TORONTO — As the U.S. government takes big steps to usher cryptocurrency into mainstream finance, one of the world’s biggest crypto exchanges is urging the Canadian government to match and exceed those efforts, even as concerns mount.
Coinbase Global Inc. is pushing hard to educate Canadian politicians about the moment in the hope of seeing someone in government champion the cause, said Lucas Matheson, who leads the company’s Canadian division.
“We need to drive a sense of urgency in our government to take crypto seriously, and to embrace this technology, to integrate it into our traditional financial system," he said in an interview.
A key focus in that push is to bring more legitimacy to stablecoins, a type of crypto designed to keep a steady value by pegging it to a currency, often the U.S. dollar, and holding reserves to back it up.
The idea is that by avoiding the volatility that crypto is often known for, stablecoins can work better as a form of internet-based currency. They offer the potential for faster and cheaper money transfers, especially across borders, though come with their own risks.
One of the biggest concerns so far is that without regulation, it’s been hard to know if stablecoin issuers like Tether International and Circle Internet Financial actually hold the collateral they claim.
Following the U.S. lead
An industry-supported bill moving quickly through the U.S. government seeks to address those concerns by setting rules about the need to back stablecoins one-for-one to either U.S. dollars or short-term treasuries, and issuing regular financial reports.
“What the U.S. has done is establish some credibility at the most senior levels of government, and we hope that that inspires our elected officials to do the same” said Matheson.
Regulators in Canada, however, still treat stablecoins like other forms of crypto: as a security. That means it's considered an investment, rather than a form of payment.
“We're keen for Canada to also embrace some frameworks and definitions around stablecoins,” said Matheson.
“A lot of the advocacy work in Canada has been focused on our federal government, our new Minister of Finance (François-Philippe) Champagne, to help his office understand the opportunity to embrace crypto.”
Going mainstream
There’s no doubt stablecoins are becoming big business.
Tether, the largest U.S.-dollar backed stablecoin, has seen the market capitalization of its token go from under US$10 billion in 2020 to almost US$160 billion. Meanwhile it made US$13 billion in profit last year thanks to the interest on the treasuries it holds as collateral.
The market as a whole is estimated to be around US$250 billion, but could grow to some US$2 trillion by 2028 as the U.S. law paves the way for growth, estimates Standard Chartered.
The growth coincides with efforts to bring the option more directly to consumers, including Shopify’s announced partnership with Coinbase in mid-June to make stablecoins a standard option for payments.
For merchants, the option offers potential savings on fees linked to other forms of payments like credit cards, though for consumers the benefits aren’t so clear.
Matheson said it’s still early days, but he could see some companies using virtual rewards to entice people to use them.
“I would imagine there will be a world where you will go to a Shopify merchant, that merchant will offer a token-gated experience where maybe you need an NFT, to hold that NFT as part of a loyalty program, or as part of a previous purchase. And now that you have that token, you can enter into the token-gated experience that's sort of limited and exclusive, and then shop with a merchant, and receive digital twins of those products as a warranty, as a receipt, and as a collectible.”
While it’s still not clear what consumer appetite is for stablecoins, they’re already proving to be very popular with criminals.
Research firm Chainalysis figures that there was some US$51 billion of stablecoins received by illicit cryptocurrency addresses last year, and that they accounted for 63 per cent of all illicit crypto flows.
Proponents like Matheson tout the traceability and transparency of the blockchain, but as the current levels of illicit flows show, there are ways to get around that through the use of software that can combine transactions and obfuscate the flow of crypto.
Growing risks
And while criminal flows are a problem now, there is also growing concerns about the implications of stablecoins becoming a bigger segment of the financial industry.
The Bank for International Settlements, a central bank-backed global institution tasked with helping maintain financial stability, put out a warning just last week.
“If stablecoins continue to grow, they could pose financial stability risks,” said BIS in a report.
Along with concerns about crime, the report warned about the risks if a coin-issuer stumbled or collapsed. It said the boom in stablecoins resembles 19th century banking in the U.S., where each bank was printing its own bills and there were panic withdrawals when customers started to doubt the soundness of some banks.
“Society has a choice. The monetary system can transform into a next-generation system built on tried and tested foundations ... or society can relearn the historical lessons about the limitations of unsound money, with real societal costs, by taking a detour involving private digital currencies.”
There’s also a concern of stablecoins trying to act more like banks by offering interest on holdings, and the potential stability risks that come with that.
The U.S. law actually prohibits stablecoin issuers from paying interest, in part because of such concerns, but Matheson wants to see Canada to drop its own ban.
“Currently that is not a permitted activity in Canada, providing yield on stablecoins, but it's something certainly our industry is advocating for with our regulators.”
As the industry pushes to be more integrated in the financial industry, it continues to be dogged by concerns of scams and questionable dealings, including by the many crypto initiatives being launched by the family of U.S. President Donald Trump.
But Matheson said modernizing rules around crypto is the answer.
"Regulatory clarity will trump all other temporary behaviour or experimentation that we're seeing in the market.”
This report by The Canadian Press was first published June 30, 2025.
Ian Bickis, The Canadian Press
