Canadian Regulator Introduces Temporary Stablecoin Rules
Canada's CSA hints at new rules for stablecoins, a type of crypto tied to real-world money, aiming to protect investors while adapting to the evolving crypto market.
The Canadian Securities Administrators (CSA) has shed light on its new, temporary approach towards handling stablecoins, a kind of cryptocurrency that is often pegged to traditional money, like dollars.
In a fresh October 5 message, this guiding body for Canada's local financial regulators hinted it might permit the trading of certain stablecoins. These are unique digital coins that directly link their worth to real-world money, yet under specific rules and conditions. This comes even after their previous opinion in February, stating that such digital coins can be seen as securities, a type of investment that most Canadian exchanges are not allowed to trade.
The CSA could permit stablecoin trading if issuers, those who create the coins, securely store a proper reserve of assets and if crypto platforms offering stablecoins openly share important information regarding their management, operations, and asset reserves.
Stan Magidson, a leader at both the CSA and Alberta Securities Commission, emphasized, “This temporary frame, destined for future expansion, establishes standards to safeguard that investors are well-informed about what they’re buying, including the risks.” Still, the CSA warned that even compliant, traditional money-backed crypto assets carry risks and are not officially risk-free or endorsed.
With a current market cap of $123 billion,stablecoins, although declining over the last year and a half, still make up about 11% of the total cryptocurrency market capitalization. Notably, in mid-2021, the CSA also provided insights on staking (a crypto earning method), affirming it is permitted under certain conditions.
