Canada Moves to Regulate Stablecoins in New Budget

Canada will move to regulate fiat-backed stablecoins, the government announced Tuesday in its 2025 budget. The plan would create a legal framework for the issuance and use of stablecoins within Canada, aiming to bring oversight and clarity to a fast-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 after that are projected at $5 million annually, offset by fees from regulated issuers. Related amendments to the Retail Payment Activities Act will allow regulators to supervise payment providers that use stablecoins.

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

Its regulatory plans place Canada among a growing list of jurisdictions establishing rules for stablecoins. The U.S. passed the GENIUS Act earlier this year, while Hong Kong and the European Union have rolled out their own frameworks. Whether these steps will spur mainstream adoption or simply mark another high point in the recurring cycle of crypto hype — much like other previous tech 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 national regulation of stablecoins, warning that Canada lagged behind peers like the U.S. and U.K. in modernizing its payments infrastructure. Morrow also noted that cross-border transfer costs remain far higher in Canada than in those countries.

Canada’s GENIUS Act?

Industry groups largely applauded the government’s announcement. The Canadian Web3 Council told Decrypt it welcomed the budget measure as “Canada’s answer to the U.S. GENIUS Act.”

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

The council said the government’s commitment could foster competition in payments and reduce transaction costs. However, it cautioned that overlapping regulations could disadvantage Canadian firms 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 stays open, proportional, and accessible, so fintechs can help build the next generation of trusted payment rails for Canadians,” they told Decrypt.

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