Canada’s Stablecoin Act: What it Means for Exchanges, DeFi, and Crypto Businesses

A guide to Canada’s first federal stablecoin framework, and what it means for your business.

Canada’s Stablecoin Act (the “Act”) is the country’s first federal law governing stablecoin issuers. If you run a crypto exchange, OTC desk, DeFi protocol, or crypto ATM in Canada, or build software that handles stablecoins, the Act affects how you operate.

Here is what the Act requires, who it covers, and what each type of participant should do now.

Why Regulators Are Acting Now

Stablecoins began as a means to move value between exchanges. Today, Stablecoins power cross-border payments, DeFi lending, and settlement infrastructure, with a global market cap of nearly $300 billion and daily trading volume exceeding $30 billion. That scale has pushed two concerns to the top of Canada’s agenda.

Financial stability. The larger stablecoins grow, the more their reserve quality and redemption reliability matter to the wider financial system. The collapses of FTX, Celsius, Voyager, and BlockFi showed what happens when platforms hold customer funds without proper safeguards: users become unsecured creditors with little recourse.

Monetary sovereignty. USDT and USDC dominate Canadian usage, yet both are issued and regulated in the United States. That is a trend the US GENIUS Act has accelerated by scaling USD-stablecoin infrastructure globally. The C.D. Howe Institute has warned that without a domestic framework, Canada risks losing oversight of its own payment flows to foreign issuers. The Stablecoin Act is Canada’s response.

More may be coming from Washington. The CLARITY Act, which cleared the Senate Banking Committee in May 2026 and now awaits a full Senate floor vote, would set market-structure rules for digital assets, contains hotly contested provisions on stablecoin yield, and would bar a Federal Reserve retail CBDC. It still needs 60 votes in the Senate, reconciliation with the House, and a presidential signature, so both its odds and its final text are unsettled. If it passes, demand for US-issued stablecoins likely grows, sharpening the case for a domestic Canadian framework. Still, treat it as a signal of regulatory direction, not a fixed rulebook.

Who the Act Covers

An “issuer” is anyone who creates a stablecoin and makes it available for purchase, directly or indirectly, by a person in Canada (s. 2). The Act applies to Canadian and foreign issuers alike and covers both CAD- and USD-denominated stablecoins. In practice, any stablecoin accessible to Canadians online meets the threshold; there is no meaningful geographic carve-out for blockchain-based tokens.

The Act does not apply to: banks and other federally regulated financial institutions (s. 12), central banks (s. 13), closed-loop stablecoins (s. 11), and non-fiat-backed tokens (which stay under provincial securities law).

What the Act Requires

Register with the Bank of Canada (ss. 15–17). Issuers must register before issuing any stablecoin. The application (s. 17(2)–(5)) must include corporate structure and ownership, a technology description (ledgers, smart contracts, issuance and redemption infrastructure), a redemption policy, a lawyer’s opinion on reserve, encumbrance, and custody compliance, an accountant’s statement of financial condition, governance/risk/data-security/wind-down policies, and enforcement history across AML, financial-services, and securities regulators.

Requirement	What it means
1:1 reserves (s. 37)	Hold reserves worth at least the full face value of all stablecoins in circulation, at all times. Reserves must be the reference currency or high-quality liquid assets. Government of Canada T-bills and insured deposits are expected to qualify; commercial paper will not. The eligible-asset list awaits regulations, and existing custodial arrangements may need restructuring.
No pledging (s. 38)	Reserve assets cannot be used as collateral or otherwise encumbered, except in limited circumstances set out in regulations.
Segregated custody (s. 39)	Reserves must sit with a qualified custodian, separate from both the issuers and the custodian’s assets, and beyond the reach of either party’s creditors in insolvency. A standard contract is unlikely to suffice; segregated custody typically requires a trust structure documented by insolvency counsel before filing.
Four public policies (ss. 40–44)	Governance, risk management, data security, and recovery/resolution policies must be created, maintained, and publicly disclosed.  Because these policies are public, they double as commercial documents, draft them with both audiences in mind.
No yield to holders (s. 32)	No interest or yield of any kind, direct or indirect, in cash, digital assets, or otherwise. The issuer may earn income on reserves but cannot pass it to holders or use reserves for anything but redemption.
No false claims (ss. 33–34)	A stablecoin cannot be marketed as legal tender, a bank deposit, or government-insured.
Ongoing reporting (s. 46)	Monthly certified accountant’s statement (financial condition, supply, reserve composition) plus periodic full compliance reports including a lawyer’s opinion on reserve, encumbrance, and custody.
National security review (ss. 21–22, 27)	The Minister of Finance can review any application on national-security grounds and direct the Bank of Canada to refuse it.
1:1 reserves (s. 37)	Hold reserves worth at least the full face value of all stablecoins in circulation, at all times. Reserves must be the reference currency or high-quality liquid assets. Government of Canada T-bills and insured deposits are expected to qualify; commercial paper will not. The eligible-asset list awaits regulations, and existing custodial arrangements may need restructuring.

