CANADA Law and Practice Contributed by: Irbaz Wahab, Cloudhaus Law
fiat currency such as the Canadian dollar. The Act does not extend to algorithmic stablecoins, being those that use a formula or algorithm rather than direct asset backing to maintain their peg, meaning algorithmic stablecoins fall outside the Act’s prudential framework and are instead assessed under general securities and derivatives law principles depending on their struc- tural features. The distinction is therefore meaningful in Canada: fiat-backed stablecoins are subject to a dedicated registration and reserve regime under the Stablecoin Act, while algorithmic stablecoins remain subject to the general crypto-asset regulatory frame- The Stablecoin Act (Bill C-15), which received Royal Assent on 26 March 2026, establishes Canada’s first purpose-built legal framework for fiat-referenced sta- blecoins. Under the Act, issuers must register with the Bank of Canada as the primary supervisor and maintain a 1:1 reserve of high-quality liquid assets denominated in the reference currency, held in bank- ruptcy-remote arrangements with qualified custodi- ans. Issuers must also implement a redemption policy guaranteeing at-par redemption, adopt robust corpo- rate governance and risk management frameworks, and provide ongoing reporting to the Bank of Canada including auditor and legal reports. The Act represents a bespoke framework rather than a retrofitting of exist- ing payments regulation, though it builds on the Bank of Canada’s existing supervisory expertise under the RPAA. The full operational framework is expected to come into force over a 12-to-18-month period begin- ning in early 2026, with the regime anticipated to be fully operational by 2027. Prior to the Stablecoin Act, the CSA had indicated that certain stablecoins could constitute securities or derivatives depending on their structural features. 6.2.3 Backing Assets Under the Stablecoin Act, issuers of fiat-backed sta- blecoins must maintain a 1:1 reserve of high-quality liquid assets denominated in the reference currency, held in bankruptcy-remote arrangements with quali- fied custodians. Issuers must implement a redemp- tion policy guaranteeing at-par redemption to hold- ers, and are subject to ongoing reporting obligations work administered by the CSA. 6.2.2 Stablecoin Regulation
to the Bank of Canada including auditor and legal reports. The Stablecoin Act expressly prohibits issu- ers from offering interest or yield to stablecoin holders, consistent with the approach taken in other jurisdic- tions where paying interest on stablecoin balances is restricted or prohibited to distinguish stablecoins from deposit-taking activities reserved for licensed banks. Firms seeking to offer yield on stablecoin holdings should seek specific legal advice as to whether doing so would trigger additional regulatory obligations. 6.2.4 Special Considerations The Stablecoin Act contemplates systemic risk con- siderations through the Bank of Canada’s supervisory mandate over fiat-referenced stablecoin issuers. The Bank of Canada, drawing on its existing expertise administering the RPAA, is empowered to impose enhanced governance, risk management, and recov- ery and resolution requirements on issuers whose stablecoin operations may pose systemic risk to the Canadian financial system. While the Act does not yet define explicit systemic risk thresholds, the framework signals that issuers reaching significant scale may be subject to heightened supervisory expectations, con- sistent with international approaches that distinguish between general purpose stablecoins and those of systemic importance. 7. Tokenisation and Real-World Assets 7.1 Treatment Provincial securities legislation is technology-neutral, meaning a tokenised security remains subject to the same requirements as a conventionally issued secu- rity. Existing prospectus exemptions under NI 45-106, including the accredited investor and offering memo- randum exemptions, may be available for qualifying offerings. For real-world assets that do not constitute securities, such as tokenised real estate or commodi- ties, there is no bespoke framework and arrangements are assessed under general property and commercial law principles. Tokenisation of real-world assets is an emerging area of growing interest in Canada, and fur- ther regulatory guidance is anticipated as the CSA’s ongoing NI 81-102 reform process progresses.
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