Recent developments in Canada’s payments and digital asset landscape mark a measured but important evolution. In late 2025, the federal government introduced draft legislation through the Budget Implementation Act (Bill C-15), including the Stablecoin Act. This framework, overseen by the Bank of Canada, targets fiat-referenced stablecoins—digital assets designed to maintain a stable value tied to a single fiat currency, such as the Canadian dollar. The Act establishes registration requirements for issuers (primarily non-prudentially regulated entities), mandates 1:1 backing with high-quality liquid assets held by qualified custodians, enforces redemption rights, and includes governance, risk management, and reporting obligations. It also integrates with existing regimes, such as amendments to the Retail Payment Activities Act (RPAA) to cover payment-service providers using stablecoins, and reinforces anti-money laundering (AML) rules under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
This builds on broader modernization efforts. Alongside stablecoins, Canada is advancing its consumer-driven banking framework (commonly called open banking). Budget 2025 and related legislation confirm the shift of oversight to the Bank of Canada, with an initial phase focused on secure data sharing (“read access”) targeted for 2026, followed by payment initiation and other actions (“write access”) by mid-2027. These steps align with the rollout of Real-Time Rail, Payments Canada’s instant payment system expected in 2026.
Assuming the Stablecoin Act and related rules gain final passage and implementation proceeds, stablecoins could serve as an effective tool at the clearing and settlement layer. Stablecoins enable near-instant, programmable transfers on distributed ledgers, with finality achieved through blockchain consensus rather than traditional batch processing. For CAD-referenced stablecoins under the proposed regime, this means tokenized value backed by reserves, redeemable at par, and transferable peer-to-peer or through intermediaries. In clearing and settlement, they offer atomic settlement—where payment and delivery occur simultaneously—reducing counterparty risk and eliminating multi-day reconciliation cycles common in legacy systems.
Open banking creates essential conditions for this utility. By enabling secure, consented sharing of financial data and (in later phases) initiation of payments, open banking allows third-party providers to access account details, verify funds, and trigger transfers efficiently. This complements stablecoins: a fintech or payment provider could use open banking APIs to confirm a payer’s balance or initiate a pull, then settle via stablecoin rails for speed and finality. Rather than competing trends, they form complementary infrastructure—open banking handles consent, identity, and integration with traditional accounts, while stablecoins provide the efficient, programmable settlement medium. Together, they support more seamless account-to-account flows, including those involving non-bank entities.
For Canadian fintechs, this combination opens practical opportunities. Lower settlement costs become feasible, as stablecoin transfers avoid intermediaries like correspondent banks or high interchange fees in some card networks. Faster settlement—often seconds rather than days—improves cash flow for merchants, lenders, and platforms. New models emerge, such as embedded payments in apps or automated treasury management, where fintechs leverage open banking for data insights and stablecoins for execution. Competition increases as barriers to entry drop for innovative providers, though compliance with registration, AML, and custody rules adds operational overhead.
Banks face a dual set of considerations. On one hand, regulated stablecoins present infrastructure decisions: whether to issue their own (if exempt or feasible under prudential rules), partner with issuers, or integrate stablecoin rails into core systems. Opportunities include offering custody for reserves, providing liquidity, or developing hybrid services that combine traditional deposits with tokenized transfers. On the other hand, risks include balance sheet impacts if deposits shift to stablecoins, potential disintermediation in payments, and heightened operational and cyber risks from new technologies. Banks must weigh these against the stability benefits of regulated, domestic stablecoins that preserve monetary sovereignty compared to foreign alternatives.
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In a global context, Canada’s approach is deliberate rather than leading-edge. The U.S. advanced with the GENIUS Act in 2025, establishing federal rules for stablecoin issuers and accelerating adoption of USD-linked tokens. Jurisdictions like the EU (under MiCA), Hong Kong, Singapore, and Japan have operational regimes, often treating stablecoins as payment instruments with prudential safeguards. Canada positions itself as pragmatic, focusing on CAD-backed issuance to mitigate risks from USD dominance, while aligning with global standards on reserves, redemption, and AML. This avoids rushing but risks trailing in innovation if implementation delays occur.
Over the next 12–24 months, expect phased progress. Regulatory details—eligible assets, technical standards, insolvency protections—will emerge through Bank of Canada consultations and regulations. Early adopters may test CAD stablecoins in closed environments or pilot cross-border use cases. Integration with Real-Time Rail could enable hybrid instant payments, where stablecoins handle certain legs for efficiency. Fintechs and banks will likely invest in compliance infrastructure and explore partnerships. Constraints remain: technical interoperability, consumer adoption, and coordination between federal and provincial oversight (e.g., securities laws). Risks include operational failures, reserve management issues, or cyber vulnerabilities, underscoring the need for robust supervision.
What to watch next
– Publication of final regulations under the Stablecoin Act and related RPAA amendments.
– Bank of Canada guidance on issuer registration and oversight expectations.
– Progress on open banking phase 1 (read access) in 2026 and write access timelines.
– Early pilots or announcements from domestic issuers or institutions integrating stablecoins.
– International developments, particularly USD stablecoin usage in Canada and cross-border coordination.
As payments infrastructure experts, Apaylo Finance Technology monitors these shifts closely. We focus on building reliable clearing and settlement solutions that adapt to evolving regulations and technologies, helping clients navigate changes with practical, compliant systems.
