Ottawa doesn’t want to miss the boat on a potential Blockbuster-to-Netflix moment in the way people spend their money.
Driving the news: The federal government has been exploring changes to its laws around stablecoins in recent consultations and could make a major announcement about the digital currency in its budget next week, per Bloomberg News.
- The head of Coinbase Canada, Lucas Matheson, told The Peak that the crypto exchange has been in consultations with the federal government and that it’s optimistic Ottawa will prioritize the regulation of a Canadian stablecoin.
Catch-up: Stablecoins are cryptocurrencies pegged to fiat currencies, like the U.S. dollar. That anchor helps them maintain their value without the volatility of other crypto assets like bitcoin, while still benefiting from the speed and lower costs of blockchain payments.
Why it matters: Trillions of dollars worth of stablecoins are expected to be moved over the next few years, but 99% of those coins are currently tied to the U.S. dollar. Without a loonie-backed alternative, industry leaders say there could be a mass exodus of capital from Canada to the U.S. as stablecoins become a more popular payment option.
- The month after the U.S. passed a landmark law legitimizing stablecoins’ status as a currency, payments jumped 70%.
Yes, but: Despite the name, stablecoins can still be volatile — several have seen their value suddenly crash in recent years. Even as the U.S. leans in, skeptics argue that giving crypto a more prominent place in Canada’s financial system is still a risk.—LA