Reserve assets would also need to be held with qualified custodians incorporated in Canada, with safeguards intended to protect token holders if an issuer becomes insolvent. Issuers would be required to disclose information about their reserves and submit monthly reports to the Bank of Canada.
Stablecoin holders would have the right to redeem their tokens at face value in the underlying currency, with issuers required to initiate payment within three business days of receiving a redemption request. The proposal would also prohibit issuers from paying interest or yield simply for holding stablecoins, while restricting misleading claims that tokens are government-backed or insured.
The framework would generally apply to domestic and foreign nonbank issuers engaged in stablecoin issuance in Canada, while excluding prudentially regulated financial institutions such as banks and credit unions.
Canada’s Department of Finance said the regulatory push reflects growing adoption of stablecoins for cross-border payments and other financial services, alongside concerns about inadequate reserves, issuer insolvency, and operational risks.
The government also proposes extending oversight under the Retail Payment Activities Act to payment service providers that handle stablecoin transactions, including certain crypto exchanges, digital wallets, and payment processors.
Canada’s Approach Follows U.S. $GENIUS Act
Canada’s initiative follows a major regulatory shift in the United States, where President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, commonly known as the $GENIUS Act, into law on July 18, 2025.
The legislation establishes a federal regulatory framework for payment stablecoins, requiring permitted issuers to maintain one-to-one reserves using eligible liquid assets such as U.S. dollars and short-term Treasury securities. It also establishes disclosure, redemption, and supervisory requirements, allowing qualified issuers to operate under federal or state regulatory oversight.
The U.S. framework is approaching implementation. On Oct. 21, the Office of the Comptroller of the Currency announced final regulations governing stablecoin issuance and related activities by entities under its jurisdiction. Both the regulations and the $GENIUS Act are scheduled to take effect on Jan. 18, 2027.
Canada’s proposed framework shares several features with the American legislation, particularly its emphasis on fully backed reserves, redemption rights, and issuer transparency. However, Canada’s approach places supervisory authority primarily with the Bank of Canada for covered nonbank issuers, and includes specific national security review powers for the finance minister.
The Canadian government has acknowledged the $GENIUS Act, alongside Europe’s Markets in Crypto-Assets (MiCA) framework and regulatory regimes in Asia, as part of the international movement toward formal stablecoin oversight.
The consultation represents another step toward bringing Canada’s stablecoin industry under dedicated federal supervision, potentially providing greater regulatory certainty for companies seeking to issue or facilitate digital payments across the country.
