On December 6, Fintechs Canada has submitted a letter to Department of Finance officials in response to questions about potential approaches for regulating stablecoins in Canada.
In its submission, the organization highlights the growing use of fiat-backed stablecoins as a means of payment, citing their ability to maintain a stable value while enabling fast, cost-effective transactions. “In the case of certain fiat-backed stablecoins, the service provided to consumers and businesses is more akin to payment facilitation than banking or the provision of securities.”
Fintechs Canada argued that the principle of “same activity, same risks, same regulation” should apply to the regulation of stablecoins. It noted that these fiat-backed stablecoins share many features with existing financial services, and therefore should not be treated as new, distinct products, but instead should be regulated under existing financial services laws. “If the issuance of a stablecoin is akin to the provision of an existing financial service, it should be regulated as such,” the submission stated.
To support its proposed approach, Fintechs Canada recommended leveraging existing regulatory frameworks, including:
- Amend the Retail Payment Activities Act (RPAA) to include stablecoin-related activities and ensure proper supervision of non-systemically important stablecoin issuers.
- Amend the Payments Clearing and Settlement Act (PCSA) to grant the Bank of Canada authority to oversee prominent or systemically important stablecoin arrangements.
- Use existing banking and securities frameworks to regulate stablecoins that function like banks or investment products.
To view Fintechs Canada’s full submission, click here.
