Loon clears key regulatory hurdle to offer Canadian dollar-backed stablecoin

Calgary-based FinTech startup Loon has secured the green light from domestic securities regulators to issue its Canadian dollar-backed CADC stablecoin in Canada.

Loon announced on Tuesday that its newly established CADC Reserve Trust has received receipt for its final prospectus from the Ontario Securities Commission (OSC), giving it exemptive relief to offer the blockchain-based token. Paytrie, the Calgary company that originally created CADC—and from which Loon spun out of last year—has also been granted exemptive relief to distribute CADC.

Though Loon still has more work to do to ensure compliance, including migrating legacy CADC over to this new contract, this marks the completion of one of the key and final regulatory steps required for Loon to issue CADC, and for Paytrie to deliver it, Paytrie co-founder and Loon co-founder and CEO Kevin Zhang told BetaKit in an interview. He claimed that the two firms have carved out a new framework around stablecoin distribution in the process.

“If you’re a new stablecoin company in Canada and you wanted to issue a Canadian dollar stablecoin, you should be doing it exactly the same way we just did it.”
Kevin Zhang, Loon

“If you’re a new stablecoin company in Canada and you wanted to issue a Canadian dollar stablecoin, you should be doing it exactly the same way we just did it, because this will allow Canadians full access the same way that you expect a stablecoin to work, like USDC,” he said.

The value of stablecoins is pegged to another reserve asset beyond crypto. In the case of fiat-backed stablecoins, that asset is typically a currency like the US dollar. Stablecoins are usually, though not always, less volatile than other digital currencies. For each CADC token purchased, $1 CAD will be deposited into a reserve trust account with ATB Financial.

Loon is one of several Canadian firms that have been working to deliver a regulated, CAD-backed stablecoin to alleviate friction for domestic users and reduce the value exported by using US dollar-backed alternatives. Toronto-based Stablecorp secured similar approval to Loon last year for its QCAD offering, while Calgary’s Tetra Trust is pursuing a slightly different path for its own CADD stablecoin.

This appears to make Paytrie the second non-cryptocurrency trading platform to secure the relief necessary to offer stablecoins in Canada, after US-based ZeroHash, as an “authorized participant.”

These milestones come days after the Government of Canada released its proposed stablecoin regulations, which Zhang described as “a positive step forward” with no big surprises, noting that it follows many of the same principles as the United States GENIUS Act.

Led by Zhang and other former Paytrie staff, Loon launched last year with $3 million CAD to focus exclusively on CADC, which the startup acquired from Paytrie in 2025. Paytrie built CADC as an experiment as it set up its core stablecoin on- and off-ramp business, and since its launch in 2021, the stablecoin has facilitated over $1 billion CAD in transactions.

Zhang and his team began working with regulators while they were still at Paytrie, beginning with the Alberta Securities Commission before they were redirected to the OSC. He claimed that Tuesday’s announcement required “18 to 24 months of intense back-and-forth,” and “significant” legal investment on both companies’ behalf.

The biggest issue Loon faced, Zhang said, was how long it has taken Canada’s Stablecoin Act to become law, adding that delay “created a huge gap in the market.” Were it in effect earlier, Loon’s path would have looked a lot different: the company would have simply sought approval directly from the Bank of Canada, the CEO said.

With stablecoins increasingly used for payments, accessing them through a crypto exchange for this application “can be quite limiting,” Zhang argued. He claimed Paytrie’s capacity to deliver CADC will enable a wider array of cross-border and decentralized finance use-cases.

Zhang said the feds’ draft stablecoin regulation rules contained “nothing too out of the box, which could be a good thing or bad thing.” It also appears to signal that the federal government intends to soften its ban on stablecoin yield.

One thing it does not do, however, is create a regulatory advantage for CAD-backed stablecoins compared to their US-dollar counterparts; rather, it establishes a level playing field, he said. Zhang was hoping that policymakers would push the legislation “a little bit further” to help CAD-backed stablecoins compete domestically and abroad.

BetaKit’s Prairies reporting is funded in part by YEGAF, a not-for-profit dedicated to amplifying business stories in Alberta.

Feature image courtesy Loon.