Canada has announced plans to regulate fiat-backed stablecoins as part of its 2025 federal budget, unveiled on Tuesday, November 4. The proposed framework, which will fall under the oversight of the Bank of Canada, marks a major step in aligning Canada’s approach with the U.S. and other G7 economies that have moved to formalize rules around digital assets.
The announcement follows the U.S. Congress’s passage of the GENIUS Act in July 2025, a landmark stablecoin bill establishing clear reserve, redemption, and disclosure requirements for issuers. Canada’s move signals the government’s intent to ensure consistency across North American financial markets while modernizing its domestic payments infrastructure.
Key Features of the Legislation
According to the budget, the upcoming legislation will establish a clear regulatory perimeter for stablecoin issuers and payment providers operating in Canada. The framework’s core components include:
- Reserve Requirements: All issuers of fiat-backed stablecoins will be required to maintain adequate, high-quality reserves fully backing their tokens.
- Redemption Policies: Issuers must implement clear, reliable redemption mechanisms allowing holders to exchange tokens for fiat on demand.
- Risk Management Standards: The framework introduces mandatory risk controls to ensure liquidity, solvency, and operational resilience.
- Consumer Protection Measures: Safeguards will be enacted to protect Canadians’ financial data and ensure national security oversight.
- Central Bank Oversight: The Bank of Canada will play a central role in supervising compliance and overseeing systemic risks.
- Retail Payments Act Amendments: The Retail Payment Activities Act will be expanded to cover payment service providers processing stablecoin transactions.
The federal government plans to allocate $10 million over two years, starting in the 2026–2027 fiscal year, to support implementation. Ongoing administrative costs, estimated at $5 million annually, will be offset by regulatory fees charged to licensed issuers.
Modernizing Canada’s Payment Ecosystem
The move is part of a broader national initiative to modernize Canada’s payment systems, following the Bank of Canada’s earlier consultations on retail payment regulation and digital finance.
Financial analysts note that stablecoin oversight has become a critical component of global regulatory convergence, particularly as tokenized cash and digital settlement instruments gain traction among banks and fintech firms.
By establishing a comprehensive stablecoin framework, Canada positions itself among the first advanced economies to integrate digital asset regulation directly into its national budget strategy, underscoring Ottawa’s intent to balance innovation, consumer safety, and financial stability in the evolving digital economy.