Ottawa: Canada’s 2025 Federal Budget has unveiled plans to introduce new stablecoin legislation, closely aligned with the U.S. GENIUS Act, as part of the government’s broader payments modernization strategy.
The proposal, announced on November 4, aims to regulate fiat-backed digital assets to make transactions faster, safer, and more transparent while addressing emerging security and systemic risks in the growing crypto economy.
Under the plan, stablecoin issuers will be required to:
Maintain adequate reserve assets,
Comply with national security standards,
Implement redemption and risk management policies, and
Adhere to data protection requirements.
The Bank of Canada will administer the system, with CA $10 million allocated over two years (2026–27) to oversee implementation. Annual operating costs of CA $5 million will be funded through fees from regulated issuers.
Security Concerns and Crypto Risks
While the budget notes that national security safeguards will be embedded in the framework, it stops short of listing specific measures.
Chainalysis, a blockchain analytics firm, cautioned that the stablecoin ecosystem remains vulnerable to shocks — recalling the TerraUSD (UST) collapse in May 2022, which wiped out over $60 billion in market value after losing its U.S. dollar peg.
“The incident underscored the dangers of experimental token models and inadequate collateralization,” Chainalysis said.
The firm also cited major exploits such as the Euler Finance hack in March 2023 (losses of $197 million) and the Curve Finance breach in July 2023, which compromised hundreds of millions in assets.
According to Chainalysis, wider institutional adoption could amplify risks:
“A significant depegging event could compel institutions to realize losses, triggering wider financial contagion.”
Industry Reaction: Optimism and Advocacy
Despite these risks, the Canadian crypto industry has largely welcomed the government’s move.
Stand With Crypto Canada, representing more than 60,000 advocates, called the measure a “major step toward faster, cheaper, and borderless payments.”
“We’re working to ensure Canada builds a thriving blockchain ecosystem that powers innovation and economic growth,” the group said on X (formerly Twitter).
Coinbase Canada CEO Lucas Matheson hailed the development as a “turning point for innovation,” adding:
“Stablecoins will make payments faster, cheaper, and more accessible for all. This shows Canada is ready to lead on digital money.”
Mirroring the U.S. GENIUS Act
Canada’s move strongly mirrors the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, passed by U.S. Congress in June 2025 with bipartisan support.
The GENIUS Act established:
Clear legal definitions for payment stablecoins,
1:1 reserve backing in cash or Treasury bills,
Mandatory audits and reporting, and
AML/KYC compliance requirements.
Large issuers with over $10 billion in circulation fall under federal supervision, while smaller firms are regulated at the state level.
Observers note that Canada’s proposal closely echoes this model — aiming to protect consumers, preserve monetary stability, and position the Canadian dollar competitively in the evolving digital economy.
Stablecoin Market Outlook
According to Bitwise CIO Matt Hougan, the stablecoin and tokenization market is on the verge of exponential expansion.
“People underestimate how fast these technologies will remake markets,” Hougan said. “It’s easy to imagine this market growing 10x or more.”
As of January 2025, total stablecoin supply stood at $187.5 billion, with USDT, USDC, and DAI controlling 97% of total users. USDT dominates the sector, serving over 5.8 million wallets — more than twice USDC’s footprint.
Canada’s approach, analysts say, balances innovation with accountability — potentially positioning it among the global leaders in crypto regulation, alongside the U.S., EU, Japan, and South Korea.
(Source: The Block)
