Tom Duff Gordon is vice president of international policy at Coinbase, a cryptocurrency exchange registered in Canada.
Canada just took its biggest step yet toward a new financial system.
In this year's federal budget, the government committed to regulation of stablecoins. And in November, it introduced a new framework that outlines exactly how stablecoins will function within our economy.
It's fair to say that some Canadians have been skeptical of crypto, but this will be a turning point. Now, Ottawa is taking them seriously.
Obviously, this is a big moment for the crypto industry in Canada, but it's an even bigger one for Canadians -- Canadians can now move money at the speed of the internet.
ARTICLE CONTINUES BELOW
The framework deserves real credit. It signals that Canada understands the potential of digital assets and intends to be a global leader. They've taken some of the best pieces from different regulations around the world -- including the U.S.'s GENIUS Act -- to create a comprehensive, Canadian-made stablecoin policy.
First, it lays out a clear structure for how stablecoins will operate in Canada. There's a path for issuers to apply for registration with the Bank of Canada, which will serve as the primary regulator.
It defines how stablecoins can be used as payment instruments, and it sets strict reserve and custody standards that require issuers to hold assets such as cash and high quality liquid assets.
Business Opinion David Olive: Despite Trump's tariff terror, Canadian stocks had a spectacular year. Will history repeat itself?
With a total return of 31 per cent on the year to mid-December, writes David Olive, the
Finally, it allows the Bank of Canada to determine when foreign regulatory regimes are equivalent to Canada's, ensuring that only issuers meeting strong standards can participate in the Canadian market.
This approach aligns directly with the vision Prime Minister Mark Carney laid out with his budget. Canada needs a more diversified economy that can compete globally, attract investment, and maintain economic sovereignty in a period of rapid technological and geopolitical change. Stablecoins will have an impact on all these fronts.
The biggest step has already been taken. But the next set of decisions are nearly as important. What's been proposed is a strong start, though there's still room for improvement.
ARTICLE CONTINUES BELOW ARTICLE CONTINUES BELOW
One question in particular will determine whether this framework delivers meaningful benefits to Canadians: Who should earn the interest generated by the reserves that back stablecoins?
Behind every stablecoin is a pool of dollar-backed assets that earn a return. In the traditional financial system, the value created by Canadians' deposits is captured almost entirely by our big banks. Most people receive only a fraction of the yield their money generates.
If regulators permit stablecoin issuers to share the yield from these reserves with Canadians, then the value created by Canadians' own money will flow directly to them. A simple rule change within the framework would rebalance the power that Canadians hold within the financial system.
It would allow millions of Canadians to instantly earn upwards of three per cent interest on the cash they hold, rather than going into the pocket of a traditional bank.
It's also a matter of sovereignty.
Taking this step differentiates our rules from the U.S., that currently doesn't allow issuers to pay interest to stablecoin holders.
This would boost demand for our dollar, making it more competitive and increase its relevance in a digital global economy.
ARTICLE CONTINUES BELOW ARTICLE CONTINUES BELOW
Next, Canada should ensure that tokenized products are regulated on equal terms, whether coming from banks or nonbank issuers. Giving one group advantages would tilt the market toward the legacy incumbents and limit innovation.
A consistent approach would let qualified issuers compete fairly and support the government's goal of stronger competition in financial services.
The final issue is timing.
Building and implementing a complete framework will take time. But, without clear interim guidance from securities regulators, Canadian-denominated stablecoins will be sidelined while global markets move ahead.
We need to ensure that stablecoins are treated as payment instruments and clearly regulated by one federal prudential regulator. As the demand for stablecoins grows, Canadians will be pushed toward foreign options, and the economic benefits will flow abroad.
This is the most significant moment for digital assets we've ever had in Canada.
We've caught up with our G-7 peers with this framework, but we can't take our foot off the gas.
Over the next few months industry and government will need to work together to get the job done.