Ottawa: Canada is preparing to introduce legislation to regulate fiat-backed stablecoins, marking a major step toward creating a secure and transparent digital asset framework. The proposal was unveiled in the 2025 Federal Budget, signaling the country’s intent to promote “safe innovation” while protecting consumers and financial stability.
According to the budget document, the upcoming legislation will require stablecoin issuers to:
Maintain adequate reserve holdings,
Implement clear redemption policies,
Establish risk management frameworks, and
Ensure protection of users’ personal information.
“The legislation will also 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,” the document stated.
Oversight and Implementation
The Bank of Canada will oversee the new regulatory regime, retaining CA $10 million from its Consolidated Revenue Fund remittances over two years beginning 2026–27 to administer the framework. From 2028 onward, the bank’s annual administrative costs, estimated at CA $5 million, will be funded through fees collected from regulated stablecoin issuers.
In parallel, the federal government is preparing amendments to the Retail Payment Activities Act to extend oversight to payment service providers utilizing stablecoins.
Officials said the legislation aims to foster confidence and accountability in the fast-evolving crypto ecosystem, ensuring stability while enabling innovation.
Global Context and Industry Consultation
According to Bloomberg, Finance Canada and other federal agencies have been holding intensive consultations with industry stakeholders and regulators to finalize the classification and risk framework for stablecoins. The talks reportedly focused on avoiding capital flight to U.S. dollar-backed tokens while encouraging domestic innovation.
The announcement aligns Canada with a growing global movement toward stablecoin regulation. The U.S. GENIUS Stablecoin Act, passed in July 2025, has become a model for digital asset oversight. Similarly, Europe’s MiCA framework and ongoing regulatory initiatives in Japan and South Korea reflect the worldwide trend toward establishing secure stablecoin ecosystems.
As of November 4, global stablecoin circulation totaled approximately $291 billion, with U.S. dollar-backed tokens dominating the market. Analysts at Standard Chartered estimate that up to $1 trillion could move from emerging market bank deposits into U.S. stablecoins by 2028.
Canada’s forthcoming legislation, experts say, could play a key role in retaining digital capital within Canadian markets while supporting the country’s ambition to be a leader in financial innovation.
(Source: The Block)
