Canada is on the cusp of a major shift in how it treats digital cash. With Budget 2025 and the tabling of Bill C-15 on November 4, 2025 (“Bill C-15”), the federal government has put legislative text on the table for the new Stablecoin Act. The Act would create the first national framework aimed squarely at Canadian dollar-backed stablecoins. This is a meaningful step toward modernizing Canada’s digital-asset landscape and clarifying the rules for digital assets that behave less like speculative cryptocurrencies and more like payment instruments.

What are stablecoins and why is Ottawa stepping in?

Stablecoins are blockchain-based digital assets designed to hold a steady 1:1 value against a reference fiat currency, such as the Canadian dollar. Their stability typically depends on a reserve of cash or cash-like assets maintained by the issuer. That reserve is what creates the bridge between traditional finance and digital markets, enabling credible payment instruments through blockchain technology.

Until now, stablecoins in Canada have largely been governed through provincial securities regulation and related guidance. In Staff Notice 21-332 and Staff Notice 21-333 the Canadian Securities Administrators (“CSA”) outline their interim “value-referenced crypto asset” (“VRCA”) framework, which requires stablecoins to have full reserve backing and issuers to provide audited attestations. This guidance offered a degree of consumer protection, but also left issuers and market participants in a regulatory grey zone. The new federal approach recognizes that fiat-backed stablecoins function more like money than investments and need a tailored regime.

A federal regime led by the Bank of Canada

Under the Stablecoin Act, primary oversight shifts to the Bank of Canada, which will supervise stablecoin issuers, set expectations for governance and risk controls, and monitor market trends. The Act applies to stablecoins with interprovincial or international reach, reflecting the inherently borderless nature of blockchain payments.

Importantly, not everyone is in scope:

  • Issuers that qualify as “financial institutions” are excluded, including banks, authorized foreign banks, federally regulated trust and loan companies, and federally regulated insurers).
  • Certain provincially incorporated financial entities are excluded.
  • Central banks are also excluded, which should have implications for any federal central bank digital currency (“CBDC”) initiatives.
  • “Closed-loop” stablecoins are also excluded, though the Act leaves that concept undefined for now, signalling future regulatory guidance. It remains to be seen whether these will be similar to other closed-loop payment instruments that can only be used within a single closed ecosystem such as a merchant, platform or network.

Registration and ongoing obligations: A high bar

Issuers covered by the Act must register on a public Bank of Canada registry before any stablecoin can be issued. Applications require deep disclosure: ownership and affiliate structures, detailed descriptions of the technology stack (ledger, smart contracts, infrastructure), and a suite of policies spanning redemption, governance, conflicts, operational and cyber resilience, anti-money laundering and anti-terrorist financing (“AML/ATF”), data security, and recovery/resolution.

Applicants also need independent legal and accounting statements confirming the reserve assets are unencumbered, fully backed, and made up solely of Canadian dollars or other high-quality liquid assets denominated in Canadian dollars. Once registered, issuers must redeem at par, maintain segregated reserves with qualified custodians, provide periodic assurance reports, and notify the Bank of material changes or significant incidents.

What the Act prohibits and how it links to other laws

The Act bans issuers from paying interest or yield on stablecoins and strictly prevents reserve assets from being pledged, encumbered, or used for anything other than redemptions. It also confirms that stablecoin issuance is considered “dealing in virtual currency” under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, meaning issuers are required to be FINTRAC-registered MSBs with full AML/ATF compliance programs. Under the Act, issuers are prohibited from issuing a stablecoin if the stablecoin is legal tender, a deposit or proof of a deposit in Canada or a foreign jurisdiction.

Bill C-15 also amends the Retail Payment Activities Act to capture certain stablecoin-related payment functions, suggesting stablecoins will be viewed as a regulated payment method, though key terms like “payment instrument” remain undefined at the time of writing.

Under the Stablecoin Act, if a provincial or foreign law applies to an issuer and such law is substantially similar to the Stablecoin Act, it could be deemed that the Stablecoin Act does not apply (in whole or in part) to the issuer. The Act provides that the issuance of a stablecoin does not constitute dealing in securities under the Bank Act, Insurance Companies Act or Trust and Loan Companies Act. However, the Act makes no mention of, and does not supersede, provincial securities laws.

The Bank’s enforcement powers

Ottawa’s proposed stablecoin legislation gives the Bank of Canada broad powers, including the ability to:

  • request any information from any person that it considers necessary for verifying compliance with the Act;
  • require compliance undertakings and impose operating terms and conditions.
  • take any measures that it deems necessary if it has reasonable grounds to believe there will be a failure to comply;
  • issue administrative monetary penalties; and
  • make public names, violations and penalty amounts, as well as reasons, facts, and analysis.

For example, where the Bank determines that an issuer is engaging in an unsafe or unsound practice, the Bank may direct the issuer to cease the practice and take any corrective measures the Bank considers necessary. If the Bank is satisfied that the issuer has contravened the Act or the regulations, or is engaging in unsafe or unsound practices, the Bank may also recommend that the Minister of Finance issue an order prohibiting the issuer from issuing a stablecoin. At present, there are no indications of what would be considered an unsafe or unsound practice.

What’s still to come

This is a framework law with plenty of runway. After Bill C-15 has passed, the government is expected to release draft regulations under the Stablecoin Act for public consultation, which will address key outstanding elements. The federal Cabinet will be empowered to issue regulatory guidance on reserve composition, definitions, additional custodians, penalty tiers, required compliance policies and even marketing and advertising restrictions. The in-force date is also to be determined. At present, we anticipate it will come no earlier than mid-February 2027.

It remains to be determined how the Stablecoin Act will interface with the CSA’s interim VRCA framework. For example, CSA members have already approved one Canadian dollar-backed VRCA stablecoin for issuance and circulation under a registered prospectus, and have approved one foreign, U.S. dollar denominated stablecoin for issuance and circulation in Canada under a novel form of undertaking.

Further, it is expected additional details will be provided with respect to what information issuers and applicants will be required to submit to the Bank, what will be made public, and when.

Bottom line

Canada is moving to a purpose-built federal stablecoin regime with a strong prudential and consumer-protection lens. For businesses that hope to issue stablecoins that are not otherwise excluded, the Stablecoin Act is set to reshape compliance expectations, and raise new questions about how digital cash fits into Canada’s broader financial ecosystem.

For issuers and adopters, the time to prepare is now. Learn more in our article: Ready or not, federal stablecoin regulation is coming to Canada: Seven things issuers and adopters can do now to prepare.