- Canada allocates $10 million for bank oversight of stablecoins.
- The new framework mandates full fiat reserves and transparent redemption rules.
- The policy aligns Canada’s payment system with U.S. GENIUS Act standards.
Canada has taken a bold step towards creating a national framework of fiat-backed stablecoins with the introduction of a federal budget (2025). The plan, outlined in the budget released on Tuesday, marks the first significant step for the country to regulate digital assets.
It aligns with the GENIUS Act proposed by the United States earlier this year. The project is designed to modernize Canada’s payment systems and reduce the cost of transactions. It is also aimed at accelerating the adoption of blockchain-related financial solutions in the Canadian economy.
Canada Reveals Stablecoins Regulation in 2025 Federal Budget (Source: X)
The Bank of Canada will administer the implementation. It will oversee compliance activities within two years, compared to the federal budget. These include supervision, employment, and the development of regulations, with a budget of $10 million.
Bank of Canada to Oversee Stablecoin Legislation
Reports indicate that the oversight program will operate between fiscal years 2026 and 2027. The cost of supervision is estimated at $5 million per year. This will be recovered later through the regulated issuers through the Retail Payment Activities Act.
The new law will require stablecoin issuers to maintain full reserves in fiat currency and disclose redemption policies. It will also establish a system of risk management that safeguards user information and ensures solvency.
The government indicated that the framework will enable confidence in digital payments. It is also aimed at bringing clarity to businesses in the country’s crypto industry. The move comes at a time when the Bank of Canada is trying to strike a balance between innovation and financial stability.
Most recently, the central bank put its central bank digital currency (CBDC) initiative on pause last year. The reason was that it did not find any convincing argument in favor of a national digital currency. In comparison, the new policy on stablecoin is an indication of transitioning to the use of solutions in the private sector to develop faster and more efficient payment systems.
Regulatory Context and Global Alignment
The regulatory path taken by the Canadian government follows that of the United States in its GENIUS Act of July 2025. The act demands full-reserve support of stablecoins and restricts issuers to licensed persons. The proposal of Ottawa is a matching commitment of oversight and consumer protection. It is also aimed at encouraging financial technology innovation.
The step puts Canada on the list of the increasing number of nations that establish legal regulations of stablecoins as their use spreads worldwide. The global market for stablecoins currently has a value of $309.1 billion. The U.S. Treasury predicts that this will reach 2 trillion by 2028.
Big payment systems like Western Union, MoneyGram, SWIFT, and Visa already have systems that utilize stablecoins. The use of USD Coin (USDC) in payments by one of the largest technology companies in Canada, Shopify, with the assistance of Stripe and Coinbase, demonstrates the growing commercial relevance of the asset.
Besides, the federal government’s move to establish legislative standards for stablecoins underscores its effort to modernize the national payments infrastructure. The move also positions Canada’s financial innovation strategy in line with global trends.
