The Bank of Canada will only approve high-quality stablecoins

The Bank of Canada has provided explicit guidance on the future of stablecoins. High-quality, well-supported digital tokens are the only type that will be approved under the new rules expected to come into force in 2026. 

The central bank hopes that stablecoins will be operated like real money, rather than investment products that could pose risks to financial stability.

Bank of Canada Governor Tiff Macklem said that all stablecoins must be safe, reliable, and trusted by users. People must be confident they can always redeem them at full value, even during periods of market stress.

On Tuesday, speaking at the Montreal Chamber of Commerce, he said that digital money should meet the same standards as cash and bank deposits, and that technology is only welcome if it enhances financial stability and public trust.

Bank of Canada sets strict requirements for stablecoins

The Bank of Canada envisions a one-to-one peg model for stablecoins. Macklem said that if a bank is allowed to issue a stablecoin, that currency must be linked to a currency issued by a central bank, such as the digital coin must always equal $1 Canadian. This peg would need to be backed by solid liquid assets that are readily convertible into cash. By that standard, then, Treasury bills and government bonds would presumably meet the criteria, while riskier bets are likely outside those bounds.

The measures are supported by Canada’s 2025 federal budget, which was published in early November. Among other measures, the proposal outlines requirements that stablecoin issuers must meet, including holding 100% reserves and maintaining transparent conditions for redemptions. Issuers will also be required to maintain strong, effective risk management frameworks that are capable of mitigating the risk of a sudden failure or run event involving stablecoins.

It also has data privacy at its core. The draft rules focus on protecting personal and financial information, as well as ensuring strong cybersecurity and operational resilience. Canadian regulators are attempting to prevent the site meltdowns and investor losses that other jurisdictions have experienced, with a focus on consumer protection at the core of their approach.

Stablecoin rules align with broader financial reforms

The stablecoin push is part of a broader effort to modernize Canada’s financial system, with the government and the central bank aiming to make digital payments faster, cheaper, and more secure for a population of over 40 million.

Bank of Canada Governor Tiff Macklem said they are levelling the playing field by ensuring Canadians can reliably benefit from innovation in stablecoins, stressing the reforms are designed to support both innovation and trust.

Some industry players said the changes could reshape the digital finance landscape in the country. Proposed rules could fundamentally change how Canadians use money and the internet in the long run, said Lucas Matheson, Chief Executive of Coinbase Canada.

The country’s policy also comes amid increasing international momentum. Matheson remarks intensified ongoing regulatory work, which has gained momentum in the wake of the United States’ approval of the GENIUS Act in July. Additionally, recent months have seen UK and Hong Kong regulators advancing stablecoin frameworks.

The setting is a rapidly expanding market. The total value of global stablecoins is currently around $313.6 billion, according to the US Treasury’s estimates, which suggest it could balloon to $2 trillion by 2028. Canada is beginning to respond – and not just through regulation.

There’s also a Real-Time Rail payments system under construction, which will enable businesses and consumers to make instantaneous settlements, and an open banking framework that aims to simplify the process of switching banks and encourage greater competition.

At the same time, Canada has chosen not to issue its own digital currency for the time being. A CBDC was shelved in September 2024, when Macklem said there was no strong reason to proceed. Instead, Canada is focusing on creating clear rules for private digital money systems, based on the idea that any stablecoin operating in the country should act like cash to some degree.

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