Canadian securities regulators have released interim terms and conditions governing cryptocurrency exchanges and stablecoin issuers while long-term regulations are developed.
The new obligations address uncertainty following a ban on trading crypto assets deemed securities, including prominent stablecoins.
Safeguarding Stablecoin Reserves
Under the temporary rules, stablecoin issuers must maintain full, verifiable reserves equivalent to tokens outstanding and held with a qualified custodian.
This requirement aims to prevent incidents like TerraUSD’s collapse, where coins lost their peg to the US dollar due to deficient backing.
Additionally, crypto exchanges and stablecoin operators must disclose details on governance, operations, risks and other factors to inform users.
Fostering Market Integrity During Regulatory Build-Out
According to Canadian Securities Administrators (CSA) Chair Stan Magidson, the interim regime protects investors and promotes integrity while more permanent oversight takes shape.
However, the CSA cautioned significant risks remain for crypto investors despite the new conditions.
Magidson stated the rules provide transparency around crypto assets that should have been expected from the start. They offer recourse after opaque operations caused consumer harm previously.
Assertive Stance on Crypto Oversight
Canada has adopted an assertive posture on regulating cryptocurrencies in 2022, especially following FTX’s dramatic collapse.
While shaping long-term policy, the CSA continues gathering input from crypto players to develop thoughtful oversight.
Exchanges and stablecoins will need to meet a high standard to serve Canadian users presently. But compliance may guide ethical projects toward mainstream adoption.
By adhering to heightened norms now, innovative models aiming to gain trust through transparency can lead the way.