Canada’s central bank is calling for the country to establish a stablecoin regulatory framework to modernize the payment system and avoid falling behind other countries that are moving forward with such policies.
“Even if you’re on the right track, you’ll get run over if you sit there,” Ron Morrow, the executive director of payments, supervision and oversight at the Bank of Canada, said in a speech Thursday at the Chartered Professional Accountants conference in Ottawa, Canada, a transcript of which was published on the central bank’s website.
Morrow called on federal and provincial regulators to create a policy framework for stablecoins. “At the end of the day, for stablecoins to be seen as money, they need to be as safe and stable as the balance in your bank account,” Morrow said, adding:
“Governments are moving to regulate stablecoins and other cryptocurrencies so consumers can reap their benefits and be protected from credit and liquidity risks. In fact, many jurisdictions worldwide either have, or will soon have, a regulatory framework for crypto assets.”
The stablecoin market is currently dominated by US-dollar pegged tokens. Source: RWA.XYZ
The comments came amid what many in the crypto industry are calling “stablecoin summer,” a reference to the renaissance stablecoins are experiencing following the passage of the GENIUS Act in the United States, which paved the way for mass adoption of stables.
Related: ASIC eases licensing rules for stablecoin distributors in Australia
Bank of Canada backtracks on central bank digital currency plans
In 2022, Canada’s central bank collaborated with the Massachusetts Institute of Technology (MIT), a globally recognized research university focused on science and tech, to develop a central bank digital currency (CBDC).
However, in September 2024, the bank abandoned its CBDC plans to focus on other priorities, including the development of a real-time payment system that would allow users to receive funds instantly.
The bank surveyed Canadians about their perceptions of a CBDC and found that 42% of respondents viewed CBDCs positively, while 20% of respondents indicated that they “disliked” or even “hated” the idea.
CBDCs continue to be a contentious topic for the crypto community, with many participants saying the technology is antithetical to the values of open, permissionless finance. Critics of CBDCs also say the tokens could usher in a surveillance state.
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