Canada’s central bank spelled out detailed criteria this week for how stablecoins must operate under planned regulations due in 2026. Governor Tiff Macklem said stablecoins should function like trusted money. He told the Montreal Chamber of Commerce that these digital assets must be pegged one-to-one to a central bank currency such as the Canadian dollar or another major fiat. Those pegged values must be backed by high-quality liquid assets like Treasury bills and government bonds. Macklem emphasized that stablecoins must always be redeemable at their face value. To ensure this, issuers will be required to fully disclose redemption terms, including timing and any fees charged. The Bank of Canada says these conditions will help Canada establish stablecoins that are safe for both individuals and businesses. Officials view the new framework as part of modernizing Canada’s financial system. Alongside stablecoin regulation, Canada plans to roll out a Real-Time Rail system that will enable instant settlements between consumers and businesses. Officials also continue work on an open banking regime to increase competition and flexibility in financial services. Regulatory collaboration and consumer protection The Bank of Canada said it will coordinate with the Department of Finance to support drafting the upcoming legislation. The proposed rules will integrate with the Retail Payment Activities Act, expanding oversight to include stablecoin payment services and require issuers to demonstrate sufficient operational resilience. Macklem framed the initiative as ensuring that stablecoins become what regulators call “good money.” He compared them to banknotes and deposits, assets that Canadians trust to hold value and facilitate transactions. That perspective reflects the central bank’s broader mandate to preserve monetary stability and safeguard the payment system. The federal government announced in November that it would introduce stablecoin legislation next year. Budget 2025 proposals say stablecoin issuers not already subject to prudential regulation must meet strict reserve and risk management standards as part of the new legal regime. Global context and innovation goals Canada’s push follows similar moves in other nations to regulate digital assets without stifling innovation. Stablecoins have grown in use as a bridge between traditional finance and blockchain-based services, but concerns over reserve transparency and redemption risk remain central for policymakers. By setting clear expectations now, Canada aims to balance the benefits of digital currencies with consumer and investor protection. Regulators say this approach will foster safe innovation while reducing the chance of financial instability linked to poorly backed digital assets.
