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The federal government says in Tuesday’s budget that it will move ahead to regulate stablecoins, following on a move this past summer by the United States to do so.
Stablecoins are a kind of crypto asset that are pegged to real-world currencies, aiming to make them a more reliable way to transfer money than more volatile cryptocurrencies.
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Ottawa says it will bring forward legislation to establish rules around the reserves issuers need to back up their stablecoins, as well as to deal with issues around risk management, information privacy and national security.
The move comes after many financial leaders, including past and current Bank of Canada executives, have called for action to help pave the way for Canadian-dollar linked stablecoins.
The worry has been that with U.S. dollar stablecoins dominating the space, Canada could see capital siphoned out of the country as more businesses look to use the crypto asset for cheaper and faster money transfers.
Lucas Matheson, chief executive of Coinbase Canada, said the move signals Canada’s ready to lead on digital innovation.
“Today’s news will change how Canadians interact with money and the internet forever,” he said in a statement.
Kareem Sadek, national technology risk services leader at KPMG Canada, said legislating the space will move stablecoins beyond the fragmented regulations that have hampered innovation.
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