Canada's Stablecoin Act 2026: What the New Proposed Regulations Mean for Issuers and PSPs

On 24 October 2026, the Department of Finance published proposed Stablecoin Regulations in the Canada Gazette, Part I. They would implement the Stablecoin Act, which received Royal Assent on 26 March 2026. The Act is not yet in force. Under section 97, it comes into force on a day or days fixed by order of the Governor in Council, and no such order has been made.

The package does two things:

• Issuers. It sets out the detailed rules a registered issuer would have to follow: registration content, reserves, redemption, policies, reporting, fees and penalties.
• Payment service providers. It proposes amendments to the Retail Payment Activities Regulations that would bring certain stablecoin payment activities within the Bank of Canada's existing oversight of payment service providers (PSPs).

Neither the Act's issuer duties nor the proposed regulations bind anyone today. The government says it intends the framework to take effect in fall 2027, and the proposals are open for comment. Businesses that may be affected can use the draft text now to plan, without treating it as law.

For background on why the framework exists and how it is structured, see our overview of Canada's stablecoin framework. This article covers what the October proposals add.

Stablecoin Act vs proposed Stablecoin Regulations: what is the difference?

The Act sets the obligations. The regulations would supply the detail that makes them workable.

Section numbers for the regulations refer to the proposed text published on 24 October and may change.

Who would fall under Canada's stablecoin framework?

Issuers. Under the Act, to "issue" a stablecoin means to create it and make it available for purchase, directly or indirectly, by a person in Canada. The proposed regulations (s. 2) explain both elements:

• Creating means having direct or indirect control over the stablecoin's properties.
• Making available means having control over its distribution.

An entity that only lists or resells a stablecoin, without controlling its properties or distribution, is not automatically the issuer. A trading platform, a wallet provider and a distributor all need their roles analysed separately.

Exclusions.

• Financial institutions. Under s. 12 of the Act, it does not apply to issuers that are financial institutions. The impact analysis confirms that banks, trust, loan and insurance companies, credit unions and foreign financial institutions are outside this regime because they are already prudentially regulated.
• Central banks. Central banks are excluded under s. 13.
• Closed-loop stablecoins. These are excluded under s. 11, but only if they meet both conditions in proposed s. 5:
  • The holder can use the stablecoin only to buy goods or services from a specific merchant or group of merchants, or transfer it to someone else for that purpose.
  • It can be redeemed for fiat only from that merchant, a member of the group, or a person affiliated with the issuer.
  A merchant-branded token that can be spent or redeemed outside that network would not qualify. The impact analysis describes redemption by "the merchant and its affiliates", while the draft text refers to persons affiliated with the issuer. Any closed-loop design should be checked against the final wording.
• Non-fiat-backed assets. These are outside this framework. According to the Department of Finance, they remain with provincial and territorial securities regulators.

Outstanding stablecoins. Proposed s. 3 treats a stablecoin as purchased in Canada when the buyer's usual place of residence, head office or principal place of business is in Canada. That test determines which stablecoins count as outstanding for reserve and redemption purposes. It is separate from the question of whether an entity issues in Canada in the first place.

Foreign issuers

Being incorporated outside Canada is not an exemption. The Act reaches stablecoins made available to persons in Canada "directly or indirectly", and the Department of Finance confirms that foreign issuers are covered on that basis.

That does not mean every issuer in the UAE, Cyprus, Germany, India, Turkey or Ukraine has to register. Coverage depends on the facts.

Hypothetical example. A non-financial company incorporated in Cyprus issues a euro-backed stablecoin. A Canadian crypto trading platform lists it for its clients. Before anyone can say whether the issuer is in scope, several facts need to be established:

• Does the issuer control distribution into Canada, for example through an agreement with the platform?
• Is the stablecoin made available for purchase by persons in Canada?
• Is the issuer a financial institution within the Act's meaning?
• Could an exemption order based on a substantially similar regime apply?

