Stablecoin Regulations

Summary#

The federal government is proposing the Stablecoin Regulations under the recently passed Stablecoin Act to set detailed rules for issuing and supervising fiat-backed stablecoins in Canada. The rules also amend the Retail Payment Activities Act framework so certain payment providers that use stablecoins fall under Bank of Canada supervision.

What it does#

• Sets who counts as a stablecoin issuer and when a coin is inside or outside the new federal regime (for example, “closed‑loop” coins that only work inside a merchant network are excluded).
• Requires issuers to keep reserves backing outstanding stablecoins on a one-to-one basis in high-quality liquid assets. Allowed reserve assets include cash, demand deposits, money market funds and government debt maturing in three months or less.
• Requires public redemption at par (one-to-one) and limits redemption fees to 1%; issuers must redeem within three business days of a request and publish a clear redemption policy.
• Requires written policies on governance, risk management, data security, and recovery; these policies must be summarized in plain language and reviewed regularly.
• Forces issuers to report monthly to the Bank of Canada (including an accountant’s statement on reserves) and to notify the Bank quickly about incidents and many significant changes.
• Gives the Minister of Finance powers to flag national security risks. The Minister has 60 days to decide whether to review an application, may extend that decision by 60 days, and a full review must be completed within 180 days (with possible extensions).
• Creates an enforcement system with administrative monetary penalties. Penalty ranges include up to $1,000,000 for a serious breach and up to $10,000,000 for a very serious breach.
• Adds stablecoins issued under this regime (and certain similar financial‑institution stablecoins) as a prescribed “unit” under the Retail Payment Activities Regulations, bringing some crypto exchanges, wallets and payment processors into the RPAA supervision and safeguarding rules.
• Sets a fee formula so the Bank of Canada can recover supervision costs. For example, issuers with at least $1 billion outstanding are placed in a tier with a base fee of $750,000; those with at least $500 million have a base fee of $350,000; smaller issuers pay a base fee of $25,000.

Who's affected#

• Stablecoin issuers that make coins available to people who normally live in Canada. The government estimates about 5 such issuers under the initial scenario.
• Payment service providers (PSPs) that use prescribed stablecoins — for example, custodial wallets, crypto payment processors, and some crypto-asset trading platforms. The analysis estimates about 30 additional PSPs will be brought into Bank of Canada supervision.
• Customers and businesses that hold or accept stablecoins in Canada. Subgroups more likely to hold stablecoins include younger people, higher‑income households, men, and some Indigenous and Black respondents (based on a cited 2025 survey).
• Smaller issuers and PSPs: the analysis expects 2–4 small issuing businesses and about 25 small PSPs could be affected.
• The Bank of Canada and Department of Finance, which will administer supervision, national security checks, and fee collection.

Why it matters#

• Greater protection for people who hold stablecoins: rules aim to make reserves transparent, redeemable, and insulated from issuer insolvency. That should lower the chance of losing money if an issuer fails or mismanages reserves.
• Stronger operational and cyber risk controls: required policies, incident reporting, and periodic independent reviews are meant to reduce outages and data breaches that affect payments.
• National security checks: the Minister of Finance can require reviews and stop registration for security reasons, which affects where some stablecoins may operate from.
• Costs and market effects: the government estimates the proposed Regulations and related RPAA changes would impose about $240,648 per year in total administrative and compliance costs across affected issuers and PSPs in its central scenario. The average estimated cost per issuer is about $17,704 per year; per newly scoped PSP the estimate is about $5,071 per year. These figures depend heavily on how many firms enter the Canadian market.
• Penalties for non‑compliance can be large (up to $10,000,000), so firms will need to meet the new rules or face significant fines.
• Timing: the Regulations are intended to come into force with the SCA, targeted for fall 2027, but that timing is subject to the government’s final order.

If anything in the source was unclear or uncertain (for example, how many firms will actually register), the government notes those uncertainties and models possible costs on reasonable assumptions.