Regulatory Framework for Stablecoins
In a recent address at the Chartered Professional Accountants conference in Ottawa, Ron Morrow, who oversees payments and regulatory practices at the Bank of Canada, emphasized the urgent need for a regulatory framework regarding stablecoins. He argued that Canada risks losing its competitive edge as other nations advance in establishing such guidelines.
“Even if you’re on the right track, you’ll get run over if you sit there,”
Morrow cautioned during his speech, which has been made available through a transcript on the bank’s official website.
Collaboration for Clear Policy
Morrow urged both federal and provincial authorities to collaborate on creating a clear policy for stablecoins, asserting that for these digital currencies to be accepted like traditional money, they must offer the same level of safety and stability as conventional bank deposits. He pointed out that regulatory measures are essential to protect consumers from the potential risks associated with credit and liquidity, highlighting a trend where various jurisdictions are actively working towards a regulatory framework for cryptocurrencies.
Current Landscape and Public Opinion
This call for regulation comes at a moment some experts describe as a revival for stablecoins, coinciding with the recent enactment of the GENIUS Act in the United States, which promotes widespread adoption of these assets.
The Bank of Canada had previously explored the creation of a central bank digital currency (CBDC) in collaboration with the Massachusetts Institute of Technology (MIT), which is renowned for its technological research. However, this initiative was shelved in September 2024 so the bank could prioritize the development of a real-time payment system that facilitates instant fund transfers for users.
Public opinion on CBDCs remains mixed; a survey indicated that while 42% of Canadians had a favorable view of these digital currencies, a notable 20% expressed strong disapproval. The topic of CBDCs continues to generate controversy within the cryptocurrency community, with many advocates arguing that such technology contradicts the principles of decentralized and open financial systems. Detractors also warn that CBDCs could lead to increased government surveillance.
