Canada Approves Federal Budget Advancing Stablecoin Policy
Canada narrowly passed its federal budget, which advances a policy framework to govern stablecoins. Under the new policy, the Bank of Canada will supervise stablecoins and maintain the registry of approved issuers. Stablecoin issuers are required to maintain one-to-one reserves in the reference currency or other high-quality liquid assets, ensuring immediate redemptions for customers.
Issuers must also meet stringent requirements concerning risk management, cybersecurity, disclosures, and failure management. Additionally, non-bank stablecoin issuers will be prohibited from paying interest or yield on stablecoins to customers.
Prime Minister Mark Carney's Liberal government framed the budget as a major win, with approval occurring in Parliament. Coinbase Canada CEO Lucas Matheson expressed support for the policy but called for changes, including an interim Canadian dollar-denominated path to market and the allowance of yield sharing on stablecoin deposits.
The policy reflects aspects of U.S. regulation on USD-backed stablecoins and aligns with Canada’s broader strategy for positioning in the global market.
