Financial Institutions Pursue Prevention of Earnings from Stablecoins
In a world where digital finance is rapidly advancing, the question of whether the United States will embrace new financial rails or cling to legacy models has become a topic of significant interest. A 2024 Pew study revealed that over half of Americans view banks disfavorably, indicating a growing dissatisfaction with traditional financial institutions.
Expanding the range of payment options for households and businesses could foster competition and drive down costs across the financial system. This is where stablecoins, digital currencies pegged to the value of a traditional currency like the US dollar, come into play.
The GENIUS Act, signed into law in July 2025, established a framework for stablecoin regulation in the U.S., requiring one-to-one backing with dollars or Treasuries and monthly reserve disclosures. The Act, however, banned issuers from paying yields directly to holders of stablecoins, but left room for exchanges and affiliates to offer rewards programs.
Meanwhile, across the border, Canadian firms are planning to launch a regulated Canadian dollar stablecoin in 2026. A $10 million investment from Wealthsimple, National Bank of Canada, ATB Financial, and Shopify is backing this initiative. The exact identities of the leading stablecoin issuers in Canada planning this launch are not yet explicitly named, but there is emerging interest in regulated, fully backed stablecoins in North America.
Didier Lavallée, CEO of Tetra, emphasised the potential for CAD-backed stablecoins in the market. Given that CAD is about 6% of the global FX market, and there's an uptick in the use of non-USD stablecoins, there seems to be a growing demand for such digital currencies.
Stablecoins offer instant settlement, lower correspondent banking costs, and enable 24/7 money movement – capabilities that businesses and consumers are increasingly demanding. This battle over stablecoin yields captures a broader struggle over the future of finance, with banks aiming to maintain their traditional role as deposit-takers and lenders, while stablecoin issuers seek recognition as legitimate payment providers.
As we move forward, the role of stablecoins in shaping how households and businesses manage their finances in an increasingly digital world will be one to watch. Whether it's the US doubling down on legacy models or embracing new rails, or Canada leading the charge with regulated stablecoins, the impact of these decisions will ripple far beyond Wall Street.
