Canada’s Parliament has narrowly passed the federal budget proposed by Prime Minister Mark Carney’s government, securing a major legislative victory that includes a foundational framework for stablecoin regulation.
The comprehensive policy, which is set to be overseen by the Bank of Canada, introduces stringent requirements for the issuance of fiat-pegged stablecoins in Canada, moving the country toward clearer digital asset regulation.
Key provisions of the new framework, which echo recent U.S. stablecoin legislation, mandate that non-bank stablecoin issuers must:
Maintain One-to-One Reserves: Reserves must be composed exclusively of the stablecoin’s reference currency or other high-quality liquid assets, ensuring full backing.
Guarantee Immediate Redemptions: Issuers must allow for immediate redemption of the stablecoin at par value.
Prohibit Yield: Non-bank stablecoin issuers are barred from granting any form of interest or yield to customers, in cash or digital assets, prioritizing stability over profit-seeking.
Meet Robust Standards: Issuers must comply with a suite of requirements related to risk management, cybersecurity, and public disclosures.
The Bank of Canada will be responsible for supervising compliance and maintaining an official registry of approved applicants.
The move has drawn cautious optimism from the crypto industry. Lucas Matheson, CEO of Coinbase Canada, called the legislation a “step in the right direction” in a Tuesday statement, recognizing the government’s commitment to digital innovation, CoinDesk reported.
However, Matheson also urged for two key changes to boost Canada’s competitiveness: establishing an “interim path for CAD-denominated stablecoins to reach the market as soon as possible,” and permitting issuers to share yield on stablecoin deposits. Matheson argued these steps would help the Canadian dollar maintain its global influence in the face of U.S. dollar-dominated stablecoins.
While the budget has cleared a critical procedural hurdle, its specific stablecoin provisions still face additional legislative steps before becoming fully enacted law.
