CODE VERSUS PRECEDENT: BLOCKCHAIN-DRIVEN GOVERNANCE AS A RESPONSE TO THE CRISIS OF TRUSTS IN MODERN CANADIAN FINANCE

Canada's trust law is caught in a structural crisis, torn between the rigid formalism of common law and the need for adaptive governance in a digitalized global economy. Drawing on Frederick Schauer's theory of "rules as exclusionary reasons" and Douglass North's concept of "path dependence," this paper argues that Canada's regulatory framework—exemplified by Section 122 of the Income Tax Act and Section 56 of the Ontario Securities Act - prioritizes procedural compliance over substantive resilience, leading to systemic failures such as the collapse of Penn West Petroleum Trust and the judicial rejection of cryptocurrency trusts in QuadrigaCX. Through case studies and comparative analysis, we demonstrate how Canada's adherence to outdated doctrines undermines both domestic stability and international alignment with OECD standards. We propose a dual-track solution: legislative modernization through a Uniform Digital Trust Act and the integration of blockchain-based smart contracts (e.g., ERC-1400) to encode fiduciary duties into programmable legal structures. This approach not only resolves the Schauer-North paradox but also positions Canada as a leader in responsive, technology-driven trust governance.