An interview with Lucas Matheson, CEO of Coinbase

Hi everyone, hope you’ve had or are having a great Thanksgiving. It’s been a while. My work and social life picked back up. Part of that was attending the Elevate Festival which focuses on tech and innovation. There’s a robust fintech content track so I sat in on several conversation including one about cryptocurrency and the blockchain. Without going into too much detail, there has been a push by cryptocurrency companies and members of the Bank of Canada advocating for consideration of a stablecoin as part of Canada accelerating payment innovation.

I sat with Lucas Matheson, the CEO of Coinbase to discuss the state of cryptocurrency, other uses for blockchain, how the impression of cryptobros hurt the industry and where Canada is compared to other countries.

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Q: You mentioned on the panel that you hadn’t worked with the government before. How has it been so far?

Matheson: In my career, I’ve been working for executives my whole life. I was previously at Shopify, but I had never worked on influencing the government to change policy or create opportunities for Canadians before. This is completely new for me, being able to work with leaders in the government to try to ensure that we have clear rules for the road.

In fact, I would say it’s one of the reasons I took on this role, because I really don’t want Canada to fall behind the rest of the world. We have a fairly conservative mindset about a lot of technology. Blockchain is an incredible, transformational technology that’s going to have a profound impact in the world, and it’s important that Canada appreciates that opportunity and the urgency to act.

We should be taking advantage of this technology, just like AI. We need leadership, we need a strategy, we need a plan, and we need clear rules for innovators to innovate and bring products and services into market. At Coinbase, we have so many products and services that we want to bring to Canada to help Canadians increase economic freedom and get access to what we think of as the best technology in the world for finance.

Q: What’s driving this conservative approach toward blockchain, cryptocurrency, and stablecoins?

Matheson: I don’t think it’s specific to the technology. I think it’s a general mindset around adopting technology more quickly. I think most governments around the world are looking at embracing technology to drive more efficiency for themselves as a government—to be more productive for citizens—and also for their citizens, to ensure that they have access to the best technology available to empower their lives.

Blockchain technology, digital assets, and stablecoins are all use cases of this technology that we expect tens of millions of Canadians to use and embrace to better their lives. And so it’s important that we have leadership, but also clarity and alignment, and harmonization across the provinces to ensure that we can make decisions as quickly as possible about the types of innovation in this sector that can help Canadians safely and securely access the digital economy.

Q: Is the pressure for progress on blockchain coming from within Canada or external influences like the US?

Matheson: I think the Genius Act and legislation like the Clarity Act are great forcing functions for our government and governments around the world to understand this is real, it’s not going away, it’s part of a strategic plan from some of the biggest governments in the world.

And for Canada, I think there’s certainly more increasing pressure coming from Canadians, the 5 million Canadians that own digital assets, the hundreds of companies that are innovating in Web3, and registered crypto trading platforms like Coinbase, who have been committed to Canada, to pursuing regulatory clarity and to bringing compliant products and services to market.

Q: In previous interviews, you mentioned concerns about crypto yield. Is that changing?

Matheson: Stablecoins are one-to-one fiat-backed tokens. So there’s a dollar of Canadian cash held in a traditional financial institution, and then there’s a stablecoin that moves around the internet at lightning speed, securely and safely.

And so the yield on this dollar, on the fiat dollar, where does that go? Right now, that goes into the traditional system, and intermediaries take it, leverage that margin for their benefit. The opportunity for stablecoins is to return that value of their dollar back to the holder of the stablecoin, the individual who worked for that dollar.

And so yield on stablecoins is an area where governments around the world are exploring permitting stablecoin issuers to pass along part of that reward or yield to the user. And we’re proposing in Canada that in order for us to compete on a global stage and increase demand for our currency, we ensure that we have a framework and legislation in place so that Canadian issuers of Canadian-denominated stablecoins can pass back some of that yield or reward to their users who own the dollar.

Q: What’s the current status of stablecoin regulation in Canada?

Matheson: We currently have no regulatory framework for stablecoins in Canada. We’re confident that our budget will address stablecoins, and we’re keen to read the budget and understand how the government wants to move ahead with stablecoin legislation.

