Canada’s draft stablecoin rules likely to release around upcoming national budget

Canada is planning to follow the U.S. towards regulating stablecoins as early as by next week. An update on the draft rules should arrive near the national budget announcement scheduled for next week. The regulatory overhaul around stablecoins has picked pace internationally after the U.S. recently passed its GENIUS Act that clarifies the dos and don’ts around these fiat-backed crypto assets for users as well as issuers.

Canadian regulators have been conducting meetings and discussions to finalize these draft stablecoin regulations for weeks, Bloomberg reported on Monday, October 27 citing people familiar with the matter.

François-Philippe Champagne, the finance minister of Canada is expected to provide an update on the stablecoin legislation on November 4.

Last month, the Bank of Canada (BoC) had said that the country must seriously consider the merits of stablecoin regulation. Ron Morrow, BoC’s executive director of payments and supervision, at the time had said that federal and provincial authorities should work together and quickly to advance payment regulatory frameworks with instruments including stablecoins.

As of Monday, the total valuation of the stablecoin market stands at $312 billion, data by CoinGecko showed. Tether and USDC are the top two stablecoins by market cap.

In the U.S., the stablecoin sector has risen to significant popularity among banks and corporates after the GENIUS Act was signed into law back in July this year. Financial companies from Bank of America to Fiserv, for instance, are preparing to launch their own dollar-backed crypto tokens

These tokens are designed to maintain their value in 1:1 ratio with the underlying fiat asset, making them more resistant to market volatility. Transactions in stablecoins are touted to be more time and cost efficient, with data being permanently logged on the associated blockchains in a secure standard.