Toronto-based Stablecorp has secured $1.8-million USD ($2.5-million CAD) to “significantly enhance the feature set and structure” of QCAD, its stablecoin pegged to the Canadian dollar.
The strategic growth capital comes from the venture arm of the international crypto exchange Coinbase, Side Door Ventures, and “certain other existing investors,” the company said in a statement, adding that the investors have also received warrants to purchase additional equity at a higher valuation.
“Canada, like everyone else in this world, needs to embrace stablecoins and take full advantage [of the technology],” Coinbase Canada CEO Lucas Matheson said in a statement. “Canada is not currently set up for success, and that’s why we’re excited about this partnership with Stablecorp to move us in the right direction.”
“Canada, like everyone else in this world, needs to embrace stablecoins and take full advantage.”
Lucas Matheson
CEO,
Coinbase Canada
Stablecorp revealed the support from Coinbase Ventures on May 15, the same day the crypto exchange announced it was affected by a cyberattack that could cost the company up to $400 million USD ($554 million CAD) to recover from. Coinbase said some customer data, including names, addresses, and emails, was stolen from around one percent of its monthly transacting users in the breach. A later filing revealed at least 69,461 customers to be affected.
To cap off the already rough week for the exchange, the United States Securities Exchange Commission (SEC) is also reportedly looking into whether the company misstated its user numbers in securities filings and marketing materials.
Stablecorp said the capital will help build out the necessary rails required to support a CAD-denominated stablecoin, which includes fostering liquid, on-chain foreign exchange (FX) markets, and payment rail integrations. The company said the features are critical to the stablecoin’s real economic use cases, such as cross-border payments, remittances, and global trade finance.
Stablecorp said QCAD will undergo a coinciding “structural evolution” to support its growth, including establishing the QCAD Digital Currency Trust, an arms-length trust to hold reserve assets overseen by an independent trustee. The trust would have daily reporting on the market value of reserves, monthly independent attestations of reserves, and public annual audited statements.
Stablecoins are cryptocurrencies with prices that are designed to be less volatile because they are pegged to a “stable” asset, such as a country’s currency. However, they do run the risk of “depegging” and deviating from the value of their stabilizing asset.
“[The Canadian dollar] is the 5th highest held global reserve currency, our trade with the US is the most active cross-border corridor in the world, and our currency is the 7th highest used in FX,” Stablecorp president Alex McDougall said in a statement. “The time to digitize all this commerce was yesterday and we’re thrilled to be working with a global leader like Coinbase to make this happen.”
Stablecorp launched as a joint venture between crypto asset manager 3iQ and blockchain developer Mavennet Systems in early 2020. The venture closed $1.9 million CAD in funding from Circle Ventures, crypto brokerage Genesis, the Stellar Development Foundation, Side Door, and other undisclosed investors in 2022.
As the first international crypto exchange to secure a restricted dealer licence in the country, Matheson and Coinbase have actively advocated for crypto-friendly policy and regulation in Canada. Coinbase’s venture arm has also previously backed Calgary-based FinTech startup Tetra Trust, which was selected as Wealthsimple’s first Canadian digital asset custodian this week.
Feature image courtesy Stablecorp.