Bank of Canada: Stablecoins Must Be Fully Backed by High-Quality Liquid Assets
The Bank of Canada has demanded that stablecoins used in Canada be fully backed by high-quality liquid assets (HQLA), signaling a firmer stance on crypto payment instruments. The central bank said the requirement is designed to cut the risk of liquidity runs and protect consumers by ensuring reserves are held in readily marketable, low-risk assets such as central bank balances and government debt. The move, reported by Promit Mukherjee and David Ljunggren, emphasizes reserve quality as a core credibility factor.
If enacted, the rule would likely push issuers away from commercial paper or opaque reserve mixes toward safer, lower-yield holdings, raising issuance costs but strengthening trust and bank interoperability. That tradeoff could curb risky yield-bearing products and speed institutional adoption, while shaping regulatory expectations beyond Canada. Market participants and DeFi platforms will watch how quickly issuers rebalance reserves and whether regulators provide transition guidance.