Canada Prepares Stablecoin Regulations
Canada is developing rules for stablecoins. A key update may appear in the federal budget on November 4. Finance Minister François-Philippe Champagne will present the budget.
Officials have met with regulators and industry groups recently. Currently, Canada has no unified rules for stablecoins. This uncertainty leaves companies unsure if stablecoins will be regulated as payment tools or financial products.
Securities regulators have suggested these assets might be classified as securities or derivatives. This creates challenges for developers and payment firms. Many say stablecoins mainly serve for transfers and transactions, not speculation.
US Advances Stablecoin Oversight
The United States has passed the Genius Act to regulate stablecoins. It gives regulators control over issuers and their reserve management. Anti-money laundering rules also apply under this law. This clarity attracts stablecoin businesses to the US.
Experts warn that Canada risks losing business to the US if it moves too slowly. Without clear rules, investors may prefer countries with defined policies. This could reduce activity in Canada’s financial markets.
Concerns From Analysts and Officials
- Investor John Ruffolo says Canadian savings could flow into US assets backed by stablecoins.
- This shift may lower demand for Canadian bonds and affect the Bank of Canada’s monetary control.
- Ron Morrow from the Bank of Canada urges a federal stablecoin framework like other countries’.
- Former Deputy Governor Carolyn Wilkins calls for rules to protect trust and competition in digital payments.
- Creating a national framework is complex due to coordination needed between federal and provincial regulators.
