12/03/2025
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Canada’s Stablecoin Act: A First Step Toward Regulating Digital Assets
Canada’s 2025 Budget Implementation Act introduces the country’s first draft of a Stablecoin Act. The proposed framework establishes a national regime for fiat-backed stablecoins and sets out requirements for issuers, including adequate reserve backing, redemption rights, and regular independent audits.
Oversight will be administered by the Bank of Canada, supported by upcoming amendments to the Retail Payment Activities Act to ensure alignment with provincial securities regimes. Key elements include enhanced risk-management obligations (AML/KYC controls and cybersecurity), a prohibition on offering yield (stablecoins are treated as payment instruments rather than investment products), and dual characterization under federal (payment instruments) and provincial (securities) laws.
Regulatory consultations and rule-making are expected in 2025, with full implementation targeted for the 2026–2027 fiscal cycle. The draft Act reflects Canada’s intent to support innovation while ensuring financial stability and strong consumer protection.
Why This Matters for Businesses:
• Regulatory modernization: For the first time, Canada will establish a national licensing and supervisory framework for stablecoin issuers.
• Stronger AML/ATF requirements: Unified KYC, reserve, and disclosure standards will reduce compliance risks and enhance customer protection.
• Preparation for licensing: Financial institutions and crypto firms should begin assessing their AML/KYC programs, digital-asset custody arrangements, and readiness for Bank of Canada oversight.
📌 Full analysis available on the McMillan website.
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