Canada’s federal government in Ottawa has committed to developing legislation that will regulate stablecoins backed by the Canadian dollar.
Crypto enthusiasts are cheering news that Canada’s government, in its latest budget, said that it will set clear standards for one-to-one stablecoin reserves backed by the Canadian dollar.
Administration of the legislation and management of the stablecoin will reportedly fall to the Bank of Canada, the country’s central bank.
The budget document states that: “This legislation will require issuers to maintain and manage adequate asset reserves, establish redemption policies, implement risk management frameworks, and protect the sensitive and personal information of Canadians.”
Canada is following in the footsteps of the U.S. government, which passed into law the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) Act this past summer.
Stablecoins are cryptocurrencies whose value is pegged to an underlying asset, typically the U.S. dollar or price of gold.
Stablecoins are a fast-growing area of the crypto sector as they help to facilitate financial transactions using digital assets and blockchain technology.
The Canadian budget calls for "national security safeguards" to ensure the safety of the Canadian financial system as the stablecoin is developed and issued.
The Bank of Canada has not commented publicly on its role in the stablecoin’s development or issuance.
