Stablecoins: The “Picks and Shovels” Play for the Digital Asset Era
Ever since the meteoric rise of Bitcoin and the broader cryptocurrency market, I have
frequently been asked for my thoughts on whether these digital assets belong in a
client’s portfolio. My stance has remained consistent: because there is no traditional
way to value these assets, they are speculative and highly volatile.
However, I have often indicated that a small position – typically between 1% and 5% –
can be appropriate for those seeking exposure. For Canadian investors, the most
efficient way to achieve this is through regulated instruments like the Purpose Bitcoin
ETF (BTCC) or similar Ethereum ETFs like Purpose Ether ETF (ETHH), which
provide exposure without the technical hurdles of digital wallets.
The Great Debate: Bitcoin, Doge, XRP, or Something Else?
For years, the market has been flooded with speculation about which coin would
eventually become the “global currency.”
Even Elon Musk famously suggested that Dogecoin was fundamentally better suited for
transactions than Bitcoin. Musk went so far as to speculate that Dogecoin could even
become the primary currency used on Mars, jokingly (or perhaps not) envisioning a
future where interplanetary commerce is settled in Doge.
Others looked to XRP, which many believed would become the popular choice for
banking institutions due to its speed. However, as the market matures, the fatal flaw in
these assets for daily use has become clear: their prices are highly volatile – based on
supply, demand, and hype.
When I have been asked which crypto will become the most popular for transactions, I
have maintained that stablecoins – not Bitcoin, Dogecoin, XRP, or any other Alt. Coin –
would come to be the primary mode of financial transactions.
What is a Stablecoin?
A stablecoin is a type of cryptocurrency designed to offer the best of both worlds: the
instant processing and security of payments on the blockchain, and the stable valuation
of traditional fiat currencies.
Unlike Bitcoin, which fluctuates based on market sentiment and speculation, a
stablecoin is pegged to a steady asset, most commonly the U.S. Dollar or Canadian
Dollar.
| Bitcoin / Altcoins | Stablecoins | |
|---|---|---|
| Value Basis | Supply & Demand | Pegged to Fiat |
| Volatility | Extremely High | Minimal |
| Primary Use | Speculation | Payments |
While they share the same underlying blockchain technology as Bitcoin – allowing for
24/7 borderless transactions – the stability factor makes them a viable tool for actual
commerce rather than just a volatile trading chip. Today, coins like Tether (USDT) and
USDC trade billions in volume daily, proving that the real use case for crypto is already
here.
The Recent Bitcoin Slide: A Shift in Sentiment
In recent months, we have witnessed a decline in Bitcoin’s price. While some see this as just another bout of volatility, negative sentiment is growing around Bitcoin’s lack of utility. As the market matures, the “hype” is being replaced by a demand for functionality. Investors are increasingly questioning why they should hold a volatile asset that is difficult to use for everyday purchases when a more efficient alternative exists. This has led to a rotation of confidence where the excitement once reserved for Bitcoin is shifting toward the stability and programmable nature of stablecoins.
Prominent investors like Kevin O’Leary have been vocal about this transition. O’Leary
has frequently argued that once proper regulation is in place (such as the recent
GENIUS Act in the U.S.), stablecoins will become the primary software for global
financial transactions. He suggests that the real & “institutional” play isn’t just betting on
the price of a coin, but rather owning the infrastructure that allows money to move
instantly across the globe.
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This sentiment is being echoed by major policymakers at the highest levels. Most notably, Prime Minister Mark Carney included a landmark framework for stablecoin regulation in the 2025 Federal Budget. Carney has been clear: stablecoins, when properly regulated with strong capital and liquidity requirements, can serve as a systemic payment system that dramatically improves financial efficiency. By formalizing this in the budget, the government is signaling that stablecoins are moving from the “wild west” of crypto into the bedrock of the Canadian financial system.
In essence, the market is realizing that while Bitcoin may be a “store of value” stablecoins are the “future of payments”
Two Companies Leading the Charge
Two companies currently under our research coverage are positioning themselves as leaders in the stablecoin and digital payment ecosystem.
1. The Digital Banking Innovator: Federally chartered bank which developed a Digital Deposit Receipts (DDRs). Unlike traditional stablecoins issued by unregulated tech companies, their digital assets represent actual fiat currency on deposit with a regulated bank. This provides a level of security and regulatory “blessing” that traditional crypto assets simply cannot match.
2. The Mobile Fintech & Web Infrastructure Leader: This company has leveraged its massive international user base to integrate self-custodial stablecoin wallets directly into its platform. By focusing on emerging markets where local currencies are volatile, they have enabled millions of users to save and transact in “digital dollars” with sub-cent fees, effectively building a bridge between traditional internet usage and decentralized finance.
Both companies represent a “picks and shovels” approach to the digital asset space –
focusing on the utility and infrastructure of stablecoins rather than the price of Bitcoin.
