Weekend listen: Stable coin: The future of money? | The Big Story

Added: 2026-05-23

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[00:00:05]>> [music] >> Okay, so coming into this podcast [music] today, I have to admit something off the top. I am not in any way, shape, or form an expert in cryptocurrencies or stablecoin digital currencies kind of uh >> [laughter] >> raise a lot of questions. Inasmuch as I'm trying to find out who's using them, what they're for, who's transacting, and this whole new issue of stablecoins.

[00:00:34]This is another thing that has been inundating my inbox recently with uh topics and stories. And I thought we'd talk to an expert about [music] what these things all are, how do they affect Canadian society, and do we as consumers have to pay attention to them?

[00:00:50]Is this something that we can use?

[00:00:53]Welcome to In This Economy. My name is Mike Apple. Joining me on the line today is Laura Foam, associate general counsel at Coinbase Canada to tell us all about stablecoins and cryptocurrencies. Thanks very much for joining me, Laura. Thanks to Mike for having me.

[00:01:09]>> Yeah, so the um idea, the usage of stablecoins.

[00:01:16]This has been uh in the news recently.

[00:01:18]We've got legislation now out of Ottawa.

[00:01:20]It's being adopted. These are things that are being adopted more so in the banking sector and worldwide. Can you just give us the sort of 101 on what exactly is a stablecoin? Yes, certainly.

[00:01:34]Think of it this way. Stablecoin is a cryptocurrency, but it is widely different from um the previously existing uh crypto that that that you know, such as Bitcoin or Ethereum. Bitcoin is treated more as an investment. The prices goes up and down depending on demand. Um whereas stablecoin is akin to a digital dollar.

[00:01:58]One stablecoin, like USDC for example, is always worth one US dollar.

[00:02:04]The way this works is that you have a private issuer. So, they These are not issued by the central bank of a country.

[00:02:12]They're issued by a private issuer. And every single USDC that that issuer issues is backed one-to-one by cash and short-dated treasuries that are held at a regulated financial institution.

[00:02:28]And you have an attestation of that, usually by a big four accounting firm.

[00:02:33]Uh so, compared to Bitcoin, this is boring. This is dollar. It's placed on chain, on a blockchain, but it's just a dollar and it and and the point of it is being boring and being used the same way a currency would be used. So, what we're thinking and looking at right now in in in in fact is really remittances.

[00:02:58]Uh whether small or big value remittances between Canadians, but mostly worldwide.

[00:03:06]Um because the why the biggest difference with using the traditional banking system is that these can be transferred 24/7 and internationally almost immediately.

[00:03:20]So, it is a boring dollar sitting on chain, but that you can send more efficiently and more safely than a traditional one. Well, okay. So, you've you've raised some questions right there about the idea that this is that this is to uh something that you can trade or transact 24/7. I can't do that right now. Is it like is it literally banker's hours for business that they can't do international deals considering everything right now is is pretty much done digitally? Not exactly. So, if you're if you have to transfer between two different currencies across the world, you will have to go through two or three different corresponding banks.

[00:04:03]It does not mean you can only make your transfer from 9:00 a.m. till 5:00 p.m.

[00:04:07]But, what it does mean is that it will never be instantaneous 24/7. What's the What I What I meant by 24/7 in in stablecoin is that if I said right now a USDC to someone in Vietnam, almost instantaneous, that person receives it over there. Does it get converted then back to the local currency at that point? Because again, in this case, you're talking about a stablecoin that is pegged one-for-one to the US dollar. I know we've got them here in Canada now, too. But, it So, it it basically allows for point A to point B, and then it gets uh converted to, well, theoretically, I guess you could ask for whatever currency you want it to be converted to, right? Correct. That person can keep the USDC, or itself take the steps needed to transfer it back to its own currency or any other currency. That is the the choice of the recipient. Who's the issuing companies? Is You said that that's private enterprise in the United States? Correct. So, um I'll take the example of USDC because it is the dominating one currently.

[00:05:08]Uh it The issuer is Circle.

[00:05:11]Um that is a um a regulated uh issuer from the US. In Canada, it the the situation is a little different because of a legacy regulatory matters that I will not bore you with. Uh but, the current potential issuers that we have are both um a trust. There's There's one trust, and other purely private companies uh that are also trying to issue stablecoins.

