Canada’s Approach to Stablecoins Explained: Safety First, Innovation Second

• Canada will permit only stablecoins pegged one-to-one to a central bank currency like the Canadian dollar.
• Approved stablecoins must be backed by high-quality liquid assets such as government bonds and Treasury bills.
• Issuers will face strict reserve, redemption, and risk management requirements under the new framework.

Canada’s central bank says only tightly controlled stablecoins will be allowed in the country’s financial system. 

Bank of Canada Governor Tiff Macklem said approved stablecoins must be pegged one-to-one to a central bank currency, such as the Canadian dollar, and fully backed by high-quality liquid assets.

The ‘Good Money’ Mandate

Those assets must be easy to convert into cash, with government bonds and Treasury bills cited as acceptable examples. Stablecoins backed by riskier investments or complex financial structures are unlikely to qu…

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