Navigating the Stablecoin Storm: Why Canada Must Act Now to Protect Its Financial Future

John Ruffolo Warns Canada: The Stablecoin Storm Is Coming and We Can’t Afford to Snooze

By John Ruffolo, Special to Financial Post
Published October 8, 2025

Canada once relied on steel, oil, and lumber. Today, digital rails carry data, ideas, and money. These rails now traverse invisible networks. American firms build most of them. Canada must act soon; else its economy will depend on U.S.-built rails and rules.

The U.S. Leads the Stablecoin Surge

On July 18, the United States passed the Genius Act. This law backs stablecoins with the U.S. dollar. These coins tie one-to-one with U.S. Treasury securities. They now enter mainstream finance. U.S. stablecoins own 99 percent of the market.

Every stablecoin use helps finance U.S. government debt. Every payment feeds U.S. banks. Every transaction moves Canadian data across the border.

Why Canada Must Pay Attention

Stablecoins now process more transactions than Visa and Mastercard. Their use brings several risks for Canadians:

Capital Flight: A shift of only 5 percent of Canadian bank deposits—around $135 billion—into U.S. stablecoins may drop domestic lending by about $675 billion. This loss will hit essential loans for homes, small businesses, and provincial infrastructure.
Rising Borrowing Costs: Fewer deposits mean lower demand for Government of Canada bonds. Ottawa might then need to offer higher interest rates.
Monetary Policy Constraints: More U.S. digital dollars in Canadian hands can weaken the Bank of Canada’s control over money supply and interest rates.
Sovereignty Risks: Relying on U.S.-issued stablecoins lets American regulators freeze Canadian company funds held in digital wallets. This move can harm Canada’s financial independence.

Outdated Canadian Regulation Hampers Progress

Canadian regulators treat fiat-backed stablecoins as securities. This view is like judging a Tesla as if it were a horse-drawn carriage. Using this lens pushes real stablecoin issuers to leave Canada. Canadians then depend on foreign—mainly American—stablecoin products.
In contrast, economies in Europe, Singapore, the U.K., South Korea, and the U.S. treat stablecoins as payment tools. This treatment fits their true role and sparks innovation.

A Three-Point Plan for Canadian Prosperity

Canada must move quickly with these steps:

Regulatory Clarity: Change the law to view fiat-backed stablecoins as payment tools rather than securities. Set rules for one-to-one backing with Canadian dollars and Government of Canada bonds. Use clear controls like bankruptcy-remote custody, daily reserve checks, independent audits, and allow OSFI-regulated banks to issue tokenized deposits and Canadian stablecoins. This move keeps Canadian yield and valuable financial data at home.
Financial Sovereignty: Keep reserves, servers, and managing systems only in Canada. Let OSFI-regulated Canadian banks hold these stablecoin assets. Handle disputes under Canadian law. This rule cuts off the reach of foreign regulators.
Adoption and Interoperability: Build digital payment rails that work with current banking apps and systems like the Real-Time Rail. Keep fees low to attract merchants and consumers. The federal government should lead by example. It can accept Canadian stablecoins for tax payments, rebates, and fees. This step will grow public trust.

Looking Ahead: Building a Secure Payment Future

This call is not about chasing trends or fueling speculation. It is a call to build a Canadian payment rail that is as secure and clear as cash. The rail must be rooted in trust, transparency, and Canadian law. These steps are vital. They help Canada compete in a digital world and stop foreign powers from taking control.

John Ruffolo, founder of tech-focused Maverix Private Equity in Toronto, warns that Canada must face the “stablecoin storm” at its doorstep. Its leaders must craft a strong plan before it is too late.

For comprehensive analysis and continued coverage on finance, cryptocurrency, and innovation, subscribe to the Financial Post.

Full money-growing playbook here:
youtube.com/@the_money_grower