Term Rental (Airbnb):

• Same property purchase and costs: $2,593/month
• Nightly rate: $130
• Occupancy: 65% (237 nights per year)
• Gross annual revenue: $30,810
• Platform fees (3%): -$924
• Cleaning costs ($60 per booking, ~180 bookings): -$10,800
• Supplies and maintenance: -$1,200
• Net annual income: $17,886
• Average monthly income: $1,490
• Monthly cash flow: -$1,103 (still negative, but better)

Wait, this still shows negative cash flow. Why did investors do it?

Several reasons. First, the appreciation bet remained the same, but the monthly loss was smaller. Second, these numbers assume conservative occupancy. Savvy operators achieved 75% to 80% occupancy, particularly in prime locations. At 75% occupancy (274 nights at $130), gross revenue jumped to $35,620, and net monthly income rose to about $1,800. Suddenly the monthly loss dropped to around $800, much closer to break-even.

Third, short-term rental income qualified differently for tax purposes. Operators could deduct numerous expenses: furnishings, utilities, internet, cleaning supplies, even portions of mortgage interest. The tax treatment often made short-term rentals more attractive after accounting for deductions, though specifics depend on whether income is reported as business or rental income under CRA rules.

Fourth, and perhaps most important, short-term rentals offered an exit strategy. If the market softened or regulations tightened, operators could quickly convert to long-term rentals or sell. Traditional landlords faced tenant protections, eviction restrictions, and potential rent control. Short-term rentals avoided these complications entirely.

By 2018-2019, professional property management companies emerged specifically for short-term rentals. They handled everything: guest communication, cleaning, maintenance, pricing optimization. For a 20% to 25% cut of revenue, they turned Airbnb operation into a fully passive investment. This professionalized the industry further and encouraged more investor participation.

The calculus shifted in markets like Montreal and Halifax, where property prices were lower. A $300,000 condo in Montreal with similar short-term rental income generated positive cash flow much more easily, making the investment even more attractive.

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City-by-City Regulatory Responses

As short-term rentals proliferated, cities faced pressure from residents, tenant advocacy groups, and the hotel industry to respond. But crafting effective regulations proved complicated. Each city took different approaches, with varying levels of success.

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Vancouver: Early Mover, Mixed Results

Vancouver moved first among major Canadian cities. In 2018, the city implemented regulations requiring short-term rental operators to obtain business licenses, restricting rentals to principal residences only, and limiting them to either the full home while the host was away or a secondary suite.

The rules seemed strict on paper. Only your primary residence could be rented short-term. No investor-owned units allowed. Violations carried fines up to $1,000 per day.

Initial results showed promise. Airbnb listings in Vancouver dropped substantially within the first year, a significant reduction. This theoretically returned thousands of units to long-term rental supply.

But the picture was more complicated. First, determining principal residence proved difficult. How do you verify someone actually lives in a property? The city relied primarily on self-reporting and complaint-driven enforcement. Some operators simply lied on applications or registered properties under different names.

Second, enforcement was limited by staff resources. Vancouver had only a handful of inspectors to monitor thousands of listings across the city. Catching violators required cross-referencing business license data with Airbnb listings, a time-consuming process the platform didn't initially facilitate.

Third, operators adapted. Some switched to longer-term stays (30+ days) that fell outside short-term rental regulations. Others moved to neighboring municipalities like Burnaby or Richmond, where regulations were looser or nonexistent.

By 2020, Vancouver had issued thousands of short-term rental licenses, suggesting the city had clawed back some units but hadn't eliminated the problem entirely.

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Toronto: Slow to Act, Still Struggling

Toronto debated short-term rental regulations for years before acting. Despite clear evidence of impact, the city didn't implement comprehensive rules until late 2020, delayed further by the pandemic.

Toronto's final regulations, effective September 2020, mirrored Vancouver's approach: principal residence only, mandatory registration, and restrictions on investor-owned units. Operators needed city registration numbers to list properties.

But the timing was terrible. The pandemic had already decimated short-term rental demand. Many operators had converted back to long-term rentals out of necessity, not regulation. When travel resumed in 2021-2022, enforcement of the new rules was spotty.

The registration requirement should have helped. In theory, platforms like Airbnb and Vrbo would only allow listings with valid registration numbers. In practice, thousands of listings operated without proper registration even after the rules took effect. One analysis found over 18,000 Airbnb listings in Toronto while only about 2,800 held valid licenses in early 2021.

The city has struggled with enforcement, relying primarily on a complaint-based system that requires residents to identify violations. Registration numbers have climbed into the thousands, but independent monitoring suggests ongoing compliance gaps.

The city has issued fines, but they've been rare. Between 2020 and 2023, Toronto levied only about 200 charges related to short-term rental violations, a tiny fraction of suspected violations. Without consistent enforcement, many operators continued business as usual, accepting the low risk of getting caught.

