Canada's Stablecoin Act: Overview And Implications

The proposed Stablecoin Act introduces a regulatory framework for stablecoins in Canada which aims to strengthen consumer protection, financial stability and market integrity in the rapidly evolving digital asset ecosystem. The proposed legislation attempts to align Canada with other jurisdictions that are regulating—or moving toward regulating—stablecoins as payment instruments.

The proposed framework

The draft legislation proposes the following elements in the Canadian stablecoin framework:

• Registration requirement. Issuers must register with the Bank of Canada and be subject to its oversight.
• 1:1 reserve requirements and composition. Issuers must maintain a reserve of assets with a value that is equal to or greater than the par value of outstanding stablecoins composed exclusively of the reference currency and other high-quality liquid assets.