The Canadian country manager of crypto exchange Coinbase wants the federal minister of artificial intelligence (AI) and digital innovation, Evan Solomon, to add blockchain technology to his portfolio.
The federal government has already moved quickly on legislation governing stablecoins, a digital asset, in response to industry demands. However, Lucas Matheson, CEO of Coinbase Canada, believes that Solomon’s portfolio should include the technology underlying cryptocurrencies. AI and blockchain are related not just through their potential to transform existing industries, but by Canada’s opportunity to assert its digital sovereignty, advocates like Matheson say.
“We’ve asked that Evan Solomon expand his scope and mandate beyond artificial intelligence,” Matheson said in an interview with BetaKit. “If you think of AI as a decision-making tool, blockchain will form a trust layer underneath AI to move valuable data on the internet. We don’t have a federal leader with a mandate to coordinate and champion blockchain technology.”
Solomon is responsible for AI, digital innovation, and economic development in Southern Ontario. In an email to BetaKit, Sofia Ouslis, a spokesperson for Solomon’s office, acknowledged that it had engaged with Coinbase and other companies in the digital economy.
“In those conversations, they have shared perspectives on blockchain and stablecoins as part of their broader advocacy,” Ouslis wrote. “We routinely hear views from innovators across different sectors, but that doesn’t mean those issues fall within our mandate.”
Coinbase is a leading crypto exchange in the United States with over $500 billion USD ($705 billion CAD) assets under management. It also has a significant Canadian presence and has invested in domestic startups. Records show the US-based Coinbase Group has lobbied the direct deputy support to Solomon at Innovation, Science and Economic Development Canada, as well as Finance Canada and the Bank of Canada, to promote blockchain tech and stablecoins.
On Sunday, Matheson went on the Grey Cup field with Prime Minister Mark Carney for the coin toss. “We had a great chat on the field, but we didn’t talk business,” Matheson told BetaKit.
AI, blockchain, and digital sovereignty
The movement on stablecoins and discussions around the role blockchain should play in finance and government come as Canada is increasingly focused on how it can assert its digital sovereignty.
Advocates like John Ruffolo, founder of CCI and managing partner at Maverix Private Equity, have argued that Canada will be left at the mercy of a US-dominated payment system without sovereign payment rails for stablecoins. Ninety-nine percent of stablecoins are already pegged to the US dollar in the global market, according to JPMorgan.
Stablecoins are a form of digital currency that are pegged to a traditional fiat currency like the Canadian dollar. In response to industry demands and similar legislation in the US, the federal government revealed a draft framework to regulate stablecoin issuers in Canada.
In an interview with BetaKit, Ruffolo said that allowing Canadian money to flow into a US-controlled stablecoin market is a threat to economic sovereignty. So is the potential for consumers to move deposits en masse to stablecoin wallets and out of Canadian banks.
“Canada needs to build its own sovereign rails so that we do not lose control of stablecoins from a monetary policy perspective,” Ruffolo said.
While Matheson has argued the technology already exists in Canada to move forward on stablecoins, he also framed the tech as an opportunity for sovereignty.
“This is also a significant opportunity for our federal government to position Canada as a leader in the digital economy and increase the global demand for our dollar,” Matheson told BetaKit. He argued that Canadian-denominated stablecoins would increase demand for Canadian government debt—such as short-term bonds—thus lowering borrowing costs for the government.
Fast moves on the Stablecoin Act
Both Matheson and Ruffolo said they were pleased with the federal government’s rapid progress on a stablecoin framework through the federal budget.
The proposed Stablecoin Act, released earlier this week, requires issuers to maintain and manage adequate 1:1 or more asset reserves, establish redemption policies, implement risk management frameworks, and protect consumers’ sensitive data, as well as national security safeguards. The Bank of Canada was nominated to oversee an eventual list of approved stablecoin issuers and allocated $10 million.
The act only regulates private company issuers of stablecoins, and it excludes banks. The legislation won’t necessarily establish all stablecoins as payment instruments, as industry groups had demanded, and will only regulate the issuance of stablecoins. How the digital assets are used will determine whether they are considered payment instruments or securities, with more details to come from provincial securities regulators.
However, Matheson argued one thing was missing: the feds should allow consumers to earn interest on stablecoins, so that value on their deposits is returned to them “rather than to bank shareholders.” The U.S. GENIUS Act also prohibits these yield-bearing stablecoins.
In a statement to BetaKit, a spokesperson for the Department of Finance said the prohibition on interest is “consistent with similar restrictions under the U.S. GENIUS Act and the EU’s MiCA regime. The framework was developed to regulate fiat-backed stablecoins that function like cash, not investment vehicles.”
Feature image courtesy Coinbase.