The Bank of Canada finally said what Canadian fintech executives have been thinking for years: our payment infrastructure is embarrassing. But this time, they're proposing stablecoins as the solution.
When Bank of Canada executive Ron Morrow told a room full of accountants that Canada is "behind in adopting new technology" and that our payment infrastructure "lags even many developing countries," it wasn't news to anyone who's tried to build a fintech product in this market. What was the news? The central bank's suggestion that stablecoins might be our way out of the innovation penalty box.
The Uncomfortable Truth About Canadian Payments
Morrow didn't mince words: Canada's digital payment infrastructure is "archaic when compared with some advanced countries, such as the U.K. and Australia." This isn't the usual central banker diplomatic speak – this is someone watching our competitive position erode in real time.
The numbers back up his concern. A recent survey found that nearly 60% of Canadian business leaders believe our competitiveness will continue declining without payments modernization. Meanwhile, our flagship Real-Time Rail system, originally promised for 2019, won't see industry testing until 2026.
The Big Five Bank Problem
Canada's payment infrastructure is "primarily controlled by the country's biggest five banks, an arrangement critics say has led to high fees and delays and throttles competition." If you're a fintech trying to build something innovative, you know this pain intimately. Want to offer instant payments? Go through the established players. Want competitive rates? Same gatekeepers.
This isn't just a Canadian problem; it's a Canadian competitive disadvantage that compounds daily.
Why Stablecoins Matter Now
Stablecoins now process $1 trillion annually in transactions. That's larger than most national payment systems, and it's growing. Shopify quietly launched stablecoin payment options three months ago through partnerships with Coinbase and Stripe. Meanwhile, Calgary-based Tetra Digital just closed $10 million to launch a Canadian-dollar stablecoin in 2026, with backing from Wealthsimple and National Bank.
The writing isn't on the wall; it's in flashing neon signs.
The Regulatory Reality Check
While Canada debates jurisdiction, the world is moving. The U.S. GENIUS Act, passed in July 2025, creates a clear framework for regulated stablecoin issuers with 1:1 reserve requirements and federal oversight. The EU's MiCA regulation is already forcing non-compliant stablecoins off major exchanges.
The Innovation Gap
The U.S. launches 45 new stablecoins monthly, while the EU manages 3. Canada? We're still arguing about whether stablecoins are securities. Some Canadian authorities currently consider stablecoins securities, while the crypto industry prefers regulation as e-tokens, similar to approaches in the U.S. and EU.
This regulatory uncertainty isn't just slowing innovation – it's driving it elsewhere. Canadian fintech companies are already looking south for clearer regulatory pathways and faster market access.
The Path Forward
Morrow's call for federal and provincial regulators to "work quickly and collaboratively" is about more than stablecoins—it's about Canada's digital competitiveness. The Real-Time Rail delays have already cost us years of payments innovation. We can't afford to repeat that mistake.
The Strategic Opportunity
Stablecoins are gaining relevance due to the "high cost of international money transfers" and the need for "faster, cheaper, more transparent and more accessible cross-border payment services." For a trading nation like Canada, this isn't just a nice-to-have, it's a competitive necessity.
A Canadian-denominated stablecoin would help with payments, cross-border transactions, and foreign exchange challenges, according to Coinbase Canada's CEO. But only if we create the regulatory framework to support it.
The Bottom Line
The Bank of Canada's message is clear: "Even if you're on the right track, you'll get run over if you sit there." Canadian fintech executives have been saying this for years – now the central bank agrees.
The question isn't whether stablecoins will reshape payments—they already do. The question is whether Canada will be part of that transformation or a bystander watching innovation happen elsewhere.