Canada is preparing a regulatory framework around stablecoins now that these assets have grabbed international attention. The Canadian government, in an official statement released this week, said fiat-backed stablecoins must be made safer for national residents and businesses to engage with with comprehensive regulations.
Canada’s minister of finance, François-Philippe Champagne, announced Canada’s budget for 2025 on November 4. Stablecoins, as per the official statement, is being viewed as an instrument to make international remittance more transparent.
“In Budget 2025, the government proposes to introduce legislation to regulate the issuance of fiat-backed stablecoins by non-prudentially regulated issuers in Canada, including related
amendments to the Retail Payment Activities Act,” the budget statement said.
Canada’s stablecoin regulation will focus on clarifying that stablecoin issuers will need to maintain and manage adequate asset reserves, establish redemption policies, and implement risk management frameworks. Rules will also be put in place to ensure that the sensitive information Canadian nationals is protected while engaging with stablecoins.
“To administer the relevant legislation, the Bank of Canada will retain $10 million over two years, starting in 2026-27, from its remittances to the Consolidated Revenue Fund. Administrative costs in subsequent years are projected to be $5 million per year and will be offset from stablecoin issuers regulated under the Act,” the budget statement noted.
In order to integrate stablecoins in its existing financial ecosystem, Canada is looking to amend its Retail Payment Activities Act. These amendments are aimed at clarifying the dos and don’ts for payment service providers who are open to facilitating prescribed stablecoins for transactions.
“Regulating stablecoin issuance will benefit all Canadians by ensuring that stablecoins are backed by quality reserves, with appropriate redemption policies established and appropriate safeguards for data security and risk management,” the budget statement highlighted.
The statement has further cited findings by the Financial Consumer Agency of Canada in 2023-2024 that has claimed that young Canadians are more likely to own stablecoins.
Last month, the Bank of Canada said the country must seriously consider the merits of stablecoin regulation to help advance payment regulatory frameworks.
Stablecoins are crypto tokens pegged to reserved assets that prevents them from market volatility. Stablecoins maintain their value in a 1:1 ratio with the underlying assets. Data by CoinGecko showed that the market cap of the stablecoin sector presently stands at $311.9 billion.
Earlier this year, the U.S. also implemented the stablecoin-focussed GENIUS Act by U.S. President Donald Trump. The legislation defines clear directives for stablecoin issuers to make sure that the assets are safer to engage with.