Canada has announced plans to regulate fiat-backed stablecoins as part of its 2025 federal budget, marking a major policy shift in how the country approaches digital assets. The legislation seeks to create a clear legal framework for the issuance and use of stablecoins, a growing segment of the cryptocurrency market that is now central to global digital payments.
What the new law covers
Under the proposal, issuers of fiat-backed stablecoins will be required to:
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Maintain adequate asset reserves that match your issued tokens.
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Provide transparent redemption policies for users.
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Implement risk and privacy safeguards for Canadians’ financial data.
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Comply with national security requirements to prevent misuse.
The government said these measures are designed to ensure that stablecoins used in Canada are “safe for both consumers and businesses.”
The Bank of Canada will oversee the framework
To manage and enforce the new regime, the Bank of Canada will allocate $10 million over two years (starting in fiscal year 2026-27) of its remittances to the federal treasury.
Subsequently, continued oversight will cost around $5 million a year, covered by fees charged to licensed stablecoin issuers.
The budget also proposes amending the Retail Payment Activities Act to expand regulators’ authority over payment service providers dealing in stablecoins, giving the central bank a clearer mandate to monitor systemic risk.
Stablecoins now account for 30% of global crypto activity
Stablecoins have evolved from niche tools to a key pillar of cryptocurrencies.
A report from TRM Labs estimates that they represent 30% of all crypto transactions, with global trade volume exceeding $4 trillion between January and August 2025, an 83% year-on-year increase.
Most stablecoins are pegged to the US dollar, with Circle’s Tether (USDT) and USD Coin (USDC) controlling most of the market.
Canada’s move puts it alongside the United States, Hong Kong and the EU, which have launched their own regulatory frameworks in 2025.
Industry response: “Canada’s response to the US GENIUS Act”
Canadian industry leaders have welcomed the decision.
Morva Rohani, executive director of the Canadian Web3 Council, called the measure “Canada’s response to the US GENIUS Act.” and said it could create a path for qualified innovators to issue stablecoins under federal supervision.
Cryptocurrency exchange Shakepay also praised the move, calling it “a big step forward for fintech and digital payments in Canada.”
A spokesperson said the focus should now be on “ensuring the framework remains open and accessible, so Canadian fintechs can build trusted payment pathways.”
Caution from regulators and economists
Despite the optimism, not everyone is convinced.
The Bank for International Settlements (BIS) has repeatedly warned that stablecoins, especially those pegged to fiat currencies, could:
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Undermining the central bank’s control over monetary policy.
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Increase capital flight from developing economies.
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Expose users to liquidity and transparency risks.
Canadian officials say these concerns warrant proactive regulation before stablecoins become deeply entrenched in the country’s payments system.
Ottawa stablecoin rules aim to close Canada’s fintech gap
Budget 2025 outlines Ottawa’s first concrete move to regulate fiat-backed stablecoins, giving the Bank of Canada direct oversight of issuers and reserve management. The framework seeks to integrate stablecoins into Canada’s payments infrastructure while ensuring full backup and redemption rights for users.
Officials say the move aims to close the regulatory gap with markets like the United States and the European Union, where clear stablecoin laws are already in place. By setting national standards, the government aims to attract compliant fintech issuers and reduce reliance on foreign-backed digital assets circulating in Canada.