In calm markets, one dollar-pegged stablecoin looks much like another. Transfers settle in minutes, the quoted price sits at a dollar and the reserve report arrives on schedule. The differences surface when something breaks.
Canada now has two sets of rules written for that moment. Since late 2023, terms set by the Canadian Securities Administrators (CSA) have decided which stablecoins registered trading platforms may offer their clients. This March, the Stablecoin Act received royal assent as part of Bill C-15, the federal budget bill, and once in force it will put issuers under Bank of Canada supervision.
Rules like these usually trace back to specific failures. The four cases below, from 2019 to 2025, each broke at a different point between a holder and a dollar, and each shows what Canadian rules now ask to hold there. It’s a reading of infrastructure, not a view on any token.
QuadrigaCX, 2019: The Failure Was in the Platform’s Books
In January 2019, QuadrigaCX announced that its co-founder and chief executive, Gerald Cotten, had died in India the month before. Within weeks the platform had stopped operating and filed for creditor protection.
A staff review by the Ontario Securities Commission, published the following year, counted more than 76,000 clients owed a combined C$215 million, with losses of at least C$169 million. About C$115 million of the shortfall came from Cotten trading against his own clients through accounts opened under aliases and credited with fictitious balances. In effect, the review said, the platform “operated like a Ponzi scheme.”
Early speculation blamed coins stranded in wallets only Cotten could open, and the review found that wasn’t where most of the money went. The coins people thought they owned existed on one intermediary’s books, and the books were false. OSC staff wrote that the platform’s lack of registration had helped Cotten commit a large-scale fraud without detection.
Canada’s first stablecoin rules also sit with platforms. A platform that is registered, or has given the CSA a pre-registration undertaking, may let clients buy or deposit a stablecoin only on the terms in CSA Staff Notice 21-333, published in October 2023. Coins that weren’t fiat-backed had to be closed to new purchases by the end of that year, and the CSA later set the final date for the rest at the end of 2024.
TerraUSD, 2022: A Peg Backed by Its Own Token Had Nothing to Sell
TerraUSD (UST) was designed to hold a dollar without holding dollars. The Securities and Exchange Commission, announcing fraud charges in 2023, said UST could be exchanged for LUNA, a sister token, so the peg rested on demand for the very system it was meant to steady. UST depegged in May 2022, the agency said, and both tokens fell close to zero. Reuters put the value lost at an estimated 40 billion US dollars.
An earlier slip had been covered up. When UST dipped in 2021, Terraform Labs co-founder Do Kwon told investors an algorithm had restored the peg, while a trading firm he had arranged secretly bought the token. Kwon pleaded guilty in 2025, admitting “false and misleading statements about why it regained its peg,” and a federal judge in Manhattan sentenced him to 15 years.
Canadian text answers both failures. The CSA terms restrict a qualifying coin’s reserve largely to cash, short-dated Canadian or US government debt and regulated money market funds. The federal act defines a stablecoin as any digital asset designed to hold its value against one fiat currency, so as written, a coin built like UST would fall inside the law and owe a reserve made only of that currency or high-quality liquid assets denominated in it.
Platforms must also give clients a statement on each qualifying coin listing material departures from par on their venue over the past 12 months, so a wobble like UST’s in 2021 would have to appear there.
USDC, 2023: Full Reserves Still Waited for Monday’s Bank Wires
USDC was backed by real dollars, and it broke anyway. Late on Friday, March 10, 2023, hours after regulators closed Silicon Valley Bank, Circle said wires it had started the day before had not been processed, leaving 3.3 billion of roughly 40 billion US dollars in reserves at the failed bank. Fortune reported that USDC fell below 90 cents early on Saturday.
The reserve was big enough. Access to a slice of it, over a weekend with the banks shut, was the problem. On Sunday the Treasury, the Federal Reserve and the FDIC said every SVB depositor, insured or not, could reach their money from Monday, and USDC traded near a dollar again by midnight. Circle began clearing mint and redemption requests on Monday morning, when US banks reopened, and within days reported 3.8 billion USDC redeemed.
Two parts of the federal act speak to this. It places reserve assets with qualified custodians, segregated from the custodian’s own holdings and beyond its creditors’ reach in an insolvency. The act doesn’t say how that test applies to cash in an ordinary bank account, the form the stranded 3.3 billion dollars took.