The answers decide whether the Cypriot issuer would need Bank of Canada registration once the Act is in force.

Bank of Canada registration and national security screening

Proposed s. 8 lists the information an application would need, submitted through the Bank's electronic system. It includes:

• identity and incorporation details
• an organization chart, with 10% ownership thresholds
• board, senior officer and largest-creditor information
• details of each stablecoin, including its reference currency and par value
• evidence of the reserve
• custodians and third-party agents
• state-owned enterprise disclosures
• the categories of personal information collected, and the countries where it is stored
• any stablecoins planned for the next two years
• for issuers already operating, a wind-down plan

Under proposed s. 10, applicants would have to notify the Bank of changes within 15 days.

Applications would also go to the Minister of Finance for national security screening:

• Decision whether to review: 60 days, extendable in further 60-day periods (s. 11).
• The review itself: 180 days, extendable in further 180-day periods (s. 12).

These are maximum review windows, not a guaranteed processing time. Bank of Canada issuer registration is also separate from FINTRAC registration and from RPAA registration as a PSP.

Proposed reserve requirements: what would 1:1 backing mean?

Under proposed s. 17(1), at the end of each day the market value of the reserve would have to equal or exceed the par value of outstanding stablecoins. The 1:1 standard is about eligible reserve assets held with a custodian. Holding other crypto assets of equal value would not meet it.

The rules do not allow broader collateral, such as corporate bonds, other crypto assets or longer-dated securities.

Why the proposed qualified custodian rules matter

The Act requires reserves to be held with qualified custodians (s. 39). It defines a qualified custodian as a financial institution, or another person provided for in the regulations, that meets the regulatory requirements. Proposed s. 4 would add that a financial institution acting as custodian must be incorporated or formed under an Act of Parliament or of a provincial legislature.

Under the draft, an offshore bank, a foreign trust company or a crypto-native custodian does not automatically qualify. For foreign issuers this is one of the most significant practical points. Reserves now held abroad may need to move to, or be duplicated at, a Canadian institution, and that affects banking relationships, operations and cost.

Redemption rights, deadlines and fees

Proposed s. 15 would require issuers to:

• redeem on request, whatever the amount, at par in the reference currency
• complete the redemption within three business days, where "business day" excludes Saturdays and holidays
• charge a redemption fee of no more than 1% of the amount redeemed
• post a website notice at least seven days before introducing or increasing a fee

The impact analysis explains that the three-day period sets the deadline for the issuer to liquidate any reserve assets needed and to initiate the fiat transfer. It does not guarantee that the money arrives in the holder's bank account within three days.

Redemption is not absolute. Under s. 15(2), daily redemption limits would be allowed where a liquidity shortfall in the markets for reserve assets prevents an issuer from meeting all requests. The published redemption policy must explain these limits (s. 16), in both official languages and in clear language.

Hypothetical example. A holder asks to redeem 50,000 tokens of a CAD stablecoin on a Monday, and the issuer charges a 0.2% fee. By Thursday, the issuer must have sold any reserve assets it needs and initiated a CAD 49,900 transfer. The only exception would be a market-wide liquidity shortfall that triggers its disclosed daily limit.

The issuer also may not pay holders interest or yield, or suggest that it will. That includes arrangements where the issuer funds yield paid by someone else (ss. 13–14). Rewards tied to transactions, rather than to holding the stablecoin, would not count as yield.

Governance, risk management, data security and recovery planning

Issuers would need four written policies:

Common requirements apply to all four:

• approval by the responsible senior officer
• adequate human and financial resources
• review every year and before relevant system or control changes
• a plain-language summary of each policy published in English and French

The governance policy would have to require complaints to be acknowledged within 7 days and resolved within 30 days (s. 19(1)(g)).

Annual reviews and three-yearly independent reviews are different obligations. Only the risk management and data security policies carry the independent review requirement.

