- Bank of Canada will approve only 1:1 CAD stablecoins with liquid reserves fully backed.
- Stablecoin issuers must disclose redemption terms and fees, and maintain resilience.
- Canada aligns with the U.S. and UK moves while shelving a central bank digital currency.
Canada’s central bank set firm conditions for future stablecoins during a speech in Montreal, outlining rules ahead of 2026 legislation. Bank of Canada Governor Tiff Macklem told the Montreal Chamber of Commerce that only tightly controlled fiat-backed stablecoins will qualify. The approach aims to protect consumers, preserve monetary control, and integrate stablecoins into Canada’s regulated financial system.
What Qualifies as “Good Money”
Macklem said the Bank of Canada will only support stablecoins that behave like cash or bank deposits. He stressed that stablecoins must qualify as “good money” to operate safely in Canada. According to Macklem, this standard resembles the reliability expected from physical banknotes and traditional deposits.
To meet that, stablecoins must maintain a one-to-one peg with a central bank currency. However, the requirement goes beyond price stability alone. Macklem said issuers must fully back tokens with high-quality liquid assets. These assets must convert easily into cash during stress periods.
Typically, such reserves include Treasury bills and government bonds. Therefore, riskier instruments would fall outside acceptable limits. This structure aims to ensure stablecoins remain redeemable at par when users need liquidity most.
However, Macklem also emphasized transparency around redemptions. Issuers must disclose redemption timing, conditions, and fees clearly. As a result, users can understand exit terms before relying on stablecoins for payments.
Federal Rules Align Stablecoins With Banking
These conditions align with proposals in Canada’s 2025 federal budget, published in early November. The budget outlined a forthcoming Stablecoins Act with the Bank of Canada named as the regulator. Notably, the framework requires full reserve backing, redemption policies, and operational resilience.
Issuers must also implement risk management systems and protect personal and financial data. These measures are lessons from past market failures in other jurisdictions. The goal is to prevent sudden runs and operational breakdowns affecting consumers.
Meanwhile, retail payments legislation will extend to stablecoin transactions. This change brings stablecoin payments under existing oversight rules. As a result, stablecoins would operate within the same consumer protection framework as other payment methods.
The Liberal government said the legislation will help build trust in fiat-backed digital tokens. According to the finance ministry, trust is essential for widespread adoption. Therefore, Canada’s approach focuses on safeguards rather than rapid experimentation.
Related: Canada Moves to Regulate Stablecoins Under 2025 Budget Plan
Global Pressure and Payments Influence on Canada
Canada’s stablecoin push follows regulatory momentum abroad, notably after the U.S. passed the GENIUS Act in July. That law created a comprehensive framework for dollar-backed stablecoins. Since then, the UK and Hong Kong have advanced their own stablecoin rules.
According to Macklem, Canada’s response reflects concerns about monetary sovereignty. As dollar stablecoins spread globally, countries worry about foreign currencies dominating local payments. Therefore, Canada favors CAD-pegged tokens under domestic oversight.
The approach also fits a broader payments overhaul underway in Canada. Macklem said 2026 should bring further innovation through Real-Time Rail. This system will allow instant settlements between consumers and businesses, including cross-border payments.
Canada also plans to implement open banking. This framework will make it easier for customers to compare services and switch banks. Together, these reforms aim to modernize payments without introducing a central bank digital currency. Canada shelved plans for a CBDC in September 2024. Macklem said then that no compelling case existed. Canada instead chose to regulate private digital money tightly.
Canada’s stablecoin framework establishes strict boundaries ahead of 2026 rules, focusing on full backing, transparency, and reliability. Macklem positioned stablecoins as payment tools that must match bank-grade standards. Together with payments modernization and open banking, the plan integrates digital money into Canada’s regulated financial system.
