Canada commits $10 million for stablecoin regulation. New laws will require reserves and risk management, following U.S. footsteps.
Canada is set to introduce new legislation. This will regulate fiat-backed stablecoins under its federal budget for 2025. This move follows the U.S. passing landmark laws for stablecoins in July. Therefore, stablecoin issuers will encounter strong requirements. They need to have enough reserves and set redemption policies now.
New Legislation Targets Non-Bank Canadian Dollar Stablecoins
The government’s budget for 2025, published on Tuesday, set out the plan. Specifically, the issuers must apply different risk management frameworks. This includes measures to ensure the protection of personal and financial data. Furthermore, Canada has pledged $10 million over 2 years beginning in 2026-27.
This funding will set up a stablecoin supervision program. It is part of the payments modernization plan in Canada. Moreover, the initiative seeks to put regulations on non-bank entities. These entities issue Canadian dollar-backed stablecoins. Therefore, the regulations cover the issues of risk management and information privacy. They also include national security issues.
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The initial $10 million funding will be pulled from the central bank. This allocation spans 2026–27. Subsequently, administrative costs will be five million dollars a year. These ongoing costs will be covered by fees from stablecoin issuers. As such, the program will be self-sustaining.
On top of these is the government’s plans for new legislation. This will require adequate asset reserves for the issuers. They must also be able to have clear redemption policies. In addition, there are privacy and national security standards that issuers must meet. Consequently, these requirements have ensured a strong regulatory framework of the market.
Regulatory Framework to Amend Retail Payment Activities Act
There will be amendments to the Retail Payment Activities Act. These changes will allow for the regulation of stablecoins for payments. Therefore, how stablecoins are treated by regulators will depend on their use. They could be treated as a payment instrument under the amended Act. Alternatively, they could be categorized as securities under provincial law.
This legislative step comes after internal consultation had been ongoing for months. It also responds to pressure from the industry groups. Financial experts have always advocated for a clear federal framework. As a result, Finance Minister Francois-Philippe Champagne included the legislation in the budget. This budget was brought up on November 4, 2025.
The move is being made amid a rising demand for clear regulations from the industry. Canadian companies such as Tetra and Loon are already introducing CAD-backed stablecoins. Furthermore, the inaction has been warned about by Canadian financial leaders. A lack of domestic framework could result in more use of U.S. dollar stablecoins. This may potentially siphon capital away from the country.
Additionally, the regulation is consistent with international standards. Canada is seen as playing catch-up with like-mindeds, such as the U.S., which passed the GENIUS Act in July 2025 Some Canadian fintech leaders believe that in the absence of a domestic framework, the market could be dominated by U.S. dollar stablecoins. This would undermine the sovereignty of the Canadian economy. (60 words)
Industry Support and Consumer Protection Priorities
Canadian crypto platforms, such as Shakepay, are big fans of the initiative. They note it gives much-needed regulatory clarity. This clarity is necessary for innovation in the sector. Furthermore, other companies have been proactive, such as Tetra Digital and Loon. They are already working to issue regulated, Canadian-dollar stablecoins. This is in anticipation of the new rules.
In conclusion, Canada’s $10 million commitment and new legislation is a significant step. Consequently, it seeks to promote innovation in a secure and regulated environment. Thus, the nation is in line with global actions in responsibly integrating digital assets. This framework addresses critical issues of stability, privacy, and national security.
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