Proposed Stablecoin Act gives Bank of Canada sweeping oversight powers over stablecoin issuers and reserve requirements
Canada has introduced Division 45 of Bill C-15, proposing the country's first comprehensive Stablecoin Act under Bank of Canada supervision. The legislation would establish a federal regulatory regime requiring persons who create stablecoins and make them available for purchase in Canada to register with the central bank and maintain strict asset reserves.
The proposed Act would define stablecoins as digital assets pegged to a single fiat currency and mandate that issuers be listed on a public registry maintained by the Bank of Canada. The framework would create institutional-grade oversight comparable to traditional financial instruments.
Under the proposed framework, stablecoin issuers would be prohibited from operating without Bank of Canada registration. The application process would require detailed disclosure covering governance structures, technical specifications, anti-money laundering compliance protocols, and comprehensive financial disclosures. Once approved, issuers would appear on the central bank's public registry.
The reserve requirements that issuers must maintain to fulfill redemption obligations would mirror traditional banking safeguards, addressing stability concerns. Issuers would be required to hold qualified assets in reserve matching their outstanding stablecoin liabilities.
The legislation would amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, creating compliance obligations for financial institutions facilitating stablecoin transactions. Wealth advisors and portfolio managers would need to understand anti-money laundering requirements under the proposed regulatory regime as stablecoin transactions become part of mainstream financial services.
The proposed framework would establish policies governing how issuers manage asset reserves to fulfill redemption obligations. Financial institutions would operate under the compliance requirements set by the Bank of Canada's regulatory oversight.
Unlike outright prohibition approaches in other jurisdictions, the proposed framework would permit any person to apply for stablecoin issuer status. The registration model would balance innovation with investor protection while establishing clear regulatory boundaries.
The Bank of Canada would hold full supervisory authority, including powers to issue compliance directions, suspend registrations, revoke issuer status, and enforce redemption policies. Issuers would establish comprehensive governance, risk management, data security, and recovery policies, all subject to central bank review.
The proposed Act would establish mandatory redemption policies requiring issuers to convert stablecoins back to fiat currency on demand, providing liquidity guarantees backed by reserve requirements.
Bill C-15 also makes related amendments to the Retail Payment Activities Act, integrating stablecoin oversight into Canada's broader payment system regulatory structure. The legislation would take effect upon royal assent.