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Montreal: Aggressive Regulation, Better Enforcement

Montreal took a different approach, learning from Vancouver's experience. The city implemented strict regulations requiring permits for all short-term rentals, with different rules for owner-occupied versus investor-owned properties.

Key to Montreal's strategy was a cap on permits in many neighborhoods. The city designated zones where no new short-term rental permits would be issued, effectively freezing supply. Existing operators could continue, but growth was blocked.

Montreal also partnered more aggressively with platforms. The city secured agreements with Airbnb and Vrbo to share data and remove unpermitted listings. This made enforcement more systematic than relying solely on complaints.

Results were notable. Between 2020 and 2023, the number of active short-term rentals in Montreal dropped substantially, with most of the reduction coming in neighborhoods with permit caps. The city also increased long-term rental supply in previously tourist-heavy areas like the Plateau and Mile End.

Montreal's approach hasn't been perfect. Some operators moved to unregulated suburbs. Others found loopholes, like claiming properties were bed-and-breakfasts rather than short-term rentals, which fell under different regulations. But overall, Montreal achieved more success than Toronto or Vancouver in actually reducing supply and enforcing rules.

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Smaller Cities: Varying Approaches

Beyond the big three, smaller Canadian cities adopted different strategies based on local conditions.

Kelowna faced unique pressures as a tourist destination. The city implemented registration requirements and principal-residence rules in many zones, but took a relatively permissive approach in some areas, allowing short-term rentals as long as operators obtained business licenses and paid accommodation taxes. The goal was balancing tourism revenue with housing needs.

Results have been mixed. Kelowna has issued hundreds to over a thousand short-term rental licenses in various zones. The city's rental vacancy rate remains below 2%, suggesting housing pressure continues.

Halifax struggled with regulatory responses. As a smaller market, short-term rentals had outsize impact. Researchers estimated that by 2018, more than 1,800 units in Halifax Regional Municipality were operating as short-term rentals, representing a significant chunk of rental stock in a city with chronic low vacancy rates.

Halifax didn't implement comprehensive regulations until around 2022, years behind larger cities. The rules require registration and restrict whole-home rentals to principal residences in many zones, but enforcement capacity remains limited, with implementation beginning in 2023.

Victoria took an aggressive stance. The city banned short-term rentals in most residential areas, allowing them only in owner-occupied homes or in specifically zoned tourist accommodation areas. This was one of the most restrictive approaches in Canada.

City releases suggested it worked, with hundreds of units reportedly returning to long-term rental market following the 2018 regulations, though precise numbers were hard to verify.

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The Pandemic Disruption: 2020-2021

COVID-19 scrambled everything. Overnight, the short-term rental market collapsed.

With travel restricted and tourism evaporating, occupancy rates plummeted. Properties that had been generating thousands of dollars monthly suddenly had zero bookings. Operators faced mortgage payments with no income.

By spring 2020, many short-term rental operators in Toronto had converted to long-term rentals. Vancouver saw similar patterns. Montreal experienced even steeper declines in tourist-heavy neighborhoods.

This provided a natural experiment. What happens when short-term rentals suddenly return to long-term market? Do rents fall? Does vacancy increase?

The answer was yes, but less dramatically than advocates hoped. Toronto's rental vacancy rate increased from about 1.5% in late 2019 to around 3.4% by October 2020, the highest in over a decade. Asking rents for one-bedroom apartments dropped substantially year-over-year, particularly in downtown neighborhoods where short-term rentals had been concentrated, with some market reports showing declines of 10% to 20%.

Vancouver showed similar patterns, with the vacancy rate rising significantly by fall 2020, and average rents declining in the urban core.

This demonstrated that short-term rentals had indeed been affecting supply and pricing. Their removal, combined with reduced demand from international students and new immigrants due to pandemic restrictions, created a temporary renter's market.

But the relief didn't last.

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The Recovery: 2022-2025

As travel resumed in 2022, short-term rentals came roaring back.

Operators who had converted to long-term rentals during the pandemic faced a decision: stick with stable long-term tenants or return to more lucrative short-term rentals? Many chose the latter, either waiting for leases to expire or, in some cases, finding ways to end tenancies despite tenant protections.

By 2023-2024, active short-term rental listings had substantially recovered in major cities, though not quite back to 2019 peaks. The exact numbers fluctuate based on monitoring methodology, but thousands of units remained in short-term rental operation across Toronto, Vancouver, and Montreal.

Several factors drove the recovery beyond just resumed travel demand.

First, revenge travel was real. After two years of restrictions, tourism surged. Canada saw strong international visitor numbers recovering toward or exceeding pre-pandemic levels, and short-term rentals captured a significant share of that demand.