You also need FINTRAC registration. Bank of Canada registration is not enough. Section 5 also classifies issuers as virtual-currency dealers under the PCMLTFA, requiring separate registration with FINTRAC as a money services business. These are two independent regulators with separate compliance programs, audit cycles, and enforcement powers. Registration with the Bank of Canada does not satisfy the FINTRAC requirement. Failure to register separately with FINTRAC is a violation of the PCMLTFA.

The Three Stablecoins That Matter Most in Canada Right Now

The Stablecoin Act received Royal Assent on March 26, 2026, but its registration and reserve obligations switch on only once regulations are finalized, which is expected in 2027. In the meantime, the CSA's interim framework under Staff Notice 21-333 already governs which stablecoins registered Canadian platforms can list. The two regimes operate independently: compliance with one does not guarantee compliance with the other.

Issuer	Circle Internet Financial, LLC	Tether Operations Limited	Tetra Trust Co. via CAD Digital Inc.
Currency peg	USD	USD	CAD
CSA interim status	Filed VRCA undertaking Dec. 2024. Only major stablecoin to satisfy SN 21-333.	No undertaking filed. Not compliant with the CSA interim framework.	Provincial approval from Alberta Treasury Board and Finance. CSA undertaking status not publicly confirmed.
Reserves	Regular third-party attestations; composition publicly disclosed.	Subject to ongoing scrutiny based on publicly available information.	1:1 CAD reserves held in trust at Tetra Trust; attestations published.
Redemption	At-par policy in place.	Retail redemption terms less clearly defined.	At-par in CAD.
Outlook under the Act	Well-positioned given existing CSA compliance.	Significant reserve and governance changes would be needed to comply.	Depends on whether Tetra Trust qualifies for the s. 12 exclusion, which is unresolved.

USDC is the only major stablecoin whose issuer has met the CSA’s interim requirements. For platforms listing stablecoins in Canada today, it is the obvious starting point.

USDT is the world’s largest stablecoin by volume but has given no public sign of pursuing Canadian compliance. USDT holders should treat the stablecoin as a liability, not an asset: once the registration regime takes effect, platforms will be expected to delist stablecoins from unregistered issuers, and the CSA’s interim window is already closed to new undertakings. Listing or relying on USDT now means planning for a forced unwind later; whether issuer, platform, or holder, limiting exposure now is cheaper than unwinding operations on a regulator's timeline.

CADD launched in May 2026 as the first CAD-backed stablecoin from a licensed Canadian trust company, following Alberta approval; transfers between Wealthsimple and National Bank were completed in December 2025. CADD’s status under the federal Act is unresolved, and its approval is provincial, not federal. Additionally, Stablecorp’s QCAD has also claimed CSA approval under the existing framework. Either way, CADD signals real commercial demand for a domestic CAD stablecoin.

What This Means for Your Business

The Act’s formal obligations rest with issuers, but its practical effects extend to every participant in the Canadian crypto ecosystem.

Centralized exchanges. Every stablecoin you list must be issued by a compliant issuer: CSA SN 21-333 sets that standard today; Bank of Canada registration will be added once the registration regime takes effect. Missing either deadline puts your listings offside. Both timelines need tracking.

•      Audit issuer registration status for every listed stablecoin.

•      Delist stablecoins from issuers who fail to register.

•      Note: the CSA closed its SN 21-333 undertaking window to issuers distributing in Canada after February 2023, so the compliant list is effectively fixed until the new regime takes effect.

•      Expect layered oversight from the CSA, CIRO, and potentially the Bank of Canada for payment-related functions.

