Bank of Canada urges federal oversight of stablecoins
Canada's central bank wants federal oversight for stablecoins, saying domestic use is rising and the country needs clear national rules to keep up with other nations.
Because stablecoins are being used so widely, officials say Canada needs consistent federal oversight to protect consumers and the financial system. The regulator also urged all levels of government to work together to update the country’s payment rules.
Ron Morrow, the Bank of Canada's Executive Director for Payments, Supervision and Oversight, spoke in Ottawa about the need for quick action on stablecoin regulation. According to him, people increasingly use stablecoins for transfers that offer lower costs and faster settlement, but these lack the protections found in traditional banking.
Ron Morrow, the Bank of Canada's Executive Director for Payments, Supervision and Oversight, spoke in Ottawa about the need for quick action on stablecoin regulation. According to him, people increasingly use stablecoins for transfers that offer lower costs and faster settlement, but these lack the protections found in traditional banking.
The central bank described the issue as both a consumer protection gap and a competitiveness challenge as other countries create national rules. Morrow pointed to Canada's split approach between federal and provincial responsibilities as a barrier to unified oversight.
Bank of Canada materials say consumers have limited options when stablecoin transactions go wrong because these products operate outside the regulated financial system. The regulator argued that bringing qualifying stablecoins under existing oversight would better protect users and reduce system-wide risk.
The Bank of Canada has previously noted benefits like faster, cheaper transfers alongside risks including market runs, leverage buildup in decentralized finance, and spillovers to traditional markets. Federal researchers have highlighted jurisdictional complexity in Canada, where payment services typically fall under federal oversight while investment features may trigger provincial securities rules.
Bank of Canada materials say consumers have limited options when stablecoin transactions go wrong because these products operate outside the regulated financial system. The regulator argued that bringing qualifying stablecoins under existing oversight would better protect users and reduce system-wide risk.
At the end of the day, for stablecoins to be seen as money, they need to be as safe and stable as the balance in your bank account,the Bank wrote in a speech summary on payments innovation.
Several countries have already enacted laws to regulate stablecoins, while Canada is continuing a multi-year effort to modernize its payments infrastructure. The central bank is rolling out faster domestic systems and exploring cross-border links, viewing stablecoin policy as part of a broader push to make payments more efficient without compromising safety.
The Bank of Canada has previously noted benefits like faster, cheaper transfers alongside risks including market runs, leverage buildup in decentralized finance, and spillovers to traditional markets. Federal researchers have highlighted jurisdictional complexity in Canada, where payment services typically fall under federal oversight while investment features may trigger provincial securities rules.
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