Canada financial regulatory modernization

Canada is advancing several initiatives to modernize its financial sector and digital economy. The government is progressing toward the implementation of an open banking system, also known as consumer-driven banking. This framework is designed to allow individuals and businesses to securely share financial data across different lenders, replacing the practice of ‘screen scraping’ with more secure methods. The Department of Finance estimates the implementation will cost approximately $457.7 million over ten years, with potential consumer and business benefits totaling $13.2 billion. Initial tools for the open banking framework are expected to be available by the end of 2027.

In addition to open banking, the federal government has introduced proposed regulations for stablecoins. Following the Royal Assent of the Stablecoin Act in March, the Bank of Canada will oversee digital assets with interprovincial or international reach. A 60-day public consultation period is currently underway and is scheduled to run until December 23, 2026.

The draft regulations, which are expected to be implemented by fall 2027, target non-bank issuers of fiat-backed stablecoins, including certain foreign entities. Key requirements include maintaining reserves equal to at least 100% of outstanding stablecoins at qualified Canadian financial institutions, processing redemptions within three business days, and capping redemption fees at 1%. To prevent capital flight from traditional banks, the framework prohibits interest payments or yields linked to stablecoin holdings, though it may permit rewards specifically tied to transactions.