The Bank of Canada is urging the federal government to consider creating a comprehensive framework for regulating stablecoins, given the ongoing mainstream interest.
In his speech at the Chartered Professional Accountants conference on September 18, the Bank of Canada’s CEO, Ron Morrow, acknowledged that the current progress is insufficient and requires acceleration to support faster payments, open banking, and digital innovation.
“Unfortunately, Canada lags other jurisdictions when it comes to payments innovation. We’re behind in adopting new technology, fostering new entrants and providing Canadians with faster and cheaper payment options,” he said.
Stablecoins on the rise
In his address, Morrow noted that Canadians have yet to fully adopt cryptocurrency, with only 10% of Canadians holding Bitcoin, according to the bank’s 2023 study. They are also unlikely to pay for goods and services with Bitcoin, as it’s mostly used as an investment in the country.
However, Morrow admitted that stablecoins are a whole different story, as they maintain the value of their pegged asset, such as the US dollar. This has made stablecoins a popular payment option globally.
According to the global management consulting firm McKinsey & Company, stablecoins account for over $30 billion in daily transactions. That figure is still significantly below Canada’s traditional payment system, but it’s worth noting that it has doubled over the last 18 months.
The reason for this is simple. Stablecoins provide a cheaper and faster way to send money across borders. As crypto adoption in Canada grows, more people are likely to opt for stablecoin transfers when making international payments, as the Canadian payment system is quite expensive, even when compared to other jurisdictions such as the US and the UK.
The increasing popularity of stablecoins is exemplified by the fact that Canada’s private sector is ushering them into mainstream use.
Ottawa-based multinational e-commerce company Shopify announced in June that buyers can now make payments in the USDC stablecoin. Merchants will still receive their local currency in their bank account, but they can also set up a wallet to receive payments in the stablecoin.
Canadian digital asset infrastructure provider Tetra Digital Group also announced in early September that it would launch Shopify Canadian fiat-backed stablecoin in early 2026, subject to regulatory approval. This was just after the company closed an investment of approximately $10 million from leading Canadian fintechs and financial service providers.
These two cases show a growing interest in stablecoin transactions, and Morrow notes that, “There is a pressing need for faster, cheaper, more transparent, and more accessible cross-border payments services.”
Canada’s patchy regulatory framework
Morrow painted a picture of a Canadian regulatory landscape where the pieces don’t really fit together. In the country, regulation of digital assets is split between the provinces and the federal government.
The provinces are responsible for most of the supervision of digital assets through the Provincial Securities and Derivatives Regulation. The Canadian Securities Administrators (CSA) then acts as the umbrella organisation, helping create harmonisation between them.
At the federal level, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) regulates virtual currency exchange and transfer services through the anti-money laundering legislation.
There’s been some recent progress with the Retail Payment Activities Act, which came into full effect on September 8, 2025.The legislation brings over 1,500 payment service providers (PSPs) under the supervision of the Bank of Canada. It captures all non-bank intermediaries that interact with fiat currency and may cover some crypto-related entities, but it’s not a crypto regulation.
Canada is falling behind in the global regulatory landscape
In view of the patchy regulation and ongoing regulation in other countries, Morrow states that “Canada should also weigh the merits of federal stablecoin regulation, similar to what other countries have done.”
The call comes two months after U.S. President Donald Trump signed the GENIUS Act on July 18. The Act established a comprehensive framework for stablecoin regulation, setting up requirements for stablecoin issuers, such as 1:1 reserves for all stablecoins issued.
The passage of the Act was accelerated, as most other jurisdictions are also doing the same to boost the appeal of their fiat currency in stablecoins while also protecting investors.
The European Union already established a comprehensive crypto framework across all EU states in 2024. It sets standards for fiat-backed stablecoins, requiring institutions to be authorised and hold 60% of their assets in EU-based banks.
Japan and Singapore finalised their stablecoin regulations in 2023, while Hong Kong passed its Stablecoin Ordinance in May 2025. In a major turnaround, China is also actively pursuing stablecoin regulation, aiming to allow yuan-backed stablecoins to challenge the USD’s dominance in the cryptocurrency market.
Coordination vs. divergence on the global scale
The Bank for International Settlements (BIS) has warned regulators not to leave stablecoins outside the mainstream financial system. In its 2025 Annual Economic Report, the “central bank of central banks” outlined concerns that stablecoins have the capability to undermine monetary sovereignty, alongside transparency issues that can facilitate money laundering and risk capital flight from emerging economies.
Morrow mentioned this during his speech, and it shows that central banks that haven’t issued stablecoin regulations are likely to start considering doing so. This is quite evident in the 360-degree policy turnarounds that we’ve seen in 2025.
Pakistan had a hard-line stance against crypto and had actually promised a complete ban on crypto in the country. However, the country has reviewed that policy and invited crypto asset service providers to acquire licences. China is another example, having finally decided to pursue cryptocurrency.
G20 nations have also endorsed a roadmap for moving towards stablecoin regulation, and the FSB has issued recommendations for authorities to acquire and utilise appropriate powers and tools to enforce relevant stablecoin laws and regulations effectively.
However, while regulating stablecoins seems to be the tune, divergence is unavoidable when it comes to the implementation. The EU’s MiCA is the most notable here, as it takes a tough stance on the underlying assets by requiring 60% of them to be in EU-based banks. This has led to the world’s most popular stablecoin, Tether’s USDT, being removed from the market due to non-compliance.
That said, most nations, including the US, are focusing on the 1:1 backing aspect and anti-money laundering. The regulations so far exhibit considerable uniformity, which can only boost stablecoin usage by fostering market confidence.
