Canada’s government managed to pass its federal budget in parliament, which – among many other things – would introduce a stablecoin policy.
Parliament narrowly passed Prime Minister Mark Carney’s first budget on Monday night. Deep within the lengthy document is a section that will govern the issuance of stablecoins overseen by the Bank of Canada. There are still other procedural hurdles to specific provisions of the budget, but this marked a major victory for the new government. Echoing many of the points from the recent US law governing issuers of US dollar-backed stablecoins, issuers in Canada must maintain one-to-one reserves “consisting solely of the reference currency or other high-quality liquid assets”, allow immediate redemptions and meet a number of risk management, cyber security, disclosure and governance requirements in times of failure. The Bank of Canada will oversee and maintain the register of approved applicants.
Stablecoin issuers who are not banks will not be allowed, under this policy, to provide “any form of interest or return related to that stablecoin, whether in 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 argues 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 a “temporary path for CAD-denominated stablecoins to reach the market as soon as possible and allow issuers to share the proceeds of stablecoin deposits.”
“These steps would put Canada in a global competitive position and help maintain the Canadian dollar’s great influence worldwide,” 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 tried to increase the presence of their own currencies.
