“Canada’s Stablecoin Wake-Up Call: Regulation, CBDC Retreat, and What It Means for Crypto Innovation”

Main Points :

• The Bank of Canada is urging the creation of a regulatory framework for stablecoins to modernize payments and avoid falling behind global peers.
• Canada has shelved or scaled back its retail CBDC (central bank digital currency) efforts, shifting focus to payments infrastructure instead.
• Currently, Canada treats stablecoins largely as securities or investment products, limiting their role as a payment medium.
• Federal authorities, including OSFI, are now drafting rules around licensing, reserve requirements, redemption rights, and consumer protection.
• Global movements—such as the U.S. GENIUS Act and EU’s MiCA framework—are shaping expectations and competitive pressure.
• For crypto operators and innovators, clear regulation could unlock stablecoins as real payments rails, not just speculative assets.

Below is an English article that blends the original content, recent updates, and forward-looking insights, followed immediately by a full Japanese translation in the same structure.

Canada Sounds the Alarm: Why Stablecoin Regulation Can’t Wait

In a recent keynote in Ottawa, Ron Morrow — the Bank of Canada’s Executive Director of Payments, Supervision, and Oversight — delivered a pointed message: “If you’re sitting still, even on the right path, you will be overrun.” He used this maxim to press Canadian federal and provincial regulators to rapidly adopt a stablecoin regulatory framework, lest Canada falls behind other nations in the next wave of payment innovation.

Morrow stressed that stablecoins must aim to be “as safe and stable as bank account balances” if they are to be recognized as currency. He observed that many jurisdictions are rapidly building or finalizing crypto-asset regimes intended to let consumers benefit from innovation while protecting them from credit, liquidity, and systemic risks.

This move comes as the U.S. recently passed the GENIUS Act, which formalizes a national regulatory regime for payment stablecoins. The timing is critical: as “stablecoin summer” catches fire in industry circles, countries must decide whether to regulate or risk losing control of next-gen payment architecture.

From CBDC Ambitions to Infrastructure Focus: Canada’s Strategic Pivot

Canada’s journey toward a central bank digital currency has been long and cautious. In collaboration with MIT, the Bank of Canada devoted significant R&D to explore a retail CBDC model. Yet in September 2024, it officially announced that the project was being shelved or scaled back.

The rationale: Canada’s payments landscape has more urgent modernization needs. The Bank now plans to shift resources toward developing a real-time payments (RTP) rail and improving oversight of payment service providers (PSPs).

A 2024 public consultation revealed only 42% of respondents were supportive of a CBDC; about 20% were opposed. That, combined with concerns over privacy, surveillance, and lack of compelling public-interest justification, pushed the Bank to reprioritize.

Even though the retail CBDC is on pause, Canada is not abandoning digital innovation. Its digital dollar page now says the Bank of Canada will “continue to monitor global developments” while focusing on payments modernization.

Why Canada Today Treats Stablecoins as Securities—and the Roadblocks That Causes

One of the thorniest problems facing stablecoin adoption in Canada is classification. Under its current regime, Canadian securities regulators (the CSA) have often treated stablecoins—or “value-referenced crypto assets”—as securities or derivatives.

This classification means that stablecoins must meet securities rules, making them less useful or practical as a medium of exchange, and more as investment instruments. Crypto industry voices argue that stablecoins should instead be regulated like payments or digital money, not like shares or bonds.

Regulation to date has lacked clarity. For instance:

• It’s unclear whether non-bank stablecoin issuers fall under federal or provincial jurisdiction.
• The Retail Payment Activities Act (RPAA) currently doesn’t explicitly encompass stablecoin issuance or redemption.
• Some proposals recommend amending existing securities, banking, and payments legislation to cover stablecoins, rather than creating an entirely new regime.

As long as stablecoins are legally viewed as securities, their path to becoming everyday money is blocked by compliance burdens, regulatory ambiguity, and limited utility.

Emerging Regulatory Action: OSFI, Licensing, Reserves, and Consumer Protections

Regulators aren’t entirely passive. In recent months, the Office of the Superintendent of Financial Institutions (OSFI) — Canada’s banking regulator — has begun drafting rules explicitly aimed at stablecoin issuers. These rules are expected to cover licensing, minimum reserve ratios, redemption terms, audit obligations, and customer protection mandates.

