What is a stablecoin?
A stablecoin is a crypto-asset designed to hold a steady value against a reference currency, usually by backing each token with reserves its issuer promises to redeem. For a Canadian business, the key point is simple: a USD-referenced stablecoin is a US-dollar asset, so every payment received in one has to be converted before it becomes Canadian dollars.
Key points
- Fiat-referenced stablecoins aim to track a currency through reserves and a promise of redemption.
- A stablecoin can lose its peg; stability depends on the issuer, its reserves and market confidence.
- Canadian securities regulators use the term value-referenced crypto assets (VRCAs) for stablecoins.
- The federal Stablecoin Act received Royal Assent on March 26, 2026; Finance Canada expects it to come into force in 2027.
- A CAD business receiving a USD-referenced token converts every payment, which is a real and recurring cost.
How a fiat-referenced stablecoin works
An issuer creates tokens on a blockchain and, in the usual model, holds reserve assets such as cash and short-term government securities intended to equal or exceed the tokens outstanding. Approved customers of the issuer can redeem tokens for the reference currency, which is what anchors the price.
A business receiving stablecoins may never deal with the issuer directly. Holders typically buy and sell tokens through intermediaries or receive them as payment, relying on the redemption promise working in the background. The token itself moves on a public blockchain like any other crypto-asset: quickly, at any hour, and generally irreversibly.
Not every stablecoin uses this model. Some rely on crypto-asset collateral or algorithms rather than fiat reserves, and their risks differ. This guide focuses on fiat-referenced tokens.
Reserves, redemption and depeg risk
A stablecoin is only as steady as confidence in its reserves and its redemption process. If holders doubt that tokens can be redeemed at par, the market price can fall below the reference value, an event usually called a depeg.
- Reserve quality: what the reserves are, where they are held, and how often they are reported.
- Redemption rights: who can redeem, how quickly, at what fee, and whether there are minimums.
- Issuer risk: the governance, legal structure and wind-down plans of the issuer.
- Market liquidity: whether you can sell the token for close to its reference value when you need to.
- Network and contract risk: the blockchain and token contract can have outages or flaws, and some token designs let the issuer freeze tokens.
A stablecoin can trade below its reference value, sometimes quickly. Treat any holding as an asset with issuer and market risk, not as cash in a bank account.
What Canadian securities regulators call them
In CSA Staff Notice 21-332 (February 22, 2023), the Canadian Securities Administrators introduced the term value-referenced crypto assets (VRCAs) for stablecoins and said they may be securities and/or derivatives in several jurisdictions.
CSA Staff Notice 21-333 (October 5, 2023) set interim terms under which registered or pre-registered crypto asset trading platforms may let clients trade certain fiat-backed VRCAs, subject to issuer undertakings and reserve and disclosure conditions. On September 26, 2024, the CSA extended the compliance deadline for platforms regarding VRCAs.
Provincial securities law is administered province by province. As of October 30, 2026, how the federal Stablecoin Act will fit with provincial securities law is still being worked out. The CSA stablecoin status page tracks this.
The federal Stablecoin Act
The Stablecoin Act was announced in Budget 2025 (November 4, 2025) and enacted through Bill C-15, which received Royal Assent on March 26, 2026 (S.C. 2026, c. 3). Supporting regulations are being developed, and Finance Canada expects the framework to come into force in 2027.
Once in force, the Act makes the Bank of Canada the federal supervisor of in-scope fiat-referenced stablecoin issuers. The framework includes:
- a public registry of issuers;
- redemption at par in the reference currency;
- reserves of high-quality liquid assets at least equal to outstanding stablecoins, with monthly reserve reporting;
- governance, risk management, data security and wind-down policies.
Closed-loop stablecoins and issuers that are financial institutions or central banks are excluded. Until the framework is in force, no stablecoin is approved or registered under the Act. Details are on the Stablecoin Act page.
Why a USD token means converting every payment
If your costs, payroll and taxes are in Canadian dollars, a payment received in a USD-referenced stablecoin is not finished when it arrives. It has to be converted to Canadian dollars and withdrawn to your bank account, and both steps cost money.
Suppose a business receives $50,000 a month in USD stablecoin payments averaging $120 into a self-hosted wallet. Using the site's default assumptions (illustrative, not market data), the monthly cost is about $771, or 1.54% of volume. Of that, about $500 is the assumed 1% USD-to-CAD conversion, about $250 is a 0.5% off-ramp cost and about $21 is network fees.
In other words, the conversion is the largest single cost in this illustration, and it applies to domestic customers as well as foreign ones. A CAD-referenced token would avoid the currency conversion but not the off-ramp. The price volatility and conversion guide covers conversion timing in more depth.
| Component | Monthly cost |
|---|---|
| USD-to-CAD conversion (1%) | $500.00 |
| Off-ramp to bank account (0.5%) | $250.00 |
| Network fees ($0.05 × about 417 payments) | $20.83 |
| Total | $770.83 (1.54%) |
Questions to answer before accepting one
Accepting stablecoins is an operational decision as much as a payment choice. Work through custody, conversion, records and tax with your advisers. Useful starting points are custody models explained and stablecoins vs cards for merchants.
- Decide which token and which network you would accept, and why.
- Choose a custody model: self-hosted wallet, custodian, or a processor that converts to Canadian dollars.
- Find out what conversion spread and off-ramp fees apply, and how long withdrawals take.
- Set a policy for what happens if the token trades away from its reference value.
- Confirm record-keeping and tax treatment with a CPA, and check FINTRAC guidance for your model.
Questions people ask
Is a stablecoin the same as a Canadian dollar in the bank?
No. It is a crypto-asset whose value depends on the issuer's reserves and redemption process. It can trade below its reference value and is not a bank deposit.
Are any stablecoins approved under the Stablecoin Act?
Not as of October 30, 2026. The Act received Royal Assent on March 26, 2026, but Finance Canada expects the framework to come into force in 2027.
What is a VRCA?
Value-referenced crypto asset is the term the Canadian Securities Administrators introduced in February 2023 for stablecoins. The CSA said VRCAs may be securities and/or derivatives in several jurisdictions.
Why would a Canadian business pay conversion costs on a domestic sale?
If the customer pays in a USD-referenced token, the business holds US-dollar value and must convert it to Canadian dollars, whatever country the customer is in.
Sources
- Finance Canada — Canada's stablecoin framework
- LEGISinfo — Bill C-15 (45-1)
- CSA — Update to crypto asset trading platforms about value-referenced crypto assets
- OSC — CSA Staff Notice 21-333
Reviewed October 30, 2026. Educational information only; not financial, legal, tax or investment advice. This site does not process payments or hold funds.