**Canada Accelerates Stablecoin Regulation Ahead of Federal Budget**
Canada is rapidly developing a comprehensive regulatory framework for stablecoins, aiming to include it in the upcoming federal budget. This initiative follows weeks of discussions among government officials, industry stakeholders, and regulatory bodies, with the framework expected to be presented on November 4.
A key focus for Canadian regulators is the proper classification of stablecoins — particularly determining whether they should be regulated as securities or derivatives. This clarity is essential to avoid regulatory confusion that has, until now, left stablecoins in a gray area, sometimes treated inconsistently under existing laws.
**Preventing Capital Flight and Protecting Monetary Policy**
The Canadian government’s push for clear stablecoin regulations arises amid increasing concerns over capital flight to U.S. dollar-backed stablecoins. Officials warn that any delay in establishing a clear framework could result in significant Canadian capital moving offshore, which may undermine demand for Canadian bonds and weaken the Bank of Canada’s control over monetary policy.
John Ruffolo, co-chair of the Council of Canadian Innovators, emphasized, “Delays could erode demand for Canadian bonds and weaken the Bank of Canada’s control over monetary policy.” The government’s objective is to ensure stablecoins, especially those pegged to fiat currencies, are appropriately classified and regulated to prevent market disruptions.
**Canada Joins Global Race to Regulate Stablecoins**
Canada’s swift regulatory move aligns with a broader global effort to govern the expanding stablecoin market. The United States, for example, has introduced the GENIUS Act to regulate compliant stablecoins, though some lawmakers, including Senator Elizabeth Warren, criticize it as a “light-touch regulatory framework for crypto banks.” Similarly, the Federal Reserve has pointed out existing gaps in U.S. regulation.
In Europe, the Markets in Crypto-Assets Regulation (MiCA) has already been enacted, though some consider its rules overly stringent. Meanwhile, Asian markets, including Japan and Hong Kong, are rapidly advancing their stablecoin policies. Canada’s active regulatory stance signals its ambition to maintain competitiveness in this burgeoning sector.
**The Growing Importance of Stablecoin Regulation**
The global stablecoin market continues to expand rapidly, with the total supply nearing $300 billion. U.S. dollar-pegged stablecoins, such as those issued by Tether and Circle, currently dominate the space. Experts forecast explosive growth in the coming years, estimating that up to $1 trillion could move from emerging market bank deposits into U.S. stablecoins by 2028.
For Canada, establishing a clear and robust regulatory framework is critical to securing a foothold in the global stablecoin ecosystem. As this sector evolves, Canada’s approach to regulation will play a decisive role in shaping its future participation and influence.
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*Stay tuned for further updates on Canada’s stablecoin regulations as the federal budget announcement approaches.*
https://coincentral.com/canada-races-to-regulate-stablecoins-amid-global-regulatory-push/