Canada’s extra cautious stablecoin path risks Web3 departure

After the read-only web of Web1 and the platform-driven era of Web2, Web3 proposes a blockchain-based internet structured around user ownership and decentralised control.

While global superpowers are moving to establish internet infrastructure in this new era, as seen in the U.S. government's GENIUS Act, Canada has yet to provide concrete guidance on the future of blockchain. But Morva Rohani, Executive Director of the Canadian Web3 Council (a non-profit trade association with members including big tech players such as Wealthsimple), says Canada wasn't always behind the pack.

"A few years ago, Canada could credibly claim leadership in certain areas. It was the first jurisdiction to approve a Bitcoin ETF, and the CSA framework offered a clearer path to operating than in many other markets at the time. That position has since eroded," said Rohani.

The European Union's Markets in Crypto-Assets (MiCA) regime has now entered into force, providing a harmonised framework across 27 member countries. Hong Kong and Singapore have rolled out licensing authorities designed to attract global firms.

Last year, the European Central Bank reported an approximate 700 per cent increase in Market capitalisation of euro-denominated MiCAR-authorised stablecoins. The organisation said regulatory clarity may have had a profound effect on the results.

Hubert Pun, a professor of Management Science at Ivey Business School, specialises in researching blockchain as an enterprise solution. He explained how, in Canada, stablecoins and crypto are treated as assets rather than payments. 

"If it is treated as a security, you have to pay interest, and the regulation is so much higher. We have to ask ourselves, what is the purpose of stablecoin? Is there supposed to be a security, or is that supposed to be a payment?" he said. "I strongly believe that its supposed to be a payment, and therefore it should be like a treated like a payment."

Hope may still be left for stablecoin payment believers. In November, the Canadian government completed a first reading of Bill C-15. While the draft act serves as an umbrella to implement certain budget provisions, including Personal Support Workers Tax Credits and amendments, the bill aims to enact the Stablecoin Act.

On December 10, 2025, a second reading referred the bill to the Standing Committee on Finance. Last week, in a meeting on Capitol Hill, Gloria Wong, Director, Digital Assets, at the Department of Finance, noted that faster international remittances are among the leading use cases driving the act's proposal.

As the bill stands, the government would regulate stablecoin issuers, imposing duties on persons who create stablecoins and make them available for purchase, directly or indirectly, by persons in Canada.

The Bank of Canada will be directed to maintain a public registry of stablecoin issuers. The Act also addresses, among other things, the redemption of stablecoins by issuers and the asset reserves they must maintain to fulfil their redemption obligations. If the minister overseeing operations deems a stablecoin purchase as unfufilled or a threat to national security, they may direct the bank to cancel the application for stablecoin purchases.

Rohani argued that Canada's approach to regulation has prioritised caution over clarity, resulting in uncertainty for an industry that is already subject to oversight.

"Much of the CSA regime relies on staff guidance, registration conditions, and undertakings rather than formal rule making, which limits predictability and creates ongoing uncertainty," said Rohani. "Canada remains stuck in foundational debates, and some regulators continue to approach the sector primarily through the lens of past market failures that largely occurred outside Canada, such as FTX and Celsius. While caution is understandable, the approach toward an already regulated domestic industry has become overly conservative and, at times, paternalistic."

She added that the next major step is the passage of federal stablecoin legislation, which she expects in the coming months. Once enacted, detailed regulations will be developed and implemented through a licensing regime - a process likely to take up to 18 months.

A 2023 report from the Standing Committee on Industry and Technology recommended that the Government of Canada recognise blockchain as an emerging industry in Canada, with significant long-term economic and job creation opportunities, while also following consultation with the provinces and stakeholders, establish a national blockchain strategy that clarifies the government's policy direction and regulatory approach, and demonstrates support for the industry.

Pun says provincial regulators will be another hurdle in realising this dream. 

"There's a lot of intraprovincial barriers, so we need to have a unified system that is led by the Canadian federal government," Pun said.

They added that for a stablecoin to function as a Canadian form of payment, it would need to be applied uniformly across all provinces. Internationally, Canada's comparatively weak Web3 framework is prompting businesses to move to jurisdictions with clearer rules.

"This is causing the urgency in the Canadian government, because the U.S. is moving fast with the GENIUS act. So now, if I am a Canadian firm, and I'd like to use some kind of stablecoin, well, I would love to use a Canadian one, but if Canada one is not yet mature, I am stuck to choose the US one. Being a 'Canadian' government, we need to have a sovereignty in our currency," said Pun.

The proposed act states that, although a stablecoin shall not be considered legal tender, it will not be classified as a federal security under federal securities laws. That being said, the bill's draft doesn't expressly prevent provincial securities laws from applying

"My personal vote is that now, in the infancy of stablecoin, a lot of things are starting to form in shape. I would love the Canadian government to take a little bit more risk to encourage more entrepreneurs who work in Canada," said Pun. "We may have the good talent...but after they find out that the regulation is too hard, they may move their talent to the U.S."