This executive summary lays out highlights from the report聽Putting Canada at the Forefront of Stablecoins聽written by Max Bell School聽Master of Public Policy聽students Betselot Bekele, Alexandre Lavigne, and Th茅odore Sainte-Marie as part of the 2026 Policy Lab.
Access the summary and presentation below, and read their full report聽here.听
Stablecoins (referred to as 鈥榗oins鈥�) are among the most consequential payment innovations in a generation, and Canada has a narrow window to build a competitive Canadian stablecoin on its own terms before foreign currency-backed coins completely set the standard. These digital assets are designed to hold a stable value by being pegged to a reference asset, most often a national currency such as the U.S. dollar, which is what sets them apart from volatile cryptocurrencies like Bitcoin and Ethereum that are used mainly for speculation. Their merit lies in offering a reliable way to make digital payments and move money across borders.
As a result, regulatory responses to them have accelerated worldwide. Canada has now passed the Stablecoin Act (referred to as the 鈥楢ct鈥�) through Bill C-15, introduced in November 2025, which establishes the country鈥檚 first dedicated regulatory framework and is intended to align with peer jurisdictions. With that, the following challenge has been put forward to us:聽鈥淗ow might the rise of stablecoins as a medium of exchange reshape competition in financial markets and adjacent sectors, and what regulatory or policy frameworks are needed to ensure innovation, consumer protection, and market integrity?鈥�
Although consumer protection is essential, this report concentrates on competition and innovation while preserving financial stability and market integrity.
The central problem identified is that, although the Stablecoin Act is an important step, it is too cautious. It protects stability but holds back a competitive Canadian stablecoin market in four ways. The ban on return to holders weakens the case for issuing or holding a Canadian coin. It does little to ensure that the domestic market is interoperable rather than fragmented. It regulates instruments by their technology rather than by their functions, leaving room for arbitrage as new products emerge. And it leaves the dominance of foreign stablecoins and the questions of monetary sovereignty that come with it, unresolved. The result is a framework that carries the costs of caution without yet delivering its intended benefits.
To address this, the report first explains what stablecoins are and how Canada has chosen to regulate them, and then draws lessons from the approaches taken by the United States (U.S.), the United Kingdom (U.K.), and the European Union (EU). We then assess policy options that best align with the goals of our policy question.
- Policy Option 1 - A Sovereign Anchor for Canadian Stablecoins: Intermediary-Based聽Rewards with Central Bank Digital Currency Reserves.
- Policy Option 2 鈥� A Fast Track to a Competitive Stablecoin: Intermediary-Based Rewards聽with a Short-term Liquidity Backstop.
- Policy Option 3 鈥� Value Retaining Digital Money: Inflation-Capped Stablecoin with a聽Liquidity Backstop.
- Cross-Cutting Policy Option 鈥� A Testing Ground for the Future: Establishing a聽Mandatory Regulatory Sandbox for Emerging Stablecoin-like Technologies.
Our recommendation is to move on two tracks at once. In the near term, Canada should deploy Option Two, intermediary-based rewards with a short-term liquidity backstop. This approach would require a targeted amendment to the Act, allowing Canadian stablecoins to become competitive quickly and with minimal legislative friction. In parallel, it should establish a mandatory regulatory sandbox that serves two purposes. The first is to test the more ambitious inflation-capped stablecoin of Option Three under supervision, so that its real behaviour can be observed at a limited scale before any permanent legislative change is made. The second is to behave as a standing home for emerging payment technologies with stablecoin characteristics that may not fit the Act as written, so that Canada can assess and adapt to new instruments as they appear rather than developing new legislation each time. Taken together, this approach lets Canada manage the risks of stablecoins while building a flexible framework that promotes competition and secures the country's long-term relevance in a fast-moving digital payments landscape.
Download the full version of this report聽here.
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