The legislative annex proposes amending the Bank Act, Trust and Loan Companies Act, and Insurance Companies Act to prohibit federally regulated financial institutions from issuing stablecoins directly.
The existing Stablecoin Act excludes financial-institution issuers, subject to regulations. Routing issuance through a non-financial-institution subsidiary would bring that issuing entity within the stablecoin framework.
The Bank of Canada says its role under the Act will include registering non-financial institution issuers, supervising compliance, monitoring issuance and redemption risks, and taking enforcement action.
The planned foreign-institution extension targets institutions outside Canadian prudential supervision. The annex also proposes clarifying that stablecoin issuance is not deposit-taking for foreign banks and their affiliates covered by Part XII of the Bank Act.
The existing Act separately excludes central banks, and also lets the Bank of Canada Governor grant conditional exemptions where provincial or foreign rules are substantially similar.
What holders would receive
Once applicable, the Act’s safeguards would require redemption at face value in the currency a stablecoin tracks.
It would also require reserves worth at least the outstanding face value, and qualified custody that segregates reserve assets and protects them from issuer and custodian creditor claims other than holders’ redemption claims. Those duties remain subject to the Act’s statutory and regulatory terms.
Sections 33 and 34 would prohibit covered stablecoins from being deposits, publicly deposit-insured instruments or government-guaranteed or backstopped instruments, and prohibit representations suggesting those features.
A bank parent’s involvement would not convert the token into an insured savings balance.
The budget also promises continued engagement on stronger consumer protections if an issuer or custodian becomes insolvent.
The Act received royal assent on March 26, but its operating provisions take effect on dates set by order of the Governor in Council.
The Oct. 24 proposed-regulations impact statement identifies fall 2027 as the intended commencement window for the wider framework.
The budget’s new development concerns who would issue within the framework, while implementation still depends on legislation and commencement.