Canada plans to require federally regulated financial institutions to issue stablecoins through subsidiaries covered by its dedicated stablecoin framework, rather than issuing the tokens directly. The proposal in Budget 2026 would also widen the framework’s reach to foreign financial institutions that are not prudentially regulated in Canada. Budget 2026 Chapter 1
The measures are new policy intentions in the budget released on November 5. They should not be confused with the Stablecoin Act itself, which received royal assent earlier this year. The implementing regulations are still proposed and the regime has not commenced. Budget release; Parliament bill status; Proposed regulations
Subsidiaries would enter the stablecoin framework
Budget documents say the issuing subsidiaries would need to be non-financial institutions regulated under the Stablecoin Act. The government presents this approach as a way to make regulatory treatment more consistent across issuers. Budget 2026 Chapter 1
The legislative annex identifies three laws it proposes to change: the Bank Act, Trust and Loan Companies Act, and Insurance Companies Act. Those amendments would prohibit federally regulated financial institutions from issuing stablecoins directly. The proposal describes a permitted organisational route through subsidiaries, rather than announcing a general withdrawal of financial institutions from stablecoin activity.
A further amendment to the Stablecoin Act would clarify that issuing a stablecoin does not amount to accepting deposits for foreign banks and affiliated entities regulated under Part XII of the Bank Act. That clarification sits alongside the proposed extension to foreign institutions outside Canada’s prudential framework.
The budget does not give a commencement date for these new amendments. Budget 2026 legislative annex
An enacted Act, with implementation still ahead
Parliament’s record shows that Bill C-15, the Budget 2025 Implementation Act, No. 1, received royal assent on March 26, 2026. Its stablecoin provisions created the statutory framework. Section 97 of the Stablecoin Act leaves its provisions to come into force on dates fixed by the Governor in Council. Parliament bill status; Stablecoin Act, section 97
The next layer is still being developed. Finance Canada published proposed Stablecoin Regulations in the Canada Gazette on October 24, opening a 60-day period for representations. The accompanying statement says the regulations are needed to bring the Act into force.
The intended implementation window is autumn 2027, with the precise day or days to be fixed by order. This is an implementation intention, not confirmation that the new regime is already operating.
The proposal also provides transition arrangements for existing issuers. Those that apply within 30 days after the Act comes into force could continue issuing while their application is considered, subject to the stated conditions. An issuer whose application is refused would have to stop issuing. Proposed Stablecoin Regulations
What the framework covers
Finance Canada describes fiat-backed stablecoins as digital assets designed to track a single conventional currency, such as the Canadian or US dollar. Once commenced, the enacted framework would cover domestic and foreign non-financial-institution issuers making those tokens available to Canadians, directly or indirectly, without distinguishing between Canadian-dollar and foreign-currency denominations.
The Act applies only to stablecoins with actual or reasonably expected interprovincial or international applications. It excludes financial-institution issuers and closed-loop stablecoins, subject to regulations. Central banks are also excluded. The budget’s subsidiary and foreign-institution proposals would change how financial institutions fit into that framework. Stablecoin Act, sections 10 to 13
The planned safeguards include reserves worth at least the par value of outstanding stablecoins, held in the reference currency or other permitted high-quality liquid assets denominated in that currency. Issuers would also need to offer redemption at face value and maintain policies covering governance, risk management, data security, recovery and resolution. Stablecoin Act, sections 35 to 43 Finance Canada framework overview
The Bank of Canada says its supervisory responsibilities will include registering issuers, checking compliance, monitoring issuance and redemption risks, and taking enforcement action when requirements are not met. Its stated focus is full backing by high-quality liquid assets and redemption at par. Bank of Canada stablecoin overview
That issuer oversight sits alongside other rules. Finance Canada says securities regulators will continue overseeing stablecoin exchange and trading on securities exchanges and crypto-trading platforms. Payment-service providers carrying out stablecoin payment functions would fall under the Retail Payment Activities Act once the relevant stablecoins are prescribed in regulations. Finance Canada framework overview
Additional insolvency protections remain under discussion
The enacted Act already sets a baseline for reserve protection. Section 39 would require issuers to ensure custodians hold reserve assets separately from their own assets and the issuers’ other assets. It would also require protection from other creditor claims, including in insolvency, while preserving holders’ redemption claims. Those duties await commencement. Stablecoin Act, section 39
Budget 2026 also commits to further engagement on protecting consumers if a stablecoin issuer or custodian becomes insolvent. The budget passage does not settle the design of those additional protections. Budget 2026 Chapter 1
For institutions considering issuance, the immediate development is therefore a proposed corporate-structure requirement and a broader regulatory perimeter. For holders, the next concrete milestones are the outcome of the regulations consultation, final rules and commencement orders, alongside any legislation implementing the budget’s changes.
Related coverage: Dalimss News has separately reported on Canada’s Bill S-8 proposal for a C$1,000 crypto-ATM transaction cap and the FSB’s assessment of cross-border stablecoin monitoring gaps. These concern separate Canadian legislation and international monitoring work, respectively.