Second, inflation and interest rate increases made the investor math more compelling. With mortgage rates jumping from 2% to 5% or 6%, rental property cash flow became more challenging. Short-term rentals offered higher revenue potential to offset increased carrying costs.

Third, remote work normalized flexible living arrangements. The line between business travel and extended stays blurred. Professionals working remotely for a month in a different city chose Airbnbs over hotels. This created new demand categories that hadn't existed pre-pandemic.

Fourth, enforcement of new regulations remained weak in most cities. Despite stricter rules on paper, the actual risk of getting caught and fined stayed low. For operators doing the math, weak enforcement made illegal operation a rational business decision.

The return of short-term rentals coincided with renewed housing affordability pressures. By 2024, rental vacancy rates in major markets had tightened again, though they remained above the extreme lows of the late 2010s in some cities. Rents climbed to new records, surpassing even 2019 levels in many markets.

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Quantifying the Current Impact

As of 2025, how many units have short-term rentals removed from long-term housing stock? The answer varies significantly by city, but we can estimate based on available data.

Statistics Canada's recent research identified "potential long-term dwellings" (PLTDs)—entire-home short-term rentals that are frequently rented and could theoretically serve as long-term housing. Nationally, PLTDs represented about 0.69% of housing units in 2023, with concentrations higher in major tourism and urban centers.

Toronto: Research suggests thousands of entire units operating as short-term rentals, with Statistics Canada's 2023 analysis identifying over 8,000 potential long-term dwellings in Toronto alone. Not all these units would be long-term rentals in the absence of Airbnb—some might be vacation homes or empty second properties. Studies suggest that 60% to 80% of entire-home short-term rentals would likely be long-term rentals otherwise.

In a city with roughly 500,000 rental units total, even a few thousand unit removal represents about 1% of rental stock. Doesn't sound like much until you remember that a 1% vacancy rate versus 2% means the difference between a crisis market and a tight but manageable one.

Vancouver: Several thousand active listings with similar composition to Toronto. This suggests thousands of entire units operating as short-term rentals, with a portion effectively removed from long-term supply using similar assumptions.

Vancouver's rental market is smaller than Toronto's, with roughly 200,000 purpose-built rental units. The removal represents about 0.75% to 1% of supply, again seemingly small but meaningful in a market with historically low vacancy rates.

Montreal: Thousands of active listings, with similar patterns. This suggests several thousand units effectively operating primarily as short-term rentals rather than long-term housing.

Montreal's rental market is larger, with over 600,000 rental units. The removal represents roughly 0.5% to 0.8% of supply, proportionally less than Toronto or Vancouver but still meaningful in neighborhoods with high concentrations.

Across Canada's major cities, a conservative estimate suggests tens of thousands of units that could serve as long-term rentals are instead operating as short-term rentals. McGill research from 2017 alone found approximately 13,700 units removed across Toronto, Montreal, and Vancouver combined, and the market has evolved since then.

The impact is concentrated geographically. In downtown Toronto between Spadina and Jarvis, or in Vancouver's downtown peninsula, or Montreal's Plateau, the effect is much more pronounced. Some buildings have 20% to 30% of units as short-term rentals, fundamentally changing building character and reducing available long-term supply in the most desirable neighborhoods.

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The Tourism Economy Argument

Defenders of short-term rentals argue they serve important economic purposes beyond just investor returns.

Tourism is a significant part of Canadian urban economies. In 2019, tourism contributed roughly $105 billion to Canada's economy, with accommodation representing a substantial portion of visitor spending. Short-term rentals capture some of this market share.

The argument goes: short-term rentals allow travelers to visit who might otherwise skip expensive hotels. This increases overall visitor numbers, boosting restaurant spending, attraction visits, and other economic activity. Cities should view short-term rentals as tourism infrastructure rather than just housing stock removal.

There's truth to this, but it's complicated.

First, the substitution effect matters. When travelers choose Airbnb over hotels, hotel occupancy and revenue decline. Hotels employ more people per room (housekeeping, front desk, maintenance, food service) than short-term rentals do. Research suggests hotels generate substantially more employment per room than short-term rentals, meaning the net employment effect may be negative, though these analyses are primarily U.S.-focused and should be viewed as indicative rather than Canada-specific empirical fact.

Second, the tax capture is different. Hotels collect and remit occupancy taxes automatically. Short-term rentals initially avoided these taxes, though federal and provincial measures now extend GST/HST and require platforms to collect and remit accommodation taxes. Compliance remains imperfect, and municipal revenue from short-term rentals is still typically different per room than from hotels.

Third, the tourist distribution is uneven. Business travelers and convention visitors still primarily use hotels. Short-term rentals attract leisure travelers, often with different spending patterns. The economic benefit to cities varies based on visitor type.

Fourth, and most relevant to housing discussions, short-term rental tourism occurs in residential neighborhoods, not purpose-built tourism districts. This creates conflicts. Hotels are generally located in commercial zones or specifically designated accommodation areas. Short-term rentals operate in neighborhoods where residents live, work, and raise families.

