Canada Moves to Regulate Stablecoins in New Budget

Canada will move to fiat-backed regulation stablecoinsthe government announced on Tuesday in its 2025 budget. The plan will create a legal framework for the issuance and use of stablecoins in Canada, with the goal of bringing oversight and clarity to a rapidly growing corner of digital finance.

“This legislation will require issuers to maintain and manage adequate asset reserves, establish redemption policies, implement risk management frameworks, and protect the sensitive and personal information of Canadians,” the budget said.

“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.”

To oversee the new regime, the Bank of Canada will retain $10 million over two years, starting in 2026-27, from its remittances to the federal treasury. Administrative costs are then expected to be $5 million per year, offset by fees from regulated issuers. Related amendments to the Retail Payment Activities Act will allow regulators to oversee payment providers that use stablecoins.

Stablecoins have become one of the most talked about parts. According to TRM Labs, now account for about 30% of all crypto transactions, with the global volume exceeding $4 trillion between January and August 2025, an increase of 83% from the same period a year earlier. More than 90% of fiat-backed stablecoins are pegged to the US dollar, with Tether (USDT) and Circle (USDC) dominating the market.

Its regulatory plans place Canada among a growing list of jurisdictions setting rules for stablecoins. The United States passed GENIUS Act earlier this year, while Hong Kong and the European Union developed their own frameworks. Whether these steps will stimulate mainstream adoption or simply mark another high point in the recurring cycle of crypto hype – like other previous technologies that fizzled out, such as NFTs – remains uncertain.

Momentum has been building in Canada for months. In September, Ron Morrow, Executive Director of Payments, Supervision and Oversight at the Bank of Canada, called for the national regulation of stablecoins, warning that Canada has lagged behind peers such as the United States and the United Kingdom in modernizing its payment infrastructure. Morrow also noted that cross-border transfer costs remain much higher in Canada than in those countries.

Canada’s GENIUS Act?

Industry groups have widely applauded the government’s announcement. The Canadian Web3 Council said Decrypt hailed the budget measure as “Canada’s answer to the US GENIUS Act.”

“[This establishes] a path for qualified innovators to issue fiat-backed stablecoins under federal oversight,” said Morva Rohani, executive director of the council.

The board said the government’s commitment could foster competition in payments and reduce transaction costs. However, he warned that overlapping regulations could disadvantage Canadian companies compared to their American counterparts.

Canadian crypto firm Shakepay also praised the move. A spokesperson called it a “big step forward for fintech and digital payments in Canada.”

“We’ve been pushing for this kind of clarity for years at Shakepay, and it’s great to see real progress. Now the focus turns to implementation: making sure the framework remains open, proportionate and accessible, so fintechs can help build the next generation of trusted payment rails for Canadians,” they said. Decrypt.

But while stablecoins have their supporters, others have suggested they can also be risky. The Bank for International Settlements has warned that stablecoins undermine monetary sovereignty, present problems of transparency, flight of risk capital from developing countries and that their peg to fiat currency may be fragile.