Toronto fintech firms push for regulatory clarity as U.S. and Europe surge ahead in stablecoin innovation.
Canada’s cryptocurrency industry is grappling with major regulatory hurdles as homegrown firms attempt to bring a Canadian dollar-backed stablecoin to market, amid mounting frustration over the country’s fragmented approach to crypto oversight.
Stablecorp Digital Currencies Inc., a Toronto-based startup supported by U.S. crypto giant Coinbase Global Inc., recently submitted a formal request to the Ontario Securities Commission (OSC) to approve its QCAD stablecoin — potentially the first public stablecoin fully backed by the Canadian dollar. The move follows years of development and comes one month after Coinbase Ventures officially backed the company.
However, despite similar products flourishing in the U.S. and Europe under supportive legislative frameworks, Canadian firms face a more complicated path. QCAD has stalled for nearly five years, mirroring the broader struggles of Canadian crypto platforms trying to navigate a regulatory environment dominated by provincial authorities rather than a centralised national agency.
“We really think it’s a priority in Canada to have a Canadian-denominated stablecoin so that Canadians can use Canadian-denominated digital assets in their everyday payments, peer-to-peer payments and remittance,” said Lucas Matheson, CEO of Coinbase Canada. “Our industry and Coinbase have been working with our federal government to help prioritize stablecoins at a federal level to ensure that they’re regulated as intended, as money.”
At the heart of the issue are guidelines from the Canadian Securities Administrators (CSA), a collective of provincial and territorial regulators, which classify most stablecoins as securities or derivatives. This classification significantly hampers their use in day-to-day digital transactions.
These rules, introduced as part of a broader regulatory crackdown that took effect at the end of 2023, have already triggered an exodus of major international crypto exchanges such as Gemini, Binance, Bybit, and OKX from the Canadian market.
While Circle’s USDC received special designation as a value-referenced crypto asset in December — the only stablecoin legally usable on Canadian exchanges — it is denominated in U.S. dollars. Though popular globally, USDC is of limited utility for Canadians seeking to transact in their local currency. It also stirs questions of national identity amid renewed rhetoric from U.S. President Donald Trump suggesting Canada should become America’s 51st state.
Jillian Friedman, COO of Canadian crypto firm Symbiotic, warned of the broader implications: “Canada risks getting completely left behind when it comes to global payments, and what that also means is that our Canadian dollar has just less mobility.”
Other firms are also in the race. Transactix Financial Inc., which currently operates its CADX stablecoin as a merchant-only system, is still seeking regulatory clearance to offer the token publicly. “It’s no secret that it’s a very difficult environment,” said CEO Ali Abou Daya. “There’s a lot of questions on this front and there’s no specific clarity on which approach a company like us needs to take in order to move forward.”
Despite these efforts, questions remain about market appetite for a Canadian dollar stablecoin in a crypto ecosystem dominated by U.S.-dollar denominated assets. “From a Canadian stablecoin perspective, I don’t think the demand is really there to justify it, which is probably why you haven’t seen one emerge just yet,” said Dean Skurka, CEO of WonderFi Technologies Inc.
Even so, legal experts argue the current framework is misaligned with the nature of stablecoins. “There’s a strong argument the non-yield bearing stablecoins shouldn’t be classified as securities since they’re not used as an investment vehicle,” said Noah Billick, partner at Renno & Co. “But without federal legislation, co-ordination between provincial regulators will remain difficult.”
As other jurisdictions push forward with clearer rules and wider adoption, the clock is ticking for Canada to establish its role in the fast-evolving global stablecoin economy.
