Bank of Canada Urges Federal Stablecoin Rules to Spark Innovation and Match Global Standards

The Bank of Canada has intensified its advocacy for federal stablecoin regulation, urging Canadian policymakers to align with global standards as stablecoins gain traction in cross-border payments and digital finance. Executive Director Ron Morrow emphasized the urgency of collaborative federal and provincial efforts to modernize Canada’s payment infrastructure, which lags behind systems in the U.S., U.K., and Australia. “Canada should weigh the merits of federal stablecoin regulation, similar to what other countries have done,” Morrow stated during a conference in Ottawa, noting that stablecoins—pegged to fiat currencies like the U.S. dollar—offer faster, cheaper, and more transparent alternatives to traditional money transfers .

Stablecoins are increasingly seen as a solution to high-cost international transactions and inefficiencies in Canada’s current payment system. Critics argue that the dominance of the country’s five largest banks has stifled competition, resulting in high fees, delays, and limited innovation. The Bank of Canada has acknowledged these challenges, citing momentum from recent public and private sector initiatives but stressing the need for accelerated reforms. “We’re behind in adopting new technology, fostering new entrants, and providing Canadians with faster and cheaper payment options,” Morrow said .

Regulatory fragmentation remains a key hurdle. In Canada, oversight of digital assets is split between federal and provincial authorities, with the Office of the Superintendent of Financial Institutions (OSFI) set to implement a federal framework once finalized. Unlike the U.S. GENIUS Act—which establishes clear reserve requirements, licensing standards, and consumer protections for stablecoin issuers—Canada’s approach remains less defined. The Canadian Securities Administrators (CSA) currently classifies stablecoins as securities or derivatives, requiring compliance with securities laws and public disclosures. This contrasts with the U.S. and EU, which treat stablecoins as payment instruments, a distinction that could hinder cross-border interoperability .

The U.S. legislative push, including the GENIUS Act and the STABLE Act, has set a precedent for stablecoin oversight, mandating 1:1 reserve backing and federal supervision. These measures aim to reduce systemic risks while fostering adoption by banks and fintechs. Canada’s regulatory divergence risks creating friction for cross-border transactions and could deter innovation. The CSA’s Staff Notice 21-333, which requires stablecoin issuers to maintain transparent reserve ratios and file with regulators, lacks the clarity and harmonization seen in U.S. and EU frameworks .

Industry leaders, including Coinbase Canada’s CEO Lucas Matheson, have called for Canada to reclassify stablecoins as payment instruments and develop a domestic stablecoin like QCAD. They argue that modernizing regulations could attract investment and position Canada as a competitive player in the global digital asset market. Meanwhile, the Office of the Superintendent of Financial Institutions (OSFI) is reportedly working on a robust regulatory framework, though details remain undisclosed .

The Bank of Canada’s recent focus on real-time payment systems and collaborations with institutions like MIT underscores its commitment to innovation. However, experts warn that without swift regulatory action, Canada risks falling further behind. “Canada must act quickly to ensure its financial system remains competitive and secure,” Morrow reiterated, highlighting the importance of balancing innovation with safeguards .

[1] title1 (https://www.bnnbloomberg.ca/business/economics/2025/09/18/bank-of-canada-says-canada-should-weigh-merits-of-stablecoin-regulation/)

[10] title10 (https://www.reuters.com/markets/us/bank-canada-says-canada-should-weigh-merits-stablecoin-regulation-2025-09-18/)

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[13] title13 (https://www.millerthomson.com/en/insights/technology-ip-and-privacy/implications-of-the-genius-act-on-stablecoins-in-canada/)