Bank of Canada Eyes Stablecoin Regulation

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 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.