Canada’s banks are about to get hit by a trillion-dollar stablecoin tsunami – The Logic Canada’s banks are about to get hit by a trillion-dollar stablecoin tsunami – The Logic

With an aim to advance the use of real-time payments and open banking, the commerce platform, Shopify, has recently introduced an option for consumers to make payments using stablecoins, a popular crypto token. Pegged to the value of the U.S. dollar, one of the appeals of using stablecoin is that payment transactions are settled on the spot on Coinbase’s Base blockchain, without fees or a waiting period that traditional methods often necessitate.

The GENIUS Act passed in the U.S. Senate, establishes a legal framework for stablecoins at the federal level. This paves the way for banks and firms to issue their own stablecoins and is ultimately driving innovation in Fintech. By contrast, the regulatory framework in Canada around the use of stablecoins as a mechanism for mainstream payment falls into a legal grey area.

It is uncertain whether uses for stablecoins outside crypto-trading platforms — such as payments and settlement — are permitted in Canada. Osler’s Matthew Burgoyne, Chair of the Digital Assets and Blockchain practice, tells The Logic that “[i]t’s been extremely frustrating as a legal advisor,” since he’s unable to provide a clear answer when clients ask him what is and isn’t allowed.

While the Department of Finance is in the process of developing federal legislation to govern stablecoins, these guardrails are still forthcoming. Experts believe that under the current conditions, Canada is at risk of being unprepared and is likely to miss opportunities in this rapidly evolving area.

If you have a subscription, you can read the full article by Claire Brownell, “Canada’s banks are about to get hit by a trillion-dollar stablecoin tsunami,” on The Logic website.