Canadian Securities Regulators Release Latest Guidelines, Could Open the Door for Stablecoins?

Canadian regulators release guidelines, potentially allowing stablecoins.

Compiled by: Blockchain Knight

As part of the global stablecoin development trend, the Canadian Securities Administrators (CSA), the supervisory organization responsible for regulating securities regulators in various provinces and territories in Canada, has intervened and developed new guidelines to clarify the trading and issuance of stablecoins within its jurisdiction.

Among the many assets in the crypto field with different characteristics and utilities, stablecoins, which are pegged to traditional fiat currencies or other assets, are very popular.

In its latest announcement on October 5th, CSA provided its insights on “value-referenced crypto assets”, with a particular emphasis on stablecoins.

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This clarification is an important update to its statement issued in February. In the previous statement, CSA emphasized that stablecoins may fall under the category of securities and derivatives, therefore Canadian exchanges would be restricted from trading them.

However, the latest guidelines introduce a possible shift in position. If exchanges and stablecoin issuers comply with established conditions, they can trade these assets. An important prerequisite is that issuers need to maintain appropriate asset reserves with qualified custodians.

In addition, exchanges trading stablecoins must ensure transparency and disclose relevant details about their operations, management, and asset reserves.

CSA Chair and Chair of the Alberta Securities Commission Stan Magidson emphasized the importance of this framework, stating:

“We will further refine this interim framework to ensure that investors receive the information they need about the assets they are purchasing, including the associated risks.”

Although CSA’s new guidelines seem to give the green light to the trading and issuance of stablecoins, the implications in their announcement are worth noting. CSA highlights the inherent risks associated with crypto assets backed by fiat currencies.

According to CSA, meeting regulatory requirements does not prove that these assets are risk-free or officially recognized.

The report states, “CSA reminds Canadian investors that value-referenced crypto assets, including any fiat currency-supported crypto assets that meet the interim terms and conditions, are subject to various risks and are different from fiat currencies. Meeting these interim terms and conditions for assets should not be considered an endorsement or approval of the asset, nor does it indicate that the asset is risk-free.”

Meanwhile, according to DeFilLama data, the market capitalization of stablecoins is currently $12.388 billion, a significant decrease compared to a year ago. Coincodex data shows that stablecoins account for 11.28% of the total global crypto market value.

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