Canada to Approve Only High-Quality Stablecoins Under New Regulations

According to Cointelegraph, the Bank of Canada has announced its intention to approve only high-quality stablecoins that are tied to central bank currencies. This move is part of the country's forthcoming stablecoin regulations, which are anticipated to be implemented by 2026. Governor Tiff Macklem emphasized the importance of stablecoins serving as "good money," comparable to bank notes or bank deposits. Speaking at the Montreal Chamber of Commerce, Macklem stated that stablecoins should maintain a one-to-one peg to fiat currencies and be backed by high-quality liquid assets, such as Treasury bills and government bonds, to ensure they can be easily converted into cash. Canada's approach to stablecoin regulation follows the release of its extensive 2025 budget report in early November. The report outlines requirements for stablecoin issuers to hold adequate reserves, establish redemption policies, and implement risk management frameworks to protect personal and financial data. Macklem highlighted the goal of enabling Canadians to safely leverage the innovation of stablecoins. This regulatory momentum in Canada gained traction after the United States passed the GENIUS Act in mid-July, which is regarded as one of the most comprehensive stablecoin frameworks to date. Other countries, including the UK and Hong Kong, have also advanced their stablecoin regulations in recent months. The stablecoin market is currently valued at $313.6 billion, with projections from the US Treasury in April suggesting it could reach $2 trillion by 2028. In addition to stablecoin regulations, Canada is developing a "Real-Time Rail" payments system to facilitate instant settlements between businesses and consumers. An open banking framework is also being established to allow easier bank switching for individuals. Despite these advancements, Canada decided against issuing a central bank digital currency in September 2024, with Macklem citing a lack of a compelling case for its introduction. The country's efforts to modernize its financial system aim to make digital transactions faster, cheaper, and more secure for its population of over 40 million people.