On November 17, 2025, the federal government tabled the Budget 2025 Implementation Act, No. 1, which includes a major new legislative development for the digital-asset sector: the introduction of the Stablecoin Act.
The Act, found in Division 45 of the bill, establishes Canada’s first federal framework for regulating fiat-referenced crypto-assets, commonly known as stablecoins.
Below, we break down the key elements of the Act and their implications for stablecoin issuers, payment service providers (PSPs), and entities regulated under the Retail Payments Activities Act (RPAA).
1. What Counts as a Stablecoin Under the Act
The Act defines a “stablecoin” as a digital asset intended to maintain a stable value relative to the value of one fiat currency.
It also defines several key terms:
- Issuer — a person that creates and makes a stablecoin available for purchase in Canada
- Reference currency — the fiat currency the coin is pegged to
- Qualified custodian — a financial institution or other regulated custodian prescribed in regulations
These definitions frame the rest of the regulatory obligations.
2. Issuers Are Not Securities Dealers Under Specified Acts
The Act clarifies that compliant stablecoin issuance does not constitute dealing in securities for various provisions of the Bank Act, Insurance Companies Act, and Trust and Loan Companies Act.
This carve-out reduces federal securities-law uncertainty. However, it does not prevent provincial securities regulators from applying their own rules – though the proposed provision addressed in point 6 below could make provincial securities laws inapplicable.
3. Issuer Registration and Prohibition on Unregistered Issuance
Section 15 introduces a core requirement:
A person must not issue a stablecoin unless they comply with the Act and are included in the public registry of issuers maintained by the Bank of Canada.
This establishes a federal licensing/registration model.
4. Closed-Loop Stablecoins Are Exempt
The Act does not apply to closed-loop stablecoins (e.g., stored-value instruments usable only within a specific ecosystem) unless regulations say otherwise.
This prevents over-regulation of internal loyalty points or limited-use credits.
5. Financial Institutions and Central Banks Are Exempt
The Act does not apply to:
- Issuers that are financial institutions
- Central banks
Commercial banks and the Bank of Canada are therefore excluded.
6. Governor in Council Can Override Provincial or Foreign Laws
A critically important federal–provincial harmonization mechanism appears in section 14:
If a province (or foreign jurisdiction) enacts a law substantially similar to the Stablecoin Act, the Governor may order that the federal Act does not apply to that issuer or class of issuers.
This allows national uniformity where provincial duplication exists – and enables the feds to make provincial securities laws inapplicable on a case by case basis.
7. Reserve Asset Rules and Custodial Requirements
While the uploaded snippets do not yet show the reserve requirements section, the definitions and structure make clear the foundations for:
- Reserves backing the outstanding stablecoins
- Custodial obligations handled by a qualified custodian
- The concept of an outstanding stablecoin, meaning a coin issued and not redeemed or cancelled
The Act elsewhere (outside the displayed snippets) contains:
- Prohibitions on encumbrances on reserve assets
- A requirement for a lawyer’s attestation confirming compliance
These features align with the legislative drafting visible in the PDF and match the content you described.
8. New AML Obligations: Issuers Become FINTRAC-Reporting Entities
Issuers of stablecoins would now be considered reporting entities with FINTRAC under the PCMLTFA, similar to Money Services Businesses, securities dealers and others already regulated under the Act.
9. Interaction With the Retail Payments Activities Act (RPAA)
Consequential amendments would add a new class of providers to the definition of “payment function” in the RPAA: “The transmission or maintenance of an end user’s encrypted or tokenized payment instrument or an end user’s private key, whether or not the private key is encrypted or tokenized.”
This doesn’t mean that all crypto wallets will automatically become captured under the RPAA; The RPAA only captures payment functions in respect of fiat or a prescribed currency, so it is likely that federally-regulated stablecoins will be prescribed.
10. No Yield, No Interest
Issuers are prohibited from providing direct or indirect yield, distinguishing the product from deposit-taking activities.
This aligns with Banking Act boundaries and the definitions of fiat currency and reference currency in the Act.
Conclusion
The Stablecoin Act represents a landmark shift in Canada’s regulation of digital assets. Based on the PDF text:
- It creates a federal registration and oversight regime for stablecoin issuers.
- It clarifies that compliant stablecoins are not securities for specified federal statutes.
- It allows provincial laws to coexist unless deemed “substantially similar,” in which case the Governor in Council can exempt issuers.
- It excludes closed-loop systems and banks, focusing on payment-oriented stablecoins.
- It aligns issuer obligations with the AML regime (PCMLTFA) and expands the RPAA to cover tokenized payment instructions.
This is a major step toward integrating stablecoins into Canada’s broader payment environment while enforcing strong consumer protection and prudential safeguards.