The question becomes: do the tourism benefits outweigh the housing costs? The answer likely varies by city.

In smaller tourism-dependent communities like Tofino or Banff, where tourism is the primary economic driver and housing supply is naturally constrained by geography, short-term rentals may be more defensible as economic infrastructure. Workers in these communities face housing challenges regardless, driven more by limited developable land and seasonal population swings than by short-term rentals specifically.

In large cities like Toronto, Vancouver, and Montreal, where housing affordability is a critical issue affecting hundreds of thousands of residents and where tourism is important but not the dominant economic sector, the balance tilts differently. Preserving housing supply for residents likely generates more long-term economic value than capturing incremental tourism spending.

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What Comes Next?

The short-term rental story in Canada isn't finished. Several trends will shape the next few years.

Regulatory tightening continues. More cities are implementing or strengthening restrictions. The trend is clearly toward stricter regulation, even if enforcement remains challenging. Quebec has introduced strict provincial rules requiring registration numbers and empowered municipalities to heavily restrict or effectively ban non-primary-residence short-term rentals in many residential zones through a combination of provincial registration requirements and local zoning tools. While this isn't a blanket provincial ban across all of Quebec, the practical effect in many Montreal neighborhoods and other municipalities resembles one.

Platform cooperation is improving, slowly. Airbnb and Vrbo initially resisted sharing data or helping cities enforce regulations. That's changing, partly due to regulatory pressure and partly from recognition that sustainable operations require community buy-in. Data-sharing agreements are becoming more common, making enforcement easier.

Professional management is consolidating. The short-term rental management industry is maturing. Large companies now manage thousands of properties across multiple cities, bringing economies of scale and standardization. This professionalization may reduce some of the neighbor conflicts and building management issues that plagued earlier years, but it also entrenches short-term rentals as a permanent asset class rather than a temporary phenomenon.

The investor calculus is shifting again. With interest rates elevated and rental yields compressed, the financial advantage of short-term rentals has narrowed. Some operators are converting back to long-term rentals simply because the math no longer works. If rates stay elevated, this trend may continue, organically reducing supply without regulatory intervention.

Purpose-built short-term rental buildings are emerging. Some developers are now building and operating properties specifically designed for short-term rental use, separate from residential housing stock. These hybrid hotel-apartment buildings may offer a compromise: allowing short-term rental operations without converting existing residential supply.

The most likely outcome is a continued mix of regulations, enforcement challenges, operator adaptations, and market forces. Short-term rentals won't disappear, but they may stabilize at a lower level than the 2018-2019 peaks, particularly if cities maintain enforcement pressure and the financial advantages narrow.

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The Bottom Line

Between 2008 and 2025, short-term rentals fundamentally reshaped Canadian housing markets in ways most people didn't fully recognize as they happened.

What started as spare room rentals evolved into a commercial industry that removed tens of thousands of units from long-term housing supply across Canadian cities. The financial incentives were clear: operators could earn substantially higher revenue than traditional rentals, even accounting for additional costs and risks.

Cities responded slowly, hampered by regulatory uncertainty and enforcement challenges. When regulations finally came, they were often weakly enforced, allowing many operators to continue with minimal risk of consequences. The pandemic created a brief pause, demonstrating that short-term rentals did indeed affect supply and pricing, but the recovery has been strong.

Today, research indicates that short-term rentals represent a small but meaningful share of housing stock in major Canadian cities—about 0.69% nationally according to Statistics Canada's measure of "potential long-term dwellings," with higher concentrations in urban centers and tourist destinations. While this seems small in percentage terms, in markets where vacancy rates sit below 2% and housing affordability is a crisis, this removal of supply matters significantly. It's not the only factor driving unaffordability, but it's a meaningful piece of the puzzle.

The tourism economy benefits are real but need to be weighed against housing costs. In tourist-dependent smaller communities, the balance may favor short-term rentals. In major cities facing housing crises, preserving residential supply should likely take priority.

Moving forward, the trajectory points toward stricter regulation, better enforcement, and possibly some organic reduction as the financial incentives narrow. But short-term rentals are now a permanent feature of Canadian housing markets. The question isn't whether they'll exist but how cities manage their scale and impact to balance tourism benefits with local housing needs.

For residents watching neighborhoods transform, the lesson is clear: seemingly small regulatory gaps can have large cumulative effects. The quiet conversion of thousands of apartments into de facto hotel rooms happened largely because cities were slow to recognize the pattern and slower to respond. By the time regulations arrived, the industry was entrenched and removal became politically and practically difficult.

Understanding this history matters for addressing other emerging housing challenges. The short-term rental story shows how quickly market forces can reshape housing supply when regulatory frameworks don't keep pace with business model innovation.