As the United States government advances major initiatives to integrate cryptocurrencies into the traditional financial system, one of the world’s largest crypto exchanges — Coinbase Global Inc. — has called on the Canadian government to follow suit and even exceed these efforts, reports the Baltimore Chronicle with reference to Bloomberg.
According to Lucas Matheson, who heads Coinbase’s Canadian division, the company is actively working to educate political leaders about the importance of this technology, particularly with regard to stablecoins — cryptocurrencies pegged to fiat currencies, most commonly the U.S. dollar, and backed by corresponding reserves.
Matheson emphasized the urgent need for the Canadian government to treat cryptocurrency as a critical element of the economic future and to integrate these tools into the traditional financial infrastructure. He believes stablecoins can enable fast, cost-effective international transactions but that the market remains vulnerable without transparent regulation.
The lack of clarity about whether stablecoin issuers like Tether International and Circle Internet Financial hold the collateral they claim has become a pressing concern. In response, the U.S. has introduced a bill that would require stablecoins to be fully backed by U.S. dollars or short-term Treasury securities, and for issuers to publish 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,” Matheson said.
Currently, Canadian regulators treat stablecoins as securities, classifying them as investment instruments rather than payment tools. Coinbase is advocating for the development of new frameworks and definitions that better reflect the unique nature of stablecoins.
Much of the company’s advocacy efforts are now directed at the federal government, particularly at newly appointed Minister of Finance François-Philippe Champagne, in hopes of conveying the transformative potential of crypto adoption.
Meanwhile, the stablecoin market continues to grow rapidly. Tether, the largest U.S. dollar-backed stablecoin, has seen its market capitalization rise from under $10 billion in 2020 to nearly $160 billion today. The company earned $13 billion in profit last year from interest on U.S. Treasury securities used as collateral. According to Standard Chartered, the entire stablecoin market — currently valued at around $250 billion — could expand to $2 trillion by 2028.
In mid-June, Shopify announced a partnership with Coinbase to make stablecoins a standard payment option for merchants. For sellers, this move offers potential savings on transaction fees compared to credit cards, though consumer benefits remain unclear.
Matheson predicted that companies may soon start offering virtual rewards to encourage the use of such payments. He described a future scenario in which a Shopify merchant offers a token-gated experience — requiring an NFT obtained through prior purchase or loyalty participation — that unlocks exclusive shopping access. Consumers could then receive digital twins of purchased products as warranties, receipts, or collectibles.
However, the growth of stablecoins is also raising concerns. Research firm Chainalysis reported that around $51 billion worth of stablecoins was sent to illicit cryptocurrency addresses in the past year, accounting for 63% of all illicit crypto flows.
While blockchain technology offers transparency and traceability, criminals have found ways to circumvent tracking mechanisms through software that aggregates and obfuscates transactions.
Beyond criminal usage, broader financial stability concerns are emerging as stablecoins begin to play a larger role in global finance. The Bank for International Settlements (BIS), a global institution backed by central banks, issued a warning last week.
“If stablecoins continue to grow, they could pose financial stability risks,” BIS said in its report.
The institution compared the current boom in stablecoins to 19th-century U.S. banking, when each bank issued its own currency, leading to panics and mass withdrawals when customers lost confidence.
“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,” the BIS noted.
There is also growing concern that stablecoin issuers might begin to act like banks, offering interest on deposits — a practice that could further destabilize financial systems.
In the U.S., current legislation prohibits stablecoin issuers from paying interest, partly in response to these risks. However, Matheson said the Canadian crypto industry is pushing regulators to lift a similar 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,” he said.
Despite continued fears of scams and questionable crypto initiatives — including those associated with the family of U.S. President Donald Trump — Matheson believes the answer lies in modernizing crypto regulations.
“Regulatory clarity will trump all other temporary behaviour or experimentation that we’re seeing in the market,” he concluded.
Earlier we wrote about what to expect from Bitcoin in 2025–2026 after the halving?