Canada to plan a Cryptocurrency review on Federal Budget

Canada’s 2022 Spending Program announces the government’s intention to launch a financial sector legislative review focused on cryptocurrencies and stablecoins.

Government of Canada plan to launch "a financial sector legislative review focused on the digitalization of money and maintaining financial sector stability and security".

The proposal has been tabled by Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland in her second federal budget released on Thursday. The provision allocates only C$31.2 billion in net new spending over the next five years, with a focus on cooling down Canada's housing market, boosting defence spending and transitioning to a greener economy, but also directed at digital currencies, including cryptocurrencies and stablecoins.

“The digitalization of money, assets, and financial services—which is transforming financial systems and challenging democratic institutions around the world—creates a number of challenges that need to be addressed” is written in the provision. In particular, Budget 2022 proposes C$17.7 million over five years, starting in 2022-23, to the Department of Finance to lead a financial sector legislative review focused on the digitalization of money and maintaining financial sector stability and security. The review will examine “how to adapt the financial sector regulatory framework and toolbox to manage new digitalization risks; how to maintain the security and stability of the financial system in light of these evolving business models and technological capabilities; and the potential need for a central bank digital currency in Canada.”

Federal program spending falls to C$452 billion in the new fiscal year with a deficit of C$52 billion, which are the lowest figures since before the pandemic, but still significantly above pre-pandemic levels.