Ottawa proposes stablecoin rules under Bank of Canada

The federal government published proposed stablecoin regulations in the Canada Gazette on Friday, opening a 60-day consultation on rules for issuers under the Stablecoin Act, BetaKit reported.

The act received royal assent in March. It covers stablecoins with interprovincial or international reach and puts federal oversight under the Bank of Canada.

The draft regulations set requirements for the reserve assets that back a coin, including where those assets can be held. They bar issuers from marketing stablecoins as legal tender, bank deposits or publicly insured products, and they ban paying interest to holders.

Under the act, the finance minister can assess applicants for national security risks, and the Bank of Canada has enforcement powers. The proposal notes that digital assets are “rapidly evolving,” and the bank’s governor can make further regulations.

Koleya Karringten, executive director of the Canadian Bitcoin Consortium, said the guidance “should give the industry more certainty and stronger protections for payment use cases.” Karringten said issuers will still have to deal with both the Bank of Canada and the Canadian Securities Commission, which adds compliance work, and called for joint guidance from both regulators on trading, listing and exemption status for provincially regulated issuers.

The global stablecoin supply is worth more than $380 billion, according to the figures cited by BetaKit, and Visa reports more than $14 trillion in stablecoin transaction volume over the past year. Most stablecoins are pegged to the U.S. dollar. Canada’s first Canadian-dollar stablecoin launched earlier this year.

Comments are due about 60 days after publication, which falls in late December. Readers should confirm the exact deadline in the Canada Gazette notice.

This is not investment advice. Our earlier coverage included a look at how OSFI sought public comment on digital asset exposure.

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