Stablecoin Momentum Builds: Canada Urged to Join the Revolution
As U.S. lawmakers embrace stablecoins with sweeping legislation, Canada faces pressure from Coinbase and crypto leaders to modernize its outdated regulations—or risk falling behind.
Canada is standing at a crossroads while the United States races ahead with sweeping legislation to normalize cryptocurrency, particularly stablecoins, into the financial mainstream. At the forefront of the push to close the gap is Coinbase, the world-renowned crypto exchange, now campaigning aggressively to educate Canadian policymakers and ignite reform.
Leading the charge is Lucas Matheson, head of Coinbase’s Canadian operations. He’s sounding the alarm, urging the federal government to move beyond passive observation and begin crafting a framework that invites, rather than inhibits, the adoption of stablecoins. His message to Ottawa is urgent: match the U.S. momentum, or risk being left behind in a global financial evolution.
Stablecoins, unlike volatile cryptocurrencies such as Bitcoin, are designed to maintain a fixed value by pegging themselves to national currencies like the U.S. dollar. They promise faster cross-border payments, lower transaction fees, and smoother integration with e-commerce and retail systems. But there’s a catch. Without clear rules, questions about how these coins are backed—and by what—continue to haunt the sector. This uncertainty has kept regulators cautious, but it hasn’t slowed growth.
In Washington, change is moving fast. A new bill—backed by both industry and bipartisan lawmakers—would require stablecoin issuers to hold one-to-one reserves in cash or short-term treasuries. It also demands transparency through frequent disclosures. It’s a simple but powerful idea: if these coins are to act like money, they must be backed like money. The legislation offers the kind of credibility the crypto industry has long craved. And it’s working. The U.S. market is accelerating, setting a global standard.
Matheson hopes that by showing Canada what’s possible, the government will begin to act. But so far, Canadian regulators continue to treat stablecoins as securities—investment products—rather than payment tools. This makes their use in retail and financial systems unnecessarily complicated. In other words, if you want to use a stablecoin to buy a coffee, Canada thinks you’re making an investment.
Meanwhile, the rest of the world is not waiting. Tether, the largest U.S. dollar-backed stablecoin, has surged from under $10 billion in circulation in 2020 to nearly $160 billion today. The company earned a staggering $13 billion in profit last year alone by simply collecting interest on U.S. treasuries. Standard Chartered believes the market could reach $2 trillion by 2028, and the U.S. legislation is poised to make that vision reality.
Canada’s private sector is already experimenting. In June, Shopify and Coinbase announced a partnership to make stablecoins a standard payment option across online storefronts. This could disrupt the traditional credit card model, offering merchants lower fees and quicker settlement times. For consumers, it opens a new realm of possibilities—token-gated experiences, NFT-based receipts, and loyalty programs linked to blockchain activity.
Matheson envisions a future where customers hold NFTs that unlock exclusive shopping access or earn digital “twins” of the products they buy. It’s not fantasy—it’s the beginning of a new digital retail economy. But for it to scale, Canada must provide the legal foundation.
Not all the news is positive. Stablecoins have also become a favorite for criminals. Research from Chainalysis revealed that over $51 billion in stablecoins were transferred to illicit addresses last year, making up 63 percent of all illegal crypto flows. Blockchain may be transparent in theory, but in practice, criminals use sophisticated tools to mask transactions and avoid detection.
This duality—promising innovation and potential misuse—makes regulation not just important, but essential. The Bank for International Settlements recently warned that if stablecoins continue their meteoric rise without oversight, they could threaten global financial stability. In its latest report, the BIS compared the current boom to 19th-century U.S. banking, when individual banks issued their own currency and confidence was fragile. If users begin to doubt the value or backing of a coin, panic could spread rapidly.
The BIS isn’t alone in raising concerns. There’s growing unease around the possibility of stablecoins evolving into interest-bearing instruments, blurring the line between digital currency and shadow banking. That’s why the U.S. legislation explicitly prohibits stablecoin issuers from offering yield—something Canadian regulators have also banned. But Matheson is pushing back. He wants Ottawa to allow interest payments on stablecoins, arguing that yield is a key driver of adoption.
Crypto has always had a reputation problem. From the FTX collapse to the parade of scams and shady dealings, it’s no wonder regulators remain wary. Even former U.S. President Donald Trump’s family has been involved in launching questionable crypto ventures, adding to the circus. But Coinbase and others insist the answer isn’t tighter restrictions—it’s clearer ones. Build proper rules, they argue, and the serious players will rise to the top.
Matheson believes Canada has a unique opportunity. With the right regulations, the country can become a global hub for stablecoin innovation. But that window won’t stay open forever. If Canada waits too long, it won’t be setting its own standards—it’ll be adopting those written by others.
This is more than a tech issue. It’s a question of national competitiveness. Countries that embrace regulated stablecoins will benefit from faster payments, improved financial inclusion, and new pathways for global trade. Those that don’t may find themselves playing catch-up in a digital economy shaped by others.
The stablecoin revolution is already in motion. It’s no longer about speculation or fringe internet money. It’s about building a better, faster, more inclusive financial system. And Canada has to decide whether it wants to lead or follow.