Canada is finally starting to draw clear lines on how stablecoins operate within its financial system. Canada’s 2025 federal budget reveals plans to introduce national legislation to regulate fiat-pegged stablecoins, with the aim of making them safer for consumers and more transparent for businesses. The move comes after months of discussions among government officials, regulators and industry players and reflects Canada’s growing intent to keep pace with global efforts to bring order to the digital asset economy.
Proposed framework It is designed to balance innovation and accountability so that stablecoins do not compromise financial stability or national security. Here’s what Canada’s new approach means for the industry, the economy and the broader global cryptocurrency landscape.
Increased oversight of stablecoin issuers
New law will require stablecoins Issuers need to hold adequate reserves, establish clear redemption policies and have a robust risk management framework in place. We also implement strict privacy measures to protect your personal data. According to the budget, these measures are aimed at ensuring that fiat-backed stablecoins remain safe, reliable and fully redeemable. National security measures will be built into the framework to prevent abuse and systemic risks.
The role of the Bank of Canada and cost recovery
To administer this framework, the Bank of Canada will retain $10 million from Consolidated Revenue Fund transfers over two fiscal years beginning in 2026-2027. After that, ongoing costs, estimated at around $5 million per year, will be covered by fees from regulated stablecoin issuers. This model keeps regulation self-sustaining and shifts the cost burden from taxpayers to industry participants.
Expanding the regulatory network
In parallel, the government plans to amend the Retail Payment Activities Act to cover payment service providers that use stablecoins. This will close existing oversight gaps and ensure that both traditional and digital payment systems operate under consistent regulatory oversight.
Officials at the Treasury Department and other agencies are conducting extensive behind-the-scenes discussions with stakeholders to define stablecoin classifications and avoid capital flight to U.S.-based tokens. Although no final decision on classification was made public, the consultations demonstrated Canada’s collaborative and cautious approach.
Fostering secure digital innovation
Canada’s budget message is clear. Innovation is welcome, but it must be safe. The law aims to create a trusting environment for the growth of fintech while maintaining strong consumer protections. By putting in place clear rules and accountability measures, governments want to support, rather than stifle, the responsible development of digital assets.
Canada joins global regulatory trend
Canada’s move comes on the heels of the United States passing the GENIUS Stablecoin Act in July. The law is already shaping the global debate around fiat-backed digital assets. The European Market for Cryptoassets (MiCA) regulation is already in place, and Japan and South Korea are developing their own frameworks.
There are $291 billion worth of stablecoins in circulation, most pegged to the US dollar, and regulatory competition is heating up. Analysts at Standard Chartered even predict that up to $1 trillion could flow into U.S. stablecoins from emerging market bank deposits by 2028.
Meaning of the future
For Canada, this is not just about management, it’s also about reliability. By introducing regulations now, the country is establishing itself as a responsible player in the digital finance sector. If implemented effectively, this framework could increase investor confidence, attract legitimate innovation, and cement Canada’s reputation as a forward-thinking but prudent regulator in the digital currency era.
