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Canada's Stablecoin Regulations Ignite Discussion: Balancing Oversight and the Drive for Innovation

Canada's Stablecoin Regulations Ignite Discussion: Balancing Oversight and the Drive for Innovation

Bitget-RWA2025/11/18 18:52
By:Bitget-RWA

- Canada's federal budget passes stablecoin rules requiring 1:1 reserves and strict compliance under the Bank of Canada's oversight. - The policy prohibits non-bank issuers from offering interest on stablecoin deposits, sparking mixed reactions from industry leaders. - Critics warn strict requirements may delay market entry, while proponents argue it aligns with global regulatory trends to balance innovation and stability. - The Bank of Canada's dual role as regulator and reserve overseer raises conflict-o

Canada's federal government has obtained parliamentary consent for its national budget, which introduces a groundbreaking regulatory framework for stablecoins—an important milestone in the nation's digital currency oversight. Under the new rules, supervised by the Bank of Canada, stablecoin providers must back their tokens one-to-one with the underlying currency or top-tier liquid assets, enable instant redemption, and comply with robust protocols for risk management, cybersecurity, and contingency planning. The Bank of Canada will act as the chief regulator, responsible for authorizing and registering stablecoin issuers within this system

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Although the budget narrowly passed, it sets the stage for Canada to participate in the international stablecoin sector, which is currently led by tokens pegged to the U.S. dollar. The policy, however, specifically forbids non-bank entities from providing interest or returns on stablecoin holdings—a limitation that has sparked varied opinions. Lucas Matheson, CEO of Coinbase Canada, described the policy as "progress in the right direction," but called on the government to accelerate the launch of CAD-based stablecoins and to allow customers to share in yields. He believes these changes would strengthen Canada's economic standing worldwide and make the Canadian dollar more competitive in digital finance

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This regulatory approach is consistent with recent developments in the U.S. and EU, where policymakers are working to balance technological advancement with financial security. Nonetheless, some critics argue that the strict requirements could hinder new entrants and slow down adoption.

Canada's Stablecoin Regulations Ignite Discussion: Balancing Oversight and the Drive for Innovation image 0
The dual responsibility of the Bank of Canada as both regulator and reserve manager has prompted concerns about possible conflicts of interest, though authorities have highlighted the bank’s strong history in managing systemic risks .

On a global scale, the movement toward government-backed stablecoins is part of a larger effort to lessen dependence on the U.S. dollar for international payments. Canada's measured strategy is in line with similar initiatives in the EU and Asia to broaden digital currency options. The effectiveness of the policy will depend on its rollout, with industry participants seeking clear guidance on compliance deadlines and operational standards

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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