[00:05:37]Well, when you mentioned Circle as the issuer, is that Circle International, publicly traded company? I'm thinking, okay. How do they actually make money on on this transaction? Do they charge a fee?

[00:05:48]Subsequently, because you know, it's it's it's interesting when you're talking about pegging something to the US dollar. I mean, you have to like literally buy US dollars. So, they buy short-dated US treasuries and receive interest rates from these.

[00:06:03]Circle, for example, is one of the top 10 and I can't remember the number it is sitting at right now, but it was one of the top 10 holder of US treasuries. So, that is the the the main revenue driver.

[00:06:15]Interesting. So, they they basically generated their revenue or their initial investment going through publicly. With their reserves.

[00:06:22]>> Yeah. In Canada, we've got literally new laws and regulations of this out of Ottawa. And I guess there's a little bit of debate about I saw Don Tapscott, who's one of the pioneers in crypto, uh you know, saying it should be I I'm he was he basically I'm paraphrasing, but arguing it should be a a private entity and not the Bank of Canada, for example, issuing stablecoin. But, wouldn't it make more sense to have central banks actually issuing these things? That that seems to me would kind of take out the middleman. That's a very interesting point because that is where we started from in Canada. And the Bank of Canada conducted its own reviews and research on that topic and concluded that Canadians did not want what we call a CBDC. So, that would be a stablecoin issued by the central bank. Um it a and the main concern from the industry and from um individuals with a CBDC is is is privacy.

[00:07:23]It's it's what happens once um the there is full access to what an individual does with every single one of its own cents.

[00:07:33]Um so, it it drives concern with where at with a private uh company and competition in the space, multiple eventual issuers of stable coins and the choice uh of which stable coin you use, um individuals are more comfortable with with that usage. And we've also seen in reality in what happens in the in the market now it that that it is more efficient. We haven't seen any uh real efficiency CBDC anywhere in the world uh whereas both uh USDT and USDT, so these are two USD denominated stable coins, uh are quite uh are are efficient and have shown strength and resilience. I think it's it's really interesting though that the whole idea I thought from the crypto space was again to decentralize things with with whether it's, you know, Bitcoin or Ethereum or Solana or any the multitude of cryptocurrencies. This is almost bringing it back, you know, if it's based on the US dollar or the Canadian dollar, you're kind of bringing it back full circle. Am I wrong? That's correct and and this is a this is a topic of much contention also in the industry.

[00:08:41]The long-term view of Bitcoin for many what we call Bitcoin maxis remain that the ultimate goal is that your value will be one Bitcoin and not one Bitcoin is equal to 60,000 US dollar.

[00:08:57]But the reality of the world as it is today uh more than that than I mean a decade into the existence of crypto is that that has not happened yet.

[00:09:08]Um and we've seen crypto enter the traditional uh finance world and being quite widely used used uh today and it is using currency. It is using mainly the US currency as of today, uh hence the need for what we call an on ramp and off ramp. Um mean from the currency that you're using to into the chain by using a stable coin that is the currency you're using but on chain.

[00:09:46]I I understand how this is used then by corporations, multinationals, maybe big players who have a lot of money to transfer, but at the end of the day does this affect the day-to-day consumer?

[00:09:58]Because it you know, I'm still I'm still in some cases paying with cash. I'm fine with Interac or e-transfer these other things, but am I ever going to need to use a stable coin? Well, need to, but you could. [clears throat] And I think we have seen in the last year the real infection point there.

[00:10:15]There were 3.2 billion of the transactions that were made where in small value. So I mean between 1 and 1,000 and 10,000 dollar. So these to us are likely akin to paying bills, remittances, etc. rather than large transfer value. So we we're seeing that shift slowly. And the reason why we're seeing that shift, we believe, is because of the offering that is actually wide domain. For example, online shopping is now being made available through stable coin more and more. So Sho- Shopify merchants, for example, can accept USDC.

[00:10:57]So we're finally seeing a certain conversions of the offer of being able to pay in stable coin, for example, online because it's of course easier and the use of USDC by individuals.

[00:11:09]Well, it it it raises an interesting point though, the fact that at the end of the day you still want to know what what you're paying for based on the original currency. And that's been the problem with Bitcoin, for example, because one minute it's a well, today it's a 70 almost 80,000 dollars.

[00:11:29]Three months ago it was 129, 130,000.

