The government of Canada managed to pass its federal budget in parliament which, among many other things, would institute a stablecoin policy.
Parliament narrowly passed Prime Minister Mark Carney’s first budget on Monday afternoon. Deep in the lengthy document is a section that would regulate the issuance of stablecoins, overseen by the Bank of Canada. Other procedural hurdles remain for specific budget provisions, but this marked a major victory for the new government. In an echo of many of the points of the recent US law regulating issuers of US dollar-backed stablecoins, issuers in Canada must maintain one-to-one reserves “composed exclusively of the reference currency or other high-quality liquid assets”, allow immediate redemptions, and comply with a set of requirements on risk management, cybersecurity, disclosures and management in times of failure. The Bank of Canada will monitor and maintain the registry of approved applicants.
Under this policy, non-bank stablecoin issuers would not be able to provide “any interest or yield with respect to that stablecoin, whether in the form of cash, digital assets, or other consideration” to their customers.
Liberal Prime Minister Carney appeared over the weekend alongside Coinbase Canada CEO Lucas Matheson at the Canadian Football League championship game, although Matheson maintains that the Canadian stablecoin approach could benefit from some changes.
He called it a “step in the right direction” in a statement Tuesday. But he called for an “interim path to get CAD-denominated stablecoins to market as soon as possible and allow issuers to share the yield on stablecoin deposits.”
“These measures would put Canada in a globally competitive position and help maintain the enormous influence of the Canadian dollar around the world,” Matheson said.
The global stablecoin market is dominated by tokens pegged to the value of the US dollar, although other nations and the European Union have sought to increase the presence of their own currencies.
