Canada’s prosperity was once rooted in steel, oil and lumber. Today, it rests on invisible digital rails — data, intellectual property and, increasingly, digital money. The trouble is, those rails are being built by others, primarily the United States. And unless we act, our economy will ride on American tracks, governed by American rules.

On July 18, the U.S. passed the Genius Act. This legislation cements

U.S. dollar stablecoins

— digital dollars backed one-to-one by U.S. Treasuries — as the global standard. Every Canadian who transacts in a U.S. stablecoin funds American debt, enriches American institutions and exports our financial data south. With U.S. stablecoins already commanding 99 per cent of the global market, their dominance is baked in.

Why should Canadian policymakers care? Because stablecoins are no longer a fringe crypto curiosity. Their settlement volumes now exceed Visa’s and Mastercard’s combined. If Canadians begin to save and transact in U.S. stablecoins, the consequences are profound:

  • Capital flight: If even five per cent of Canadian deposits — $135 billion — migrated into U.S. stablecoins, the knock-on effects of our fractional reserve system could conservatively erase as much as $675 billion in domestic lending capacity. That’s money not available for mortgages, small business loans or provincial infrastructure.
  • Rising borrowing costs: As Canadian deposits shrink, so does demand for Government of Canada bonds, forcing Ottawa to pay higher interest — no matter what the Bank of Canada does.
  • Monetary policy paralysis: If Canadians transact in U.S. digital dollars, the Bank of Canada loses control over money supply and interest rates. Imagine trying to steer a ship while half the passengers have already boarded another vessel.
  • Loss of sovereignty: American regulators could one day freeze a Canadian company’s capital through a U.S. wallet provider. That’s not sovereignty. That’s dependency.

Canada’s problem is that we are regulating yesterday’s world. Right now, we treat fiat-backed stablecoins as securities, like trying to regulate a Tesla as if it were a horse-drawn carriage. The rest of the world — Europe, Singapore, the U.K., South Korea and even the U.S. — treats stablecoins as payment instruments. By clinging to the securities lens, we push legitimate issuers offshore and leave Canadians dependent on foreign products.

The fix is not complicated, but it is urgent. Canada needs to move on three fronts:

  1. Regulatory clarity: Treat fiat-backed stablecoins as payment instruments, not securities. Establish clear rules: one-to-one reserves in Canadian dollars and Government of Canada securities, bankruptcy-remote custody, daily attestations, independent audits. Allow OSFI-regulated banks to issue both tokenized deposits and Canadian stablecoins within prudential frameworks. This keeps yield and data in Canada.
  2. Sovereignty: Insist that reserves, servers and governance sit inside Canada. Custody should be held by OSFI-regulated banks on Canadian soil. Disputes adjudicated in Canadian courts. Canadians should not be subject to the whims of U.S. regulators in their daily transactions.
  3. Adoption and interoperability: Build rails Canadians can actually use — integrated with Real-Time Rails, compatible with existing banking apps and payment systems, and cheap enough to attract both merchants and consumers. The federal government can lead by accepting Canadian stablecoins for taxes, rebates and fees, normalizing their use and giving Canadians confidence.

This is not about chasing fads or encouraging speculation. It’s about building a payments rail as safe as cash, backed by trust, transparency and Canadian oversight. It’s about ensuring that when the next generation of commerce moves online, the Canadian dollar remains at the centre — not the margins.

The U.S. already has the first-mover advantage, and they’ve legislated it into permanence. Every month Canada delays, more deposits, more yield and more data drain south. We’ve been slow before — on AI, on data sovereignty, on digital infrastructure. Let’s not add money itself to the list.

The tools are at hand. The only question is whether Canada has the courage to act before it’s too late. Wait and we’ll pay more, lose leverage and depend on U.S. rails. Act now, and we keep the yield, the data and the rules at home.

John Ruffolo is the founder and managing partner of Maverix Private Equity in Toronto.