Monthly reporting and public disclosure requirements

Section 46 of the Act already requires monthly reporting, including an accountant's opinion on:

• the value of outstanding stablecoins
• the composition of the reserve
• whether the reserve meets the Act's requirements

The proposed regulations would add further items to the report:

• the number of stablecoins issued to and redeemed by persons in Canada
• the names of qualified custodians
• a summary of complaints
• the names of the third parties, such as distributors or peer-to-peer exchanges, through which the issuer makes its stablecoins available for purchase to persons in Canada

The accountant's opinion is part of every monthly report. A lawyer's statement would be required only when the Bank asks for one.

Public disclosure. Under proposed sections 27–29, an issuer's website would have to show:

• details of the stablecoins issued to persons in Canada
• the fees it charges
• how to make a complaint
• the redemption policy, publicly accessible and updated without delay
• a plain-language summary of each of the four policies, in English and French

Under proposed section 29(3), the issuer would also need to make its regulatory report available to the public on its website in English and French, except for the lawyer’s statement referred to in section 46(1)(b) of the Act. This public disclosure is distinct from submitting the report to the Bank of Canada.

Records. Proposed section 32 would require issuers to keep records sufficient to demonstrate compliance and retain them until five years after the records cease to demonstrate current compliance, subject to the specified conditions. Section 33 would require reasonable safeguards against loss, destruction, falsification, inaccuracies and unauthorized access or use. This is not a blanket five-year period measured from each transaction date.

Proposed stablecoin issuer fees and penalties

The Bank of Canada's supervision costs would be recovered through annual assessments:

The 25% and 75% figures set the size of each tier's pool, which the impact analysis says is "allocated equally among issuers in that tier". A single issuer pays its equal share of its tier's pool, not 25% or 75% of all remaining costs. The amounts would be adjusted for inflation. For the two larger tiers, the base assessment is not the full charge. These assessments are separate from the Bank's RPAA registration fee and from professional advisory costs. FINTRAC charges no registration fee.

The proposed AMP regime sets maximums of CAD 1 million for serious violations and CAD 10 million for very serious violations. A schedule classifies each provision. The amount in a particular case depends on that classification and on the penalty process, not on the maximum alone. These penalties belong to the stablecoin framework and are separate from FINTRAC's penalties under the PCMLTFA.

How the proposed rules would affect stablecoin payment service providers

The Retail Payment Activities Act (RPAA) already applies to PSPs that perform payment functions in fiat currency for end users in Canada. Its registration requirements took effect in November 2024 and its substantive requirements in September 2025. The October package would extend it to payment functions carried out in prescribed stablecoins. The impact analysis estimates this would bring about 30 more PSPs into scope, such as trading platforms offering custodial wallets and crypto payment processors.

What would be a prescribed stablecoin. According to the impact analysis, a prescribed stablecoin would be:

• one issued by an entity on the Bank of Canada's list of issuers under the Stablecoin Act
• one issued by a financial institution subject to laws substantially similar to the Act, particularly on yield, redemption, reserves and custody

Closed-loop stablecoins would be excluded. Other crypto assets, unlisted stablecoins and tokens would not become RPAA payment instruments under these amendments.

Payment functions. The existing tests still apply. A PSP must perform a payment function, such as:

• providing or maintaining a payment account
• holding funds for end users
• initiating payments
• authorizing or transmitting payment instructions
• clearing or settlement

It must also meet the geographic test, and no exclusion can apply. A sixth function would cover transmitting or maintaining an end user's private key or tokenized payment instrument. The impact analysis notes that this function needs its own Governor in Council order before it takes effect. Building non-custodial software does not by itself create an RPAA obligation.

Safeguarding. Issuer reserves and PSP safeguarding are different things:

• Issuer reserves back every outstanding coin.
• PSP safeguarding protects the stablecoins a PSP holds for its users.

The amendments would give PSPs a new safeguarding option. A separate entity, whose sole purpose is to hold end-user funds, would be the registered holder of the stablecoins, outside the PSP's insolvency estate, under a contract confirming they do not belong to the PSP. PSPs would also need procedures giving end users access to their funds without delay if the issuer becomes insolvent, including how to redeem into fiat.

