At the Blockchain Futurist Conference in Toronto, Tanim Rasul, Chief Operating Officer at the Canadian cryptocurrency exchange NDAX, critiqued the classification of stablecoins as securities by Canadian regulators. In December 2022, following the collapse of FTX, the Canadian Securities Administrators (CSA) categorized stablecoins as securities, a decision Rasul argues may have been misguided.
Rasul highlighted that Canadian regulators are currently reevaluating this stance, while other jurisdictions, notably Europe, are adopting a different approach. ‘I’m sure the regulators are wondering if this was the right choice to approach stablecoins as a security,’ Rasul stated, suggesting that Canada should consider the European Union’s Markets in Crypto-Assets (MiCA) regulation, which treats stablecoins primarily as a payment instrument rather than a security.
The CSA’s decision was influenced by ‘recent events in the crypto market,’ according to their official statements. This regulatory approach has prompted several major crypto platforms, including Binance, Bybit, OKX, and Paxos, to withdraw from the Canadian market. Additionally, Gemini has announced plans to exit by September 2024.
Despite these developments, the Canadian digital asset market remains robust. According to a report by Grand View Research, the Canadian cryptocurrency industry generated $224 million in 2024 and is projected to expand to $617.5 million by 2030.
Globally, stablecoins, which are cryptocurrencies designed to maintain a stable value by being pegged to traditional currencies, have seen significant growth. As of May 14, the market capitalization of stablecoins stood at $242.8 billion. While the majority are pegged to the U.S. dollar, there is an increasing demand for stablecoins linked to other currencies.
As Canada continues to navigate its regulatory framework for digital assets, the debate over the classification of stablecoins remains pertinent. The adaptability and innovation characteristic of the Canadian market could lead to a reassessment of current policies to better align with global trends and facilitate the growth of the digital economy within the country.
