Canada Consults Public on Stablecoin Regulation, Proposes Strict Backing Rules

Canada launches public consultation on stablecoin regulation, proposing 1:1 reserve backing and redemption within three days. The move aligns with US GENIUS Act.

The Canadian government has initiated a public consultation on a proposed framework for stablecoins, as part of its efforts to potentially implement a Stablecoin Act. This consultation aims to gather input on the regulation of tokens issued by non-financial institutions. According to Cointelegraph, this move is in line with the United States' GENIUS Act, which also addresses stablecoin regulation.

The draft rules outlined by the Canadian authorities stipulate that non-bank stablecoin issuers must maintain a 1:1 backing of their tokens with reserves held at qualified Canadian institutions. Additionally, these issuers are required to settle redemptions within three business days. CoinDesk reports that the draft rules continue to enforce a ban on offering yields on stablecoin holdings, which aligns with the government's cautious approach to regulating digital currencies.

The consultation reflects Canada's proactive stance in addressing the regulatory challenges posed by stablecoins, ensuring that these digital assets are backed by adequate reserves and that consumer protection is prioritized. By seeking public input, the government aims to develop a comprehensive regulatory framework that balances innovation with financial stability. This initiative is part of a broader trend among countries to establish clear guidelines for the rapidly evolving digital currency market.

Sources

• Cointelegraph — Canada opens consultation on stablecoins, citing US GENIUS Act
• CoinDesk — Canada opens consultation on draft stablecoin rules, maintains ban on yields

This article was generated by AI based on public information and is for reference only. It does not constitute investment advice.