In fact, public statements confirm that OSFI is collaborating with the Department of Finance and the Bank of Canada to produce a comprehensive legislative framework.

At the same time, Canada’s legal commentary notes that stablecoin issuers may be considered akin to insured depository institutions—forcing stricter oversight akin to traditional banks.

On the consumer side, Canada’s Financial Consumer Agency (FCAC) conducted recent research on how Canadians perceive and understand stablecoins, aiming to inform policy that balances innovation with consumer protection.

In a signal of urgency, the Bank of Canada and regulators have urged collaboration between federal and provincial authorities to align their fragmented jurisdictional domains.

The Global Context: U.S. GENIUS Act, EU MiCA, and BIS Pressure

Canada’s move toward stablecoin regulation doesn’t exist in isolation. Abroad, regulators are making bold steps:

• In the U.S., the GENIUS Act has passed Congress, requiring stablecoin issuers to maintain one-to-one backing, undergo audits, and submit to federal and state oversight.
• In the EU, the MiCA (Markets in Crypto-Assets) regulation has already established rules for e-money and asset-referenced tokens, banning algorithmic stablecoins outright, requiring reserve transparency, and disciplining governance structures.
• The Bank for International Settlements (BIS) recently issued a stark warning: stablecoins can undermine monetary sovereignty, invite capital flight, and create regulatory blind spots. BIS is advocating for unified tokenized monetary systems integrating central bank and commercial money.
• The ECB’s Christine Lagarde has called for closing regulatory gaps in stablecoin oversight and ensuring equivalency regimes.
• Meanwhile, a consortium of European banks is preparing to issue a euro-denominated stablecoin by 2026, pushing institutional adoption.

These developments ratchet expectations upward: regulators now look not just at whether to regulate, but how rapidly and how strictly.

Opportunities and Risks for Crypto Entrepreneurs in Canada

Opportunities

1. Payment Rail Innovation
   With clear regulation, stablecoins backed by CAD or USD could become low-cost rails for commerce, remittances, micropayments, and programmable finance (DeFi).
2. Bridging TradFi and Web3
   Firms that can align compliance with innovation—staking collateral in high-quality assets, creating audit transparency, and building redemption trust—can capture a channel between traditional finance and crypto.
3. First-mover Advantage in Canada
   As regulatory clarity emerges, early compliant issuers may secure partnerships with banks, PSPs, or retailers seeking regulated digital rails.

Risks

1. Regulatory Uncertainty & Overreach
   If Canada’s framework mimics bank licensing too heavily, small issuers may be squeezed out of competition.
2. Reserve Risk & Run Dynamics
   Even fully backed stablecoins can face confidence runs or liquidity stress, a risk pointed out by Bank of Canada staff.
3. Jurisdictional Fragmentation
   Overlapping federal, provincial, securities, and banking authorities may create contradictory regimes.
4. International Arbitrage & Compliance Burden
   Issuers must contend not only with Canadian rules, but U.S., EU, and global standards to avoid regulatory arbitrage.

For those building new crypto assets or revenue models, stablecoins may represent lower volatility entry points and payment utility beyond pure speculation.

Forward Look: Canada’s Next Moves & What to Watch

• Draft stablecoin legislation is expected in the coming year, with OSFI leading risk, reserve, and licensing rules.
• Canada may clarify that stablecoins with payment utility should fall under the RPAA or a payments super-regime, not securities law.
• Monitoring how Canada aligns (or diverges) from GENIUS, MiCA, and BIS guidance will be crucial.
• Real-time payments infrastructure (a “real-time rail”) set for 2026 could integrate stablecoins as foundational rails.
• The integration of privacy, anti-money laundering, and data governance rules will define winners and losers in the space.

Conclusion

Canada’s recent pivot—from CBDC ambition to stablecoin framework urgency—signals a deeper realization: digital assets are no longer fringe experiments; they are serious components of the next generation financial plumbing. The Bank of Canada’s warnings suggest that without regulatory clarity and a modern payments architecture, Canada might be outpaced by countries already embracing tokenized rails.

For crypto entrepreneurs, this is a window. The first issuers that can blend on-chain verifiability, reserve transparency, strong redemption rights, and compliance will be well positioned in Canada’s emerging stablecoin ecosystem. But speed and foresight are vital: regulatory regimes may lock in soon, and those left waiting may lose the ground.