DEXs and DeFi protocols. The Act does not ban DeFi lending or liquidity pools. But Canadian-connected participants, front-end operators, validators, and developers, should assess where they sit. The s. 2 issuer definition is the outer edge of the risk, not the obvious default: in most cases, a front-end or wallet is more likely caught by the parallel Retail Payment Activities Act amendments, which bring custodial wallet and payment-service providers under Bank of Canada supervision. FINTRAC registration as an MSB may also apply independently. Protocols leaning on non-compliant stablecoins as collateral may also see liquidity shrink as institutional capital shifts to registered issuers.

Software developers. If your wallet, payment aggregator, or embedded-finance product is what puts a stablecoin in a Canadian user’s hands, you could fall within scope, most likely as a payment-service provider under the RPAA amendments, and at the outer edge under the s. 2 issuer definition, even if you did not create the token. This boundary has not been tested. Legal advice at the design stage costs far less than a registration problem after launch.

OTC desks. PCMLTFA obligations are already in force and enforcement is active. In 2025, FINTRAC levied a record $176.9 million penalty against Vancouver-based CryptoMUS for over 2,500 violations, with sector penalties topping $200 million for the year. The 2025 Budget also raised the bar: AML programs must now be “reasonably designed, risk-based and effective,” and falling short is a “very serious” violation carrying penalties up to $4 million per instance. The Travel Rule applies to every virtual-currency transfer of $1,000 or more.

Crypto ATM operators. ATM operators handling stablecoins must be FINTRAC-registered MSBs running a full AML/CTF program. FINTRAC revoked 23 crypto MSB registrations in March 2026, with more enforcement signalled by the Finance Minister. Voluntary registration now beats responding to a revocation later.

Degens and HODLers. No registration falls on you, but the Act reshapes the coins you hold and trade. The upside: registered issuers must hold full 1:1 reserves and honour redemption at par, so a compliant stablecoin should actually be worth a dollar when you cash out. The trade-off: issuers cannot pay you yield, so on-chain “earn” products built on the stablecoin itself go away, and platforms will be pushed to delist non-compliant coins. The practical move is to favour stablecoins from issuers heading toward compliance, USDC today, a domestic option like CADD as it matures and treat USDT exposure as something to wind down before a platform forces the exit for you.

Federal vs. Provincial: The Unresolved Gap

The Act confirms that issuing a stablecoin is not “dealing in securities” under federal banking and insurance legislation (s. 3) and carves out deposit-taking liability from those same statutes (s. 4). What it does not do is displace provincial securities law.

Until provincial regulators withdraw their securities classification of fiat-backed stablecoins, an issuer with Bank of Canada registration may still face provincial prospectus, dealer-registration, and continuous-disclosure obligations. No federal-provincial coordination agreement has been published. Until one is developed, participants should plan to comply with both regimes at once.

The Bottom Line

The Stablecoin Act gives Canada its first real framework for digital money: reserve requirements, custodial safeguards, governance standards, and ongoing reporting. The rules are not fully in force, but the direction is set, and the businesses that treat 2026 as their build year will be ready when registration opens. For anyone listing or relying on stablecoins today, USDC is the only major option already aligned with Canada’s interim regime.

Start with the question that fits your business:

• Exchanges: are all listed stablecoins from compliant issuers, and what is your plan when the Act takes effect?

• DeFi operators and developers: does your product pull you in as a payment-service provider under the RPAA, or as an issuer under s.2? Do you need FINTRAC MSB registration?

• OTC desks: does your AML program meet the “reasonably designed, risk-based and effective” standard?

•  ATM operators: are you FINTRAC-registered and running a compliant AML program?

• Degens and HODLers: are the stablecoins you hold from issuers heading toward compliance, and what is your plan for any USDT exposure?

•   All participants: have you built the federal-provincial gap into your compliance plan?

The framework will keep evolving as regulations and amendments are issued. The incumbents who come out ahead will be the ones preparing now, not reacting in 2027.

If any of this touches your business, or your bags, reach out.

Solstice Law advises crypto DeFi operators, OTC desks, Devs, Degens, HODLers, and other crypto participants on Canadian regulatory compliance and crypto tax.

Happy to talk through where you stand and what to do next.

Written by Anish Kamboj (Founder and Principal, Solstice Law) and Jonathan Buckle (Crypto Regulatory and Tax Associate, Solstice Law).

This article is general information, not legal advice. For guidance on your specific situation, contact us directly.