Overview
On October 24, 2026, the Department of Finance published the proposed Stablecoin Regulations(the “Regulations”) under the Stablecoin Act (the “Act”). Together with the Act, the Regulations introduce a framework, to be overseen by the Bank of Canada (the “Bank”), that aims to mitigate risks associated with stablecoin issuance, including financial loss, inadequate risk management, issuer insolvency and threats to the security of sensitive personal information. The Regulations also include related amendments to the Retail Payment Activities Regulations (“RPAR”) that would bring payment service providers performing payment functions using prescribed stablecoins within the scope of the Retail Payment Activities Act. Selected key aspects of the proposal are discussed below.
The Regulations are subject to a 60-day consultation period ending on December 23, 2026, during which interested stakeholders can provide feedback using the comment feature on the Canada Gazette website.
For more information on the stablecoin framework, please refer to our publication titled Budget 2025: The Bank of Canada’s Mandate Expands to Stablecoin and Open Banking Supervision.
The Regulations
Issuer Obligations
- Registration. The Regulations would specify the information that must be included in an issuer’s application for registration, including prescribed information about each stablecoin that the applicant intends to issue.
- Stablecoin Redemption.
- The Act requires redemption of outstanding stablecoins at par value in the reference currency. The Regulations would further specify that the issuer must (i) redeem the outstanding stablecoin on request of any holder, regardless of the value, (ii) complete the redemption within three business days (subject to a limited exception if the issuer is unable to meet all the redemption requests due to a shortfall in liquidity in the markets in which the assets in the reserve of assets of the stablecoin are traded), and (iii) not charge a redemption fee that exceeds 1% of the redeemed amount.
- The issuer’s publicly available redemption policy must contain (i) a disclosure of the issuer’s duty to redeem, (ii) a description of the redemption process, including the measures that the issuer or any qualified custodian will take to fulfill the payment in the reference currency, (iii) the situations in which the issuer may limit the daily amount of redemptions, and (iv) the payment methods offered by the issuer for the redemption.
- Reserves. In accordance with the requirement set forth in the Act to maintain a reserve of assets that has a value that is equal to or greater than the par value of outstanding stablecoins, the Regulations clarify (i) that the market value of the reserve of assets, at the end of each day, must have a value that is equal to or greater than the par value of the outstanding stablecoins and (ii) the permitted composition of the reserve of assets. The Regulations also carve out an exception to the requirement that an issuer must not use the assets in the reserve of assets for a purpose other than to redeem outstanding stablecoins to enable an issuer to withdraw returns from the reserve, provided the reserve’s market value remains at least equal to the par value of outstanding stablecoin. Issuers would be required to hold reserve assets at a Canadian-incorporated qualified custodian.
- Maintaining Policies. Issuers must maintain a governance policy, a risk management policy, a data security policy, and a recovery and resolution policy. The Regulations specify the prescribed information that must be included in each policy, policy approval requirements, review cadences and associated records and reports, availability requirements, and training obligations.
- Public Disclosure. Each issuer must make the following information publicly available on its website in both English and French: the day on which the issuer’s name is added to the issuer registry, the name of each stablecoin issued by the issuer and its reference currency, any fee charged by the issuer for the issuing or redemption of a stablecoin that it issues, and the issuer’s procedures for dealing with complaints by holders of a stablecoin issued by the issuer.
Prohibitions
- False or Misleading Representations. Issuers cannot use wording or imagery suggesting that their stablecoin earns interest or yield, constitutes legal tender or a bank deposit, or benefits from government guarantees or public deposit insurance, or suggest the issuer is registered with the Bank if it is not.
- Pledging Reserves. The Regulations prohibit reserve assets from being pledged as collateral or used to create a security or security interest in support of another obligation, but provide an exception relating to repurchase agreements meeting specified conditions.
Provision of Information to the Bank
- Reporting. The Regulations clarify the information that must be included in the monthly report submitted to the Bank.
