Canadian regulators have approved the first stablecoin pegged to the Canadian dollar in the country’s first bold move to keep pace with the U.S.
Stablecorp Digital Currencies Inc., a company backed by Coinbase (NASDAQ: COIN) and Circle (NASDAQ: CRCL), has recently received regulatory approval to launch QCAD, the first compliant Canadian dollar stablecoin.
Source: Stablecorp on XStablecorp revealed in its announcement that it has been engaged in a regulatory approval process for years. It recently obtained a final receipt for its prospectus and can now legally distribute the QCAD tokens under Canada’s stablecoin regulatory framework.
“From day one, our mission was not to take the easy route, but the right one. This approval is not just a victory for Stablecorp; it’s a defining moment for Canada. We have proven that innovation and regulation can go hand-in-hand, providing the robust foundation for the future of the digital Canadian economy,” commented Jean Desgagne, the chairman of Stablecorp.
QCAD obtained the regulatory nod just a month after Canadian regulators unveiled plans to regulate the sector. Bank of Canada director Ron Morrow stated that Canada would upgrade from provincial to federal-level stablecoin oversight, “similar to what other countries have done.”
Morrow acknowledged that Canada’s digital transformation has been too slow and lags behind the U.K., Australia, and the European Union. On stablecoins, neighboring U.S. is setting the pace with the GENIUS Act, while the EU’s MiCA framework has also propelled it ahead.
Canada’s stablecoin awakening
QCAD will maintain its value by holding Canadian dollars in reserve at regulated financial institutions, Stablecorp says. It pledges to deliver instant local and cross-border transactions at a small cost charged by existing service providers.
Stablecorp is also targeting the digital asset sector, touting QCAD as “a secure and stable bridge between the traditional Canadian economy and the burgeoning global digital asset ecosystem.”
Canada’s digital asset ecosystem is one of the largest globally, with one report last year estimating that over four million Canadians own digital assets. A separate report revealed that institutional investors, including family offices and wealth funds, were increasingly allocating funds to digital assets.
Stablecorp is targeting this burgeoning sector with QCAD, which it claims will “allow for seamless integration with blockchain-based applications and Web3 innovation, ensuring Canada remains a competitive player on the world stage.”
One of the primary drawbacks of stablecoins is a lack of transparency, with leading issuers like Tether revealed to have misled investors and covered up massive shortfalls.
Stablecorp pledges to avoid these pitfalls by conducting regular audits and public attestations.
“This is the beginning of a profound shift. We have laid the rails for a new financial system—one that is more open, efficient, and accessible for every Canadian. QCAD is more than just a token; it’s the key to unlocking Canada’s digital potential,” commented CEO Kesem Frank.
ECB: Stablecoins pose little risk to the EU
Elsewhere, the European Central Bank (ECB) has downplayed the risk that stablecoins pose to the euro area, noting that adoption remains low and mostly confined to the ‘crypto’ sector.
In a recent report authored as part of the November Financial Stability Review, the regional regulator noted that most stablecoin use is limited to digital currency trading, where they account for over 80% of all settlements. Only around 0.5% of all stablecoin volume is from organic retail transfers.
As such, stablecoins have contributed to negligible retail deposit outflows in the euro area, according to the ECB. The U.S. dollar dominates the stablecoin market, which further limits its impact on the region’s reserve assets.
But even if euro area residents adopted stablecoins en masse, the region’s financial regulations would mitigate any potential risks, the watchdog added.
The ECB report differs from several others that have warned that stablecoins could disrupt the region’s financial stability. One is from the European Systemic Risk Board (ESRB), which warned that stablecoins jointly issued by EU companies and third-country entities could strain the European firms’ reserves. ESRB, an independent entity operating under the ECB, further warned that MiCA isn’t equipped to handle such situations.
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Source: https://coingeek.com/qcad-receives-green-light-as-canada-first-regulated-stablecoin/
