The Canadian government managed to pass its federal budget in Parliament which, among other things, would establish a stable currency policy.
Parliament narrowly passed Prime Minister Mark Carney’s first budget on Monday evening. At the bottom of the lengthy document is a section that would govern the issuance of stablecoins, overseen by the Bank of Canada. Other procedural hurdles remain regarding specific budget provisions, but this represents a major victory for the new government. Echoing many points in recent U.S. law regulating issuers of U.S. dollar-backed stablecoins, issuers in Canada must maintain individual reserves “composed exclusively of the base currency or other high-quality liquid assets,” allow for immediate redemptions, and meet a series of requirements for risk management, cybersecurity, disclosure, and default management. The Bank of Canada will oversee and maintain the registry of approved applicants.
Under this policy, non-bank issuers of stablecoins would not be permitted to grant “any form of interest or return with respect to such stablecoin, whether in cash, digital assets, or any other consideration” to their customers.
Liberal Prime Minister Carney appeared alongside Coinbase Canada CEO Lucas Matheson at the Canadian Football League championship game this weekend, although Matheson says Canada’s approach to stablecoin could benefit from some changes.
He called it “a step in the right direction” in a statement released Tuesday. But he called for an “interim pathway for Canadian dollar-denominated stablecoins to reach the market as soon as possible and allowing issuers to share in the yield of stablecoin deposits.”
“These measures would put Canada in a competitive position globally and help maintain the outsized influence of the Canadian dollar around the world,” Matheson said.
The global stablecoin market is dominated by tokens pegged to the value of the U.S. dollar, although other countries and the European Union have sought to increase the presence of their own currencies.