Other changes.

• PSPs would have to notify issuers without delay of operational incidents that materially affect them.
• PSPs would report the values and volumes of transfers made in prescribed stablecoins.
• Every PSP, including fiat-only PSPs, would have to provide more ownership and director information for national security purposes, such as dates of birth and countries of residence.

Hypothetical example. A Canadian app holds users' balances of a listed CAD stablecoin and lets them send it to other users. Once the amendments apply, the app would likely be providing payment accounts and holding funds in a prescribed stablecoin. It would need to assess RPAA registration, its safeguarding arrangements, how it would handle an issuer insolvency, and its reporting. Its PSP registration analysis would be separate from any securities or FINTRAC question.

Stablecoin Act, RPAA and FINTRAC are different regimes

A business may fall under one regime, several or none. Registering as an issuer would not replace RPAA or FINTRAC obligations.

FINTRAC status depends on timing and role:

• Today. FINTRAC registration depends on covered activities and the entity’s Canadian business presence. A business with a place of business in Canada must assess its MSB duties for covered services even when customers are abroad. A business without a place of business in Canada must assess whether it directs and provides covered services to clients in Canada under the FMSB rules.
• Once section 5 of the Stablecoin Act comes into force. Section 5 deems an issuer to be "engaged in the business of dealing in virtual currencies" for the purposes of subparagraphs 5(h)(iv) and 5(h.1)(iv) of the PCMLTFA. It is not yet in force. When it is, a covered issuer would be treated as dealing in virtual currencies, and therefore as within the MSB provisions. Whether it is a Canadian MSB or a foreign MSB would still turn on whether it has a place of business in Canada.
• Distributors, wallet providers and PSPs that are not the issuer are not covered by that deeming rule. Their FINTRAC status still depends on the services they provide.

Separately, CSA Staff Notice 21-333 sets the current terms on which trading platforms may offer stablecoins to clients.

When would the framework take effect?

Existing issuers. An issuer already issuing on the day before the Act comes into force would not breach the registration requirement if it applies within 30 days of commencement. The protection is conditional and temporary. An issuer that misses the window would have to stop issuing, and the protection does not exempt it from the framework's other obligations. New issuers would need to be registered before they start.

What issuers and PSPs should do now

These are sensible preparation steps, not current legal obligations:

• ☐ Map each stablecoin, its issuer and every entity involved in distribution
• ☐ Decide who controls creation and who controls making the stablecoin available
• ☐ Measure exposure to purchasers resident in Canada
• ☐ Record whether each entity acts as an issuer, a distributor, a PSP or a trading platform
• ☐ Model the reserve against the proposed eligible-asset list and the daily valuation test
• ☐ Identify Canadian institutions that could act as qualified custodians
• ☐ Test whether the redemption systems can meet the three-day standard and handle liquidity limits
• ☐ Review the four policies against the proposed content and review cycles
• ☐ Confirm the ability to produce monthly accountant-reviewed reporting
• ☐ Assess current FINTRAC and RPAA scope, and plan for the issuer deeming rule in s. 5 of the Act
• ☐ Estimate the likely tier of supervisory assessment
• ☐ Decide whether to comment before the consultation closes

Frequently asked questions

Can an issuer that is already regulated elsewhere be exempted?

Possibly. Under s. 14 of the Act, if a provincial or foreign law is substantially similar to the Act or the regulations, an order can be made that the Act, or some of its provisions, does not apply, with or without conditions. This is a discretionary order, not an automatic recognition of foreign licences, so an issuer should not plan on relying on one.

If you need to work out whether your stablecoin activities would fall under the issuer regime, the RPAA or FINTRAC, or to assess your readiness, ComplyFactor's AML advisory services in Canada can provide regulatory interpretation, a gap analysis and support with FINTRAC and PSP registration. Issuer registration decisions rest with the Bank of Canada.