The reserve requirements that issuers must maintain to fulfill redemption obligations would mirror traditional banking safeguards, addressing stability concerns. Issuers would be required to hold qualified assets in reserve matching their outstanding stablecoin liabilities.
The legislation would amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, creating compliance obligations for financial institutions facilitating stablecoin transactions. Wealth advisors and portfolio managers would need to understand anti-money laundering requirements under the proposed regulatory regime as stablecoin transactions become part of mainstream financial services.
The proposed framework would establish policies governing how issuers manage asset reserves to fulfill redemption obligations. Financial institutions would operate under the compliance requirements set by the Bank of Canada’s regulatory oversight.
Unlike outright prohibition approaches in other jurisdictions, the proposed framework would permit any person to apply for stablecoin issuer status. The registration model would balance innovation with investor protection while establishing clear regulatory boundaries.
The Bank of Canada would hold full supervisory authority, including powers to issue compliance directions, suspend registrations, revoke issuer status, and enforce redemption policies. Issuers would establish comprehensive governance, risk management, data security, and recovery policies, all subject to central bank review.
