Key Takeaways
- The central bank of Canada has signaled that any future stablecoins must be backed by high-quality assets and behave similarly to banknotes and regular currency.
- Bank of Canada Governor Tiff Macklem said that the tokens must be pegged at a 1:1 ratio with a currency issued by a central bank, hold treasury bills or government bonds in reserves, and enable seamless conversion into cash on demand.
- Canada’s 2025 budget signaled a national stablecoin framework, similar to the GENIUS Act in the U.S., that will be implemented over the next two years. The government has allocated $10 million to modernize the country’s financial system.
- The upcoming legislation would require stablecoin issuers to hold sufficient reserves, establish comprehensive redemption policies, and implement robust security measures to protect users’ personal and financial data.
The Bank of Canada (BoC) has asserted that it will only approve future Canadian dollar-backed stablecoins if they are backed by high-quality liquid assets and pegged one-to-one to a central bank-issued currency.
The recommendation comes after Prime Minister Mark Carney’s government announced last month in its budget report that it would be introducing stablecoin regulations in 2026.
Bank of Canada Calls for 1:1 Legal Tender Backing for Stablecoins
Speaking to the Montreal Chamber of Commerce on Tuesday, BoC governor Tiff Macklem said that any stablecoins issued under the upcoming framework should look and behave like “good money,” similar to bank notes or money deposited at banks, rather than speculative tokens with promises attached to them.
He stressed two conditions that stablecoins must meet: be pegged at a 1:1 ratio to a central bank currency, and backed by high-quality liquid assets, such as treasury bills and government bonds, so that they can be easily converted into cash at par. The central bank governor also emphasized that issuers must fully disclose redemption conditions, including the timing and any fees involved, so that consumers and businesses are fully aware of the tokens before relying on them for payments.
Macklem’s comments come following the release of the 2025 Budget Report, in which the government stated that stablecoin issuers would be required to hold sufficient reserves, establish redemption policies, and implement various risk management frameworks, including measures to protect users’ personal and financial information.
Canada is one of several nations currently working to modernize its financial system and bring it up to speed with the United States, which is tapping into the massive potential of cryptocurrencies and blockchain technology, having already passed a comprehensive stablecoin regulation in the GENIUS Act. Ottawa has acknowledged stablecoins as a critical piece of a broader push to make digital transactions faster, cheaper, and more secure for more than 40 million people in the country.
The BoC governor noted that the country will witness more innovation in the financial sector as it modernizes its payments infrastructure. This includes the implementation of Real-Time Rail, a framework that enables instant settlements among consumers and businesses in Canada, as well as across borders. The central bank is also working on implementing an open banking system that will make it easier for consumers to compare different banking options and switch according to their needs.
“The goal is to ensure Canadians can leverage the innovation of stablecoins, and do so safely,” Macklem said.Canada Expected to Pass Stablecoin Regulation in 2026
As more fiat-pegged stablecoins circulate, central banks, governments, and regulators across the world are concerned about monetary sovereignty and the implications that may have if residents default to foreign digital currencies for everyday transactions.
Macklem offered a pragmatic solution to the issue. He said that it is not up to the BoC to encourage or discourage stablecoin use, but it will ensure that tokens used by Canadian consumers and businesses are stable.
Speaking to CBC News last month, Coinbase Canada CEO Lucas Matheson said that the proposed stablecoin legislation would change how Canadians interact with money and the internet forever.
The stablecoin legislation, announced in the 2025 national budget, is part of the government’s plan to deliver a more secure and innovative payments system for residents. The document states that the cost of administering the framework will be $10 million over two years beginning in 2026-2027. There will also be an administration cost of $5 million, which will be paid by stablecoin issuers that are regulated under the rules.
As part of the process, the government has already amended the Retail Payment Activities Act to regulate electronic payment service providers that use stablecoins to facilitate settlements.