[00:11:32]How do you How do you base a transaction on something that has so much volatility? This to my mind is almost the cryptocurrency 2.0, if you will, that it's actually something that is more useful, for lack of better description. No, correct. And that's that's finally a real life case of updating the financial system, which is what we ultimately all want to see happen, thanks to crypto and the technology that comes with it. It's a updating the way in the daily life people interact with the money that they have earned.

[00:12:06]So, yes, entirely correct. This is not the ultimate dream of Bitcoin originally, but it is a first step toward updating the financial system, definitely.

[00:12:17]>> Are you concerned, though, or you know, you talked about the privacy why why some people don't want a central bank involved with this, and that it should be private enterprise, but the criticism of the cryptocurrency market has been, to some extent, that aspect of it, that it's been used for nefarious purposes. You can't track it and all these other things, and that, you know, kind of eliminates the issue of regulatory oversight. So, do you have to kind of find a balance there somewhere? You do, and I think Canada is in the right place for that, to be honest. Very, very quickly, the Canadian regulators made sure that we had regulated player.

[00:12:55]So, in order to interact with a centralized exchange, such as Coinbase, for example, you do go through KYC. You do go through enhanced checks.

[00:13:08]So, we are quite comfortable as a platform that these type of bad these bad actors and and the bad activities do not happen on our platform. So, it is one of the main concerns of anyone serious within the industry, and this is something we all work really, really hard uh, prevent. Yeah, you you know, in some ways if something is digital and I and I think about, for example, the questions about, um, uh, some insider trading uh, allegations that are making the round uh, in the US for the Securities and Exchange Commission on energy trades and all these things. And they can track it because it is it is a, you know, a digital there is a digital footprint.

[00:13:47]So, theoretically, all these things actually it can be traced, but it's it's to to how much, um, encryption I suppose there is behind the scenes that that that go on. Yes, and and it's it's, uh, it depends on the means you have. So, we do have these means and we take it very seriously. So, if if the the the the service provider, if I may, um, pays attention and and puts the right checks and, uh, in place, it's perfectly traceable. So, is this how how big of a market is this for, you know, for Can- like, where are we in Canada from Do you think there's going to be a private issuer at some point? I think there actually is one, is there or not? Am I wrong in saying that? No, you're you're entirely right. Uh, we we currently have, uh, Tetra Trust, that's an Alberta-based, uh, trust company that issues CAD. And then you have, um, Stablecorp that issues QCAD. And Pay Tree that issues CAD-C. That is the three ones that you may have heard of, uh, because they're regulated, so they came through, uh, they took certain steps, uh, to be properly regulated and they have, um, partnerships with established financial institutions and others. Uh, where we are still at the beginning, uh, in Canada, to be honest, compared to where, uh, USDC is, but that is the case everywhere in the world. Uh, USD is the reserve currency for, I think, about 60% of of the global foreign currency reserves in in the in the traditional market. When it comes to crypto, 99% between 98 and 99% of the market capitalization of stable coins is in US dollars. So, the entire world needs to step up when it comes to its own currency stable coins, and Canada is is has now taken steps to do that with the with the stable coin act being accepted.

[00:15:43]And then and because like if the US is the leader, have they has there actually been an economic benefit?

[00:15:51]You know, can Canada build on that? Does it allow for more international investment, trade, that kind of thing in the Canadian market if this is available? Yeah, we believe so. We don't have data. I don't have data to give you about the US, but we believe so for Canada for sure. And we also believe it is widely important for us to maintain our sovereignty by using a Canadian denominated stable coin, and by having our own stable coin issuers that invest in our governments treasuries. Oh, that's awesome. Thank you. Listen, thank you very much for for speaking with me today. This has been a really interesting topic. I And and I'll I'll I'll I'll say going in, I wasn't entirely sure, >> [laughter] >> but you made it really understandable.

[00:16:36]And yeah, it's it's really quite fascinating how all of this has has grown so so substantially, and and you made it made sense make sense. So, there you go. I hope so. Thank you very much for having me.

[00:16:47]>> Thanks for joining us. And that was Laura Formanek, associate general counsel at Coinbase Canada. My name is Mike Eppel. You've been listening to In This Economy. If you want to reach out and give us any story ideas or questions, concerns, that kind of thing, I'm on email at [email protected].

[00:17:08]And on social, you can find me on @eppman. That's E [music] P P M A N.

[00:17:14]Thanks for listening.