Canada Faces Stablecoin Pressure
The Bank of Canada is ringing alarm bells, warning that the country risks falling behind in the global race to modernize payments if it does not act quickly on stablecoin regulation. Speaking at a conference in Ottawa, Ron Morrow, the central bank’s executive director of payments supervision and oversight, stressed that Canada can’t afford to drag its feet while the U.S. and Europe push ahead.
Stablecoins Gain Momentum
Stablecoins — digital tokens pegged to traditional currencies like the Canadian dollar — are rapidly gaining traction across e-commerce, cross-border transfers, and peer-to-peer payments. Often faster and cheaper than traditional rails, they’re being hailed as the next step in everyday digital money.
The Bank of Canada noted that major economies are moving fast. The U.S. recently passed the GENIUS Act to regulate stablecoin issuers, while the EU is rolling out its MiCA law, both with strict rules on reserves, redemption rights, and consumer protection. Advocates say Canada needs to align with these models to stay competitive.
But the central bank also raised alarms. Stablecoins, if mismanaged, could collapse under liquidity crises, poor governance, or credit risks.
Calls for Unified Regulation
Canada’s fragmented system — where provinces set their own rules — has sparked fears of a regulatory patchwork that stifles innovation. The Office of the Superintendent of Financial Institutions (OSFI) confirmed that it is working on a national framework, covering licensing, reserve standards, and redemption rights.
Canada Shifts From CBDC to Stablecoins
The renewed focus on stablecoins comes after the Bank of Canada quietly hit pause on its central bank digital currency (CBDC) project. Once researched in partnership with MIT, the CBDC was shelved in September 2024 amid lukewarm public reception. Surveys showed that while 42% of Canadians had a positive view of CBDCs, 20% outright disliked or hated the idea, with many citing fears of surveillance.
By pivoting to private digital assets like stablecoins, regulators hope to capture the benefits of digital money without provoking the same backlash. Morrow stressed that the move toward stablecoin oversight is about adapting to modern realities while ensuring public trust.
Draft Law on the Horizon
A draft Canadian stablecoin law is expected in the coming months. It will bring together OSFI, federal lawmakers, and provincial regulators to create clear rules for issuers. If successful, it could become a global industry benchmark.
For now, the Bank of Canada’s message is simple: act fast, or risk being left behind. With stablecoins already powering a so-called “stablecoin summer” worldwide, Canada’s decision could define its role in the digital economy.
