Canada Proposes Federally Regulated Financial Institutions Issue Stablecoins Through Non-Financial Institution Subsidiaries

Canada's Budget 2026 proposes requiring federally regulated financial institutions to issue stablecoins through non-financial institution subsidiaries, changing how those institutions may issue stablecoins under the country's planned framework.

Announced Thursday, Nov. 5, the proposal calls for amendments to relevant federal statutes. Institutions that choose to issue stablecoins would use separate subsidiaries regulated under the Stablecoin Act.

The Act has been enacted but is not yet in force. It defines a stablecoin as a digital asset designed to maintain a stable value relative to one fiat currency. Once in force, it would require issuers to redeem tokens at par value in the reference currency and keep reserve assets separate from both the issuer's other assets and the custodian's assets. The Act also would prohibit issuing stablecoins insured under a public deposit-insurance system or guaranteed or backstopped by a government. Its redemption and reserve requirements are distinct from the budget's subsidiary proposal.

The Bank of Canada would register issuers and oversee compliance and enforcement under the Act. Canada's proposed Stablecoin Regulations are intended to take effect alongside the Act in fall 2027.