The Canadian government has unveiled plans to establish a dedicated regulatory framework for fiat-pegged stablecoins in its 2025 federal budget. This move is aimed at promoting secure innovation and protecting consumers in the fast-growing digital asset sector.
The upcoming legislation will impose stringent requirements on stablecoin issuers, specifically mandating them to hold and manage adequate asset reserves to back the stablecoins, establish clear redemption policies for users, implement robust risk management frameworks, and safeguard personal information.
The budget document further stressed the necessity of national security, stating that the legislation will include “national security safeguards to support the integrity of the framework so that fiat-backed stablecoins are safe and secure for consumers and businesses to use.”
Canada’s policy decision arrives amid a significant global movement to regulate stablecoins, a trend that gained considerable speed after the U.S. passed its GENIUS stablecoin act in July. This regulatory push is crucial given the global stablecoin supply has ballooned to approximately $291 billion, with U.S. dollar-pegged tokens dominating the market.
Prior to the budget announcement, industry stakeholders and regulators, including officials from the Department of Finance Canada, engaged in intensive talks to address pivotal concerns, such as the legal classification of stablecoins and strategies to mitigate capital flight toward U.S. dollar-backed assets. While the budget confirmed the new framework, it did not disclose the government’s final conclusion on those specific, complex matters.
To ensure effective administration of the new rules, the Bank of Canada has been allocated $10 million from its Consolidated Revenue Fund remittances over the two fiscal years starting in 2026-27.
Following this initial period, the ongoing annual administrative costs, estimated at $5 million, will be recovered through fees levied directly on the regulated stablecoin issuers.
Furthermore, the government is preparing amendments to the existing Retail Payment Activities Act. These amendments are intended to activate regulatory oversight over payment service providers that utilize stablecoins, effectively integrating these digital assets into the broader Canadian payment ecosystem.
Ultimately, the government stated the legislation’s goal is to “promote safe innovation of digital assets” and ensure that appropriate policies for stablecoin management are in place, thereby directly benefiting Canadians.
