Canada imposes full reserve requirement on stablecoin issuers

In a global stablecoin market that has declined to $300.36 billion, Canada has launched public consultation on a comprehensive draft regulation requiring issuers to hold reserves at a 1:1 ratio. Published in the Canada Gazette, the proposal clarifies implementation rules for the Stablecoin Act approved in March 2026, granting stakeholders a 60-day period to submit their feedback.

What do Canada's new stablecoin rules cover?

Under the regulation, domestic and foreign non-bank issuers operating in Canada are required to register with the Bank of Canada. Reserves backing all circulating tokens must consist of highly liquid assets such as demand deposits, government debt securities with a maturity of less than 3 months, specific money market funds, and short-term repurchase agreements. In addition, these reserves must be held at authorized custodians based in Canada, and mechanisms protecting token holders in the event of insolvency are mandatory.

How will reserve assets and redemption processes work?

While granting token holders the right to redeem at par value, the draft framework stipulates that issuers must initiate the payout process no later than 3 business days after receiving a request. Issuers are expected to submit regular monthly reserve reports to the Bank of Canada and disclose their assets transparently. The regulation prohibits paying interest or yield for holding stablecoins and also curbs misleading claims that tokens are government-backed.

Pointing to insufficient reserves and operational risks despite increasing use in cross-border payments, the Department of Finance Canada plans to bring crypto exchanges and digital wallets under the supervision of the Retail Payment Activities Act. This move represents an effort to align with global standards following the GENIUS Act signed by US President Donald Trump on July 18, 2025, which takes effect on January 18, 2027, and Europe's MiCA framework.

While global stablecoin volume has contracted since May 22 by $12.73 billion, total market size as of October 25, 2026 dropped to $300.36 billion. Despite cash outflows in the sector, regulatory moves across Canada and the US are tightening oversight for regulated digital assets within institutional payment infrastructure.

This content is for information purposes only and does not constitute investment advice.