\t\tRead: 3 min<\/p>\n
In a move that could reshape how Canadians transact, Ottawa is preparing to bring a form of cryptocurrency into Canada\u2019s payments system.\u00a0<\/p>\n
The 2025 budget committed Ottawa to creating a national framework for fiat-backed stablecoins, digital assets that are designed to maintain a stable value.\u00a0<\/p>\n
The move could make it easier and cheaper for Canadians to transact.\u00a0<\/p>\n
\u201cThe problem [stablecoins] potentially solve is one of transaction costs,\u201d said University of Ottawa economist Mike Moffatt. \u201cTraditional payment systems can be slow [and] high cost \u2014\u00a0 particularly for international transactions.\u201d<\/p>\n
Credit cards, debit cards, wire transfers and e-transfers all move money through institutions, such as banks and payment processors, which each take a fee or impose delays. Stablecoin transactions, by contrast, are settled on a shared ledger by moving a digital token from one wallet to another, reducing the number of intermediaries involved in a payment.<\/p>\n
Moffatt and others say stablecoins are a reality of the modern economy, so Canada\u2019s challenge now is catching up with other jurisdictions.<\/p>\n
\u201c\u200aStablecoins are happening anyway,\u201d said Moffatt. \u201cSo it\u2019s not that we\u2019re moving first here, but rather we\u2019re catching up to the rest of the world.\u201d<\/p>\n
Setting rules<\/p>\n
Many types of cryptocurrencies are highly volatile assets. For example, Bitcoin<\/a>, the world\u2019s most popular cryptocurrency, has recently lost about 30 per cent of its value, falling from US$126,000 in early October to around $90,000 today.<\/p>\n As their name implies, stablecoins are more stable assets because they are pegged to a traditional currency \u2014 such as the U.S. dollar \u2014 and backed by reserve assets held by an issuing company.\u00a0<\/p>\n Major global issuers of stablecoin include Circle and Tether. Canada currently has only one CAD-denominated stablecoin, QCAD<\/a>, but it is not widely circulated.<\/p>\n Canada is \u201cthe only G7 country without a well-defined regulatory system, either in active or draft form, for stablecoins,\u201d Moffatt wrote in a Sept. 23 paper<\/a> published by Moffatt\u2019s Missing Middle Initiative research centre. So far, stablecoins have been regulated only indirectly, under provincial securities and anti-money laundering laws.<\/p>\n The federal government is now trying to change that. It has already released draft legislation that, if passed, would make the Bank of Canada responsible for regulating and supervising stablecoin issuers.\u00a0<\/p>\n \u201cThe framework will cover both domestic and foreign issuers that offer fiat-backed stablecoins to Canadians, and it won\u2019t differentiate between Canadian-dollar and foreign-currency stablecoins,\u201d a Department of Finance Canada spokesperson told Canadian Affairs in an emailed statement.<\/p>\n The department says Canada\u2019s approach is meant to align Canada\u2019s rules with those already in place in the U.S. and EU, allowing payment systems to operate smoothly together.<\/p>\n