Canada is working on new stablecoin laws, and the government is expected to present the proposed framework within the next week, sources familiar with the matter have revealed.
In Australia, local digital asset companies have welcomed a proposed regulatory framework but have demanded that the government provide clarity on certain critical provisions.
Canada follows the US in regulating stablecoin
Canadian government officials have been consulting with policymakers, regulatory agencies, and digital currency industry leaders for weeks over new stablecoin laws, sources within the government told Bloomberg.
The officials are expected to unveil some of their proposals on the budget documents to be presented by Minister François-Philippe Champagne on Tuesday, November 4.
Canada’s stablecoin rush comes at a time when the U.S. has set the pace for global regulators with the passing of the GENIUS Act, a comprehensive framework that has sparked a surge in stablecoin adoption, especially in mainstream circles. Since its passage, some of the world’s largest tech and financial companies—from JPMorgan (NASDAQ: JPM) and Citi (NASDAQ: C) to Amazon (NASDAQ: AMZN) and Walmart (NASDAQ: WMT)—have announced plans for proprietary stablecoins.
This rapid growth has cemented the dominance of the U.S. dollar as the default peg for global stablecoins. Today, USD tokens account for 99% of the $316 billion stablecoin market cap. These tokens are backed by U.S. Treasury bills, creating a rising demand for U.S. debt.
According to data from the U.S. Treasury, stablecoin issuers hold more Treasury bills than South Korea, Saudi Arabia, and Germany.
For Canada, the dominance of the greenback increases the risk of capital flight to the U.S., says John Ruffolo, the vice chairman of the Council of Canadian Innovators.
According to Ruffolo, Canadians will continue to purchase USD stablecoins due to the lack of clear local regulations. He estimates that even if only 5% of Canada’s $135 billion bank deposits flow south, the knock-on effect could wipe out local banks’ lending capacity by nearly $700 billion.
The solution is regulatory clarity, says Ruffolo, who’s also the founder of Toronto-based Maverix Private Equity.
“Canada’s problem is that we are regulating yesterday’s world. Right now, we treat fiat-backed stablecoins as securities, like trying to regulate a Tesla as if it were a horse-drawn carriage,” he wrote.
Canada must treat stablecoins like payment instruments, aligning with the approaches adopted by the U.S., several European countries, Hong Kong, Singapore, and other financial hubs, he added.
Proposed rules are too vague, Australia’s ‘crypto’ sector says
In Australia, the digital asset sector has expressed concerns over proposed digital asset laws, which industry leaders claim are too vague.
The Aussie government proposed the new digital currency laws at the end of September. For the most part, the new framework would extend financial sector regulations to digital assets. Additionally, it would also create two new types of platforms: digital asset platforms and tokenized custody platforms. Both would need an Australian Financial Services License.
The Treasury has been collecting feedback from the digital asset industry since then, and according to local reports, there has been widespread concern about the framework’s vagueness.
“The draft legislation, as it stands, leaves some critical questions unanswered. We support the government’s intent to bring structure to the digital asset sector. But structure must come with clarity,” commented Caroline Bowler, the CEO of local exchange BTC Markets.
One of the main concerns is the discretionary authority the framework grants the Treasury. As local exchange Swyftx pointed out in its submission, Treasury can “impose fundamental changes” to the framework based on its interpretation. It also fails to clearly define the powers of the ASIC and the Treasury.
“Regulation should be proportionate and fit for purpose. Without that, we risk building a regime that is burdensome for businesses but does not necessarily enhance consumer protection,” BTC Market’s Bowler told one outlet.
Violations of the new laws will attract penalties of up to $10.8 million or 10% of the annual turnover—whichever is greater. However, VASPs that process less than $6.6 million annually will be exempt from the new rules.
Watch | Cut Costs & Streamline Payments: The Case for Stablecoins
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Source: https://coingeek.com/canada-stablecoin-rules-aussie-vasps-flag-gaps-in-proposed-law/