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Canada's government has passed a federal budget in Parliament that sets out policies to govern stablecoins.

Prime Minister Mark Carney's first budget contains a section on governing the issuance of stablecoins that would be overseen by the Bank of Canada.

The Canadian policies are similar to the recent U.S. law regulating issuers of U.S. dollar-backed stablecoins.

Stablecoins are cryptocurrencies whose value is tied to another asset, typically the U.S. dollar or price of gold. The two largest stablecoins are Tether (CRYPTO: $USDT ) and USDC (CRYPTO: $USDC ).

The rules in Canada state that stablecoin issuers must maintain one-to-one dollar reserves, allow immediate redemptions, and meet a number of requirements on risk management.

Canada's central bank will supervise and maintain the stablecoin registry of approved applicants.

Prime Minister Carney recently appeared beside Coinbase Canada (NASDAQ: $COIN ) CEO Lucas Matheson at the Canadian Football League's Grey Cup championship game.

Coinbase has called Canada's stablecoin legislation a "step in the right direction."

The global stablecoin market is dominated by tokens tied to the value of the U.S. dollar, although other nations and the European Union (EU) have sought to use their own currencies.