Canada just took its biggest step yet toward a new financial system. In this year’s federal budget, the government committed to regulation of stablecoins. And in November, it introduced a new framework that outlines exactly how stablecoins will function within our economy. It’s fair to say that some Canadians have been skeptical of crypto, but this will be a turning point.
Now, Ottawa is taking them seriously. Obviously, this is a big moment for the crypto industry in Canada, but it’s an even bigger one for Canadians — Canadians can now move money at the speed of the internet. The framework deserves real credit. It signals that Canada understands the potential of digital assets and intends to be a global leader.
They’ve taken some of the best pieces from different regulations around the world — including the U.S.’s GENIUS Act — to create a comprehensive, Canadian-made stablecoin policy. First, it lays out a clear structure for how stablecoins will operate in Canada. There’s a path for issuers to apply for registration with the Bank of Canada, which will serve as the primary regulator. It defines how stablecoins can be used as payment instruments, and it sets strict reserve and custody standards that require issuers to hold assets such as cash and high quality liquid assets.
The biggest step has already been taken. But the next set of decisions are nearly as important. What’s been proposed is a strong start, though there’s still room for improvement. One question in particular will determine whether this framework delivers meaningful benefits to Canadians: Who should earn the interest generated by the reserves that back stablecoins?
Behind every stablecoin is a pool of dollar-backed assets that earn a return. In the traditional financial system, the value created by Canadians’ deposits is captured almost entirely by our big banks. Most people receive only a fraction of the yield their money generates. If regulators permit stablecoin issuers to share the yield from these reserves with Canadians, then the value created by Canadians’ own money will flow directly to them.
A simple rule change within the framework would rebalance the power that Canadians hold within the financial system. It would allow millions of Canadians to instantly earn upwards of three per cent interest on the cash they hold, rather than going into the pocket of a traditional bank. It’s also a matter of sovereignty. Taking this step differentiates our rules from the U.S., that currently doesn’t allow issuers to pay interest to stablecoin holders.
This would boost demand for our dollar, making it more competitive and increase its relevance in a digital global economy. Next, Canada should ensure that tokenized products are regulated on equal terms, whether coming from banks or nonbank issuers. Giving one group advantages would tilt the market toward the legacy incumbents and limit innovation.
A consistent approach would let qualified issuers compete fairly and support the government’s goal of stronger competition in financial services. The final issue is timing. Building and implementing a complete framework will take time.
But, without clear interim guidance from securities regulators, Canadian-denominated stablecoins will be sidelined while global markets move ahead. We need to ensure that stablecoins are treated as payment instruments and clearly regulated by one federal prudential regulator. As the demand for stablecoins grows, Canadians will be pushed toward foreign options, and the economic benefits will flow abroad. This is the most significant moment for digital assets we’ve ever had in Canada.
We’ve caught up with our G-7 peers with this framework, but we can’t take our foot off the gas. Over the next few months industry and government will need to work together to get the job done.
Canada is moving forward with a comprehensive stablecoin framework that outlines how these digital assets will operate within its economy. The plan includes a clear path for issuers to register with the Bank of Canada, which would serve as the primary regulator, and defines stablecoins as payment instruments with strict reserve and custody standards. These measures mark a significant milestone for the crypto industry in Canada and for Canadians who can now move money with greater speed and certainty.
While the framework represents a strong start, several core decisions remain, including who should earn the interest generated by the reserves backing stablecoins. If regulators permit issuers to share yields with holders, Canadians could capture a portion of the returns and rebalance the benefits of the money they hold. Such a shift would distinguish Canada from the United States, where issuing entities generally cannot pay interest to stablecoin holders, boosting demand for Canada’s digital dollar in a global economy.
Looking ahead, policymakers should ensure tokenized products are regulated on equal terms across banks and nonbank issuers to avoid tilting the market toward incumbents and stifling innovation. Achieving broad, fair regulation will require time and continued collaboration among industry and government, particularly to provide interim guidance so Canadian-denominated stablecoins remain competitive as global markets evolve.
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