The Canadian Securities Administration (CSA) issued new rules for companies providing services related to cryptocurrency. Now it is forbidden in the country to buy and sell through crypto platforms any stablecoins that are not approved by the department.
Getting permission from the CSA means fulfilling a whole bunch of requirements, including making sure that the stablecoin is backed exclusively by fiat currencies. The regulator emphasized that algorithmic stablecoins, the value of which is supported not by the reserves of state currencies, but by the algorithm, will be outlawed.
The CSA chose to use the term VRCA instead of the word “stablecoins” in the documents, which is an abbreviation for “cryptocurrency assets tied to value”, since some stablecoins can only be called stablecoins with a stretch. Especially after a series of high-profile crashes in 2022.
The regulator requires trading platforms to allow the purchase or sale of such tokens only if their reserves consist of “highly liquid assets” (cash and cash equivalents), and only if these reserves are held by a qualified custodian. They must also be checked monthly by independent auditors.
While the CSA recognizes use cases for stablecoins, such as payments and hedging against volatility in the crypto market, it also considers them to be more risky than fiat currencies. Moreover, high-risk assets include even those stablecoins that the regulator allows to trade.
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