- Incident Notices. Issuers must provide to the Bank, without delay, incident notices containing the prescribed information.
- Notices of Significant Change. Issuers must provide notices of significant changes to the Bank in line with the timelines and prescribed information set forth in the Regulations. Such notices must be submitted either (i) as soon as feasible after the issuer becomes aware of the change, (ii) at least 7 days before the changes take effect, (iii) at least 30 days before the changes take effect, or (iv) at least 60 days before the changes take effect.
Administrative Monetary Penalties
- Violations. The Regulations designate certain contraventions of the Act as violations, which are classified as serious violations or very serious violations. The Regulations also note that if a notice of violation identifies two or more violations that are classified as serious violations, that series of violations is classified as a single very serious violation.
- Penalties. The penalties range from $1 to $1,000,000 in respect of a serious violation and from $1 to $10,000,000 in respect of a very serious violation. Non-compliance with prescribed orders made, undertakings required, compliance agreements entered into or directions will carry a penalty of $500 for each day that it continues, if it continues for no more than 30 days, and will carry a penalty of $15,000 to $1,000,000 if the violation continues for more than 30 days.
- Assessment. In assessing a penalty, the Bank will consider (i) the harm that is or could have been done by the violation, (ii) the history of the person that committed the violation with respect to any prior violation committed by them within the five-year period immediately before the violation, and (iii) the degree of intention or negligence on the part of the person that committed the violation.
Other Provisions
The Regulations also provide clarity and set forth requirements relating to:
- Definitions: The Regulations define and provide context for certain key terms including “issue”, “create” and “make available” in relation to stablecoins, and “outstanding stablecoin”, “purchased”, “closed-loop stablecoin” and “affiliation”, which are intended to provide clarity as to what types of activities bring entities within the scope of the Act and the Regulations.
- Registry: The Bank will maintain a registry of stablecoin issuers including the prescribed information.
- National Security Review: The Regulations define timelines and extension periods for national security reviews undertaken by the Minister of Finance.
Related Amendments to the RPAR
- Stablecoins in Scope: The definition of “stablecoin” is added to the RPAR, as well as references to the definitions of “issue”, “issuer” and “reference currency” as defined in the Act. Furthermore, the RPAR would clarify that, for the purposes of the definition of “retail payment activity", a unit meets prescribed criteria if it is a stablecoin. For purposes of the RPAR, “stablecoin” would be defined as a stablecoin, as defined in section 2 of the Act, other than a closed-loop stablecoin that meets specified criteria.
- Safeguarding of Funds: Payment service providers will have the option to safeguard end-user funds held in a stablecoin in the following manner: (i) the funds are held with an entity whose sole purpose is the holding of end-user funds, (ii) the entity is a registered holder of the funds on a distributed ledger, as defined in the Act, or on a similar technology, on which the stablecoin is recorded, (iii) the entity and the rights associated with the funds will not form part of the payment service provider’s assets in the event of its insolvency and (iv) the entity and payment service provider have entered into a contract ensuring that the funds do not belong to the payment service provider.
Looking Ahead
While stablecoins are currently subject to provincial oversight by securities regulators, which govern the availability of stablecoins on crypto-asset trading platforms, the Act and Regulations aim to provide a comprehensive regulatory framework governing the issuance of stablecoins at the federal level.
The stated intention is for the Regulations to come into force in fall 2027. Once the Regulations are in effect, issuers of stablecoins in Canada who are not financial institutions would be required to apply for registration with the Bank prior to issuing a stablecoin. Existing issuers would be subject to transitional measures that relieve them of the requirement to register with the Bank prior to issuing a stablecoin until they are registered by the Bank or refused registration, so long as they file an application within 30 days of the coming-into-force date of the Act.
Interested stakeholders should review the Regulations in detail and consider providing any feedback during the consultation period.
Fasken’s Financial Services Group is actively monitoring regulatory developments in this area.