The second part is a published redemption policy, which has to cover the manner and timing of redemption, any fees and the role of third parties such as banks. That wouldn’t remove a weekend gap. It would let a holder read in advance how long a redemption may take and whose opening hours it depends on.
PYUSD, 2025: A Sound Reserve Did Not Stop a 300 Trillion Mint
In October 2025, at 3:12 p.m. Eastern, Paxos created 300 trillion PYUSD, the PayPal-branded stablecoin it issues, in what it called a mistake during an internal transfer. PYUSD had a market value of about 2.6 billion dollars at the time, The Block reported. Paxos burned the excess within 30 minutes and said customer funds were safe, while Aave, a lending protocol, froze its PYUSD markets as a precaution.
A once-a-day reserve check would likely have missed it. The CSA terms test the reserve against coins outstanding at least once a day, and these coins existed for under half an hour. The issuer’s own monitoring contained the damage, with a lending protocol’s freeze as a backstop.
The federal answer is procedural. Issuers must keep a risk management policy covering operational resilience, incident response and recovery from disruptions, and the act defines an incident as any unplanned event that degrades or breaks an activity tied to the stablecoin. An issuer that becomes aware of one must notify the Bank of Canada without delay. A mint error fixed in minutes would appear to qualify, so the issuer would owe the Bank a notice even after the excess had been burned.
Gaming Cashier Rules Put the Exit in the Player’s Name
Whatever breaks, a holder’s way out ends at the same step, where a coin turns back into dollars in an account. Under the CSA terms, the right to redeem one for one belongs to a holder with an account at the issuer, and the issuer has to publish any criteria for qualifying to open one. A retail buyer on a platform exits by selling the coin there and withdrawing the dollars. Either way, the coin alone opens no door. An account does, and accounts come with conditions on who may hold them.
Ontario’s and Alberta’s online gambling regulators, the AGCO and AGLC, write that condition into the cashier. Their standards let a registered operator accept a deposit only once a financial services provider has authorized it, pay a withdrawal only into an account the player legally holds, and bar cryptocurrency outright. Read plainly, they leave no obvious place for a stablecoin as the cashier rail at a registered Ontario or Alberta site, however well its reserve is built.
The condition survives even when nothing went in. A no-deposit promotion has no entry rail, yet the site still needs a verified way out: cashing out can call for ID and proof of a payment method, and some sites send withdrawals back through a deposit method even when the bonus needed none. Someone outside those two provinces checking what has to hold before that exit opens would start at Canada no deposit bonus codes, a Bonus.com explainer on claiming and cashing out that says its offers are not for Ontario or Alberta residents.
Two Rulebooks, and Only One of Them Running
The platform layer has run since 2023 and reaches issuers indirectly. A platform can offer a coin only if its issuer has filed an undertaking with the CSA and publishes a monthly assurance report on the reserve within 45 days of month-end, covering the last business day and at least one day the accountant picks at random.
The issuer layer is written but idle. The Stablecoin Act takes effect on a date the federal cabinet fixes by order, and Finance Canada expects 12 to 18 months of regulatory work from early 2026, with draft regulations published for comment first. The Paypers reported the same expectation of a start next year. Securities regulators keep the trading side either way, Finance Canada says.
Much of what the four cases tested is left to those regulations: which firms besides financial institutions can be qualified custodians, how fast a redemption must be paid, what an incident notice must contain and which liquid assets count. Until the drafts appear, nobody outside government can say how strict the federal layer will be.
A Stablecoin Is Only as Strong as Its Slowest Exit
The next break probably won’t copy any of these four. Each surfaced somewhere the previous crisis hadn’t, and rules written afterward tend to guard the last door that failed.
That leaves holders with a narrower job than predicting the next failure: knowing which exit a given coin depends on, and whether that exit is written down anywhere they can read it.
Rules on both sides of the exit will keep moving, with the federal regulations still to come and Alberta’s regulated gaming market less than three months old. Each change will take effect through an official notice, which binds in a way no summary does, whether that summary comes from trade press or a publisher account like Bonus.com on X.
Whichever exit a holder relies on, the time to read its terms is before a weekend when the banks are closed.
Featured image by Shutterstock.
