The regulation of stablecoins in Canada is in flux. As the crypto asset market awaits the coming into force of the Stablecoin Act (Canada), which will regulate the issuance of fiat-backed stablecoins by non-financial-institutions, and the publication of related regulations, the regulation of activities relating to stablecoins in Canada continues to be carried out predominantly by securities regulators.
Public guidance indicates that securities regulatory staff expect firms engaged in the business of trading in stablecoins, such as Canada’s registered crypto asset trading platforms (CTPs), to be registered as dealers or rely on an exemption from registration, which has generally meant one founded in published rules. Now, a recently published relief decision of the Ontario Securities Commission (OSC) provides a new pathway to regulated trading, without a Canadian registration, that may be attractive to firms in the business of trading in stablecoins.
On July 30, 2026, the OSC issued an exemptive relief decision (Decision) in the matter of zerohash llc (Company), a United States-based crypto asset infrastructure provider. The Decision exempts the Company from the dealer registration requirement under the securities legislation in each province and territory of Canada in respect of transactions to buy and sell a limited set of stablecoins on an immediate-delivery basis. The Decision is subject to a four-year sunset clause and certain conditions.
The Decision is significant for market participants seeking to offer or facilitate stablecoin trading from Canada or with Canadian counterparties. While it is discretionary and based on the particular facts presented, the Decision offers the prospect of a viable pathway for other regulated entities to trade in stablecoins on an immediate-delivery basis without dealer registration. It also reaffirms the published view of securities regulatory staff that trading for a business purpose in fiat-backed stablecoins is registrable.
Background
Staff of the Canadian securities regulators (Canadian Securities Administrators or CSA) have maintained the position that “value-referenced crypto assets” that are intended to replicate the value of a single fiat currency (stablecoins) “generally meet the definition of ‘security’ and/or would meet the definition of ‘derivative’ in several jurisdictions” under Canadian securities legislation (see CSA Staff Notice 21-332 - Crypto Asset Trading Platforms: Pre-Registration Undertakings – Changes to Enhance Canadian Investor Protection). A person or company that is in the business of trading in securities is required to be registered under securities legislation or rely on an exemption from registration.
Separately, CSA staff have previously published guidance indicating that certain platforms that facilitate the trading of crypto assets may not be subject to securities legislation where (1) the underlying crypto asset itself is not a security or derivative, and (2) the contract or instrument for the purchase, sale or delivery of the crypto asset results in an obligation to make immediate delivery and is settled by the immediate delivery of the crypto asset (Immediate Delivery Platform) (see CSA Staff Notice 21-327 - Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets). However, because CSA staff consider stablecoins generally to be securities and/or derivatives, unregistered Immediate Delivery Platforms have not been permitted to offer stablecoin trading.
Registered CTPs are generally restricted from trading in crypto assets that are securities or derivatives. However, under an interim framework, CSA staff have permitted CTPs to allow their clients to buy or deposit certain specific stablecoins, provided that the issuer of the stablecoin has filed an undertaking acceptable to the CSA (Specified Stablecoin). Currently, the only Specified Stablecoins are USDC and QCAD.
The Decision
The Decision grants the Company relief from the dealer registration requirement to offer in Canada an immediate-delivery-based platform through which it will enter into bilateral transactions, as principal, with Canadian clients to buy or sell Specified Stablecoins. Each such transaction will be settled by the immediate delivery of the Specified Stablecoin or the fiat, as the case may be, to the client.
Key features of and conditions to the relief include the following:
- Maintain key regulatory licenses: The Decision notes that the Company has, and requires it to maintain, registration as a foreign money service business with the Financial Transactions and Reports Analysis Centre of Canada, as well as a license to engage in virtual currency business activity with the New York State Department of Financial Services.
- Not in default: The Company represented that it is not in default of securities, commodity futures or derivatives legislation in Canada.
- No leverage: The Company may not extend credit or margin to clients for the trades.
- Reporting: The Company must notify the OSC of regulatory actions and provide quarterly reporting regarding trading activity, complaints, fraud and cybersecurity events.
- Investor protection: The Company must promptly make any changes to its business practices or policies identified by itself or the OSC to address investor protection concerns.
- Fees: The Company must comply with the OSC’s fee rule as if it were a registrant.
- Four-year sunset: The Decision expires after four years.
The Future of Securities Regulation of Stablecoins
After the coming into force of the Stablecoin Act, which is focused on issuer regulation, it is currently expected that securities regulators will maintain a role in regulating certain activities relating to stablecoins, particularly relating to trading and intermediation. But the CSA’s views on the exact scope of that role have not yet been made clear.
The federal Department of Finance has stated in a policy paper that the “use and exchange of fiat-backed stablecoins will continue to be regulated according to how they are used”, with securities regulators regulating exchange and trading of stablecoins, and the Bank of Canada, under the Retail Payment Activities Act (RPAA), supervising payment service providers that perform payment functions in prescribed stablecoins once related amendments to the RPAA take effect. In a recent podcast interview, Grant Vingoe, chief executive officer of the OSC, said, “[o]ur goal would be to avoid duplicative regulation, but we’ll have to see how that evolves… I think it’s very important that an instrument that is used to facilitate trading be evaluated by securities regulators in connection with that secondary market usage and the role it fulfills to intermediate transactions.”
Conclusion
In the context of a securities regulatory framework that was designed for traditional investment classes but is being applied to crypto assets, the Decision provides a welcome possible pathway to other businesses that may be interested in securities-compliant trading in stablecoins in Canada without the burden of registration. As a discretionary relief order, the Decision is based on the particular facts and circumstances of the applicant and may not be necessarily applicable to other firms. Early engagement with experienced Canadian counsel will provide valuable assistance in assessing the possible availability of similar or other relief for firms trading in stablecoins for a business purpose.
For more information, please contact the authors or any other member of our FinTech group.