We’re keen to have a framework in place in Canada that allows issuers to issue Canadian-denominated stablecoins. Today, we don’t have that, and we’re hopeful that the government considers embracing yield as a quality of a stablecoin framework to strengthen our stablecoin in Canada.

Q: What are you hearing about stablecoins in the upcoming budget?

Lucas: I’m actually really excited to be in the budget lock-up this year to read the budget. It’s my first time going through this process. We’re anticipating some acknowledgment of this technology and hopeful that we have a framework for stablecoins.

I think the thing I’m most hopeful for is that our government really embraces and clearly commits to ensuring that this technology is prioritized in the federal government, and that we have leadership and a budget in place to coordinate across the federal government to ensure that we can actually use the technology that governments all over the world are starting to integrate into their traditional financial systems.

Q: You and your panelists expressed confidence in Prime Minister Mark Carney. Do you feel the same about him?

Matheson: What we’ve seen from Mark Carney’s government is a renewed interest in understanding problems and addressing those problems with more urgency and more commitment to competition and technology. We’re hopeful that the investments that Mark Carney is making in Canada will unlock more competition and flexibility for companies to innovate here in Canada.

In crypto, we have many companies that are leaving Canada because we lack clear rules for them to build businesses. So specifically with respect to our industry, we’re hopeful that clear rules will unlock more innovators to bring financial products to Canadians.

Q: What’s the current relationship between blockchain firms and Canada’s Big Five banks?

Matheson: I’d say the fact that we lack clear rules for banks is a great example to highlight one of the reasons why banks are not participating in this sector right now. That said, our banks do not bank crypto trading platforms. Their risk profile is being updated, I think right now, given everything going on in the world and what we’re seeing in the United States around banks integrating blockchain technology and stablecoins into their banking systems.

And because our banks have exposure into the United States, they have a really good insight into the future that’s coming on tokenization and blockchain technology. So I think governments, or banks here are on the cusp of participating in the digital economy. I think it’s inevitable that our Big Five banks will participate in the digital economy and provide digital services to their customers around stablecoins, digital assets, and exposure to cryptocurrency as an investment throughout their wealth businesses.

Q: Does the “crypto bro” reputation affect adoption in Canada?

Matheson: I think that some of the narratives in media traditionally have not helped many Canadians understand the full spectrum of what this technology is going to unlock and how they will participate in it. I don’t think most Canadians appreciate the relevance of blockchain technology and cryptocurrency to their average everyday lives.

I think most of the stories that we hear about crypto have been peak retail narratives that have created or instilled some bias in how people think about leveraging this technology and using the technology. The reality is that we’re seeing governments, sovereign wealth funds, the largest asset managers in the world, and the smallest asset managers in the world starting to diversify their wealth into this asset class because of the frankly obvious benefits that it provides.

Q: How would you explain blockchain to someone unfamiliar with crypto?

Matheson: I’d say blockchains, at a very basic level, are moving valuable data on the internet through a decentralized network that’s cryptographically secure, fast, safe, and settles almost instantly.

We grew up in a world where we’ve deposited our valuable data into central intermediaries—from our health records to all of our photos growing up, all of our emails, our text messages, and all of our money. We’ve deposited that data into these central databases.

The direction of travel now, where the world is moving, is that this valuable data is being moved on-chain and being owned and controlled by the owner of that data. Money is a great example of people taking ownership of their money back and putting it to work for themselves through DeFi lending and borrowing and yield and all the traditional ways that people leverage money for their benefit.

And so blockchains are creating a new internet of data that is safe, secure, and allows individuals to control their own data instead of keeping all of our data in central intermediaries who have been monetizing that data for the benefit of their shareholders.

Q: How far behind is Canada compared to other countries like the US, the UK, or Singapore?

Matheson: I’d say from a regulatory framework perspective, we have a very well-defined but narrow scope of regulatory clarity. From a federal level, we have yet to have an appointed leader, a crypto task force or a group of individuals that are coordinating at the federal level around the priority of blockchain technology and crypto.

Relative to other countries around the world, we’re years behind in our maturity of that strategy and around why this technology is important and how we make it Canadian, how we use this technology to better the lives of everyday Canadians. That strategy at a federal level, we’re keen to see that come to life.

This Q&A has been edited for length.