Canada Moves to Regulate Stablecoins Under 2025 Budget Plan
- Canada unveils a 2025 budget plan to regulate fiat-backed stablecoins with strict reserve rules.
- The Bank of Canada will allocate $10M to oversee new stablecoin regulations starting in 2026.
- The move mirrors U.S. stablecoin reforms, to modernize digital payments and financial safety.
Canada is preparing to take a significant step in regulating stablecoins, an important turning point in its digital finance plans. In its federal budget for 2025, the government announced new regulations for fiat-backed stablecoins. The plan would require issuers to hold sufficient reserves and set clear redemption policies. Ottawa presented the action as a component of a larger initiative to safeguard consumers and modernize payments.
The proposal comes after historic stablecoin legislation was passed in the U.S. earlier this year. According to Canadian officials, they want to ensure digital payments remain fast, safe, and reliable for residents. The government did not set a firm date for tabling the bill.
Bank of Canada to Lead Oversight and Funding
The budget allocates $10 million to the Bank of Canada over two years to set up oversight mechanisms. Then, the central bank expects ongoing costs of about $5 million annually. Those running regulated stablecoins will help cover the long-term administration costs.
Under the proposed framework, issuers must keep liquid reserves that match outstanding token value. They will also need policies allowing holders to redeem tokens for cash on demand. In addition, rules will require safeguards for consumer data and national security checks.
Officials said the framework will limit the token types covered to fiat-backed stablecoins. The document stresses that Canada will not treat all digital assets the same. Regulators will focus on projects that clearly replace or supplement traditional payments.
Industry Pushes for Clarity as Adoption Grows
The global stablecoin market sits above $300 billion today and continues to expand. The U.S. Treasury has forecast growth toward $2 trillion by 2028. Meanwhile, big payment firms and banks have been testing or integrating stablecoin solutions to speed cross-border transfers.
Domestic firms also show rising interest. Recently, Tetra Digital raised $10 million to create a token in Canadian dollars. Major investors such as Shopify and the National Bank of Canada backed that round. These moves underscore growing demand for regulated digital money options.
The budget noted that stablecoin rules could improve access to faster payments for small businesses and consumers. It also said clear rules could boost financial inclusion and support innovation among fintech firms.
CBDC Decision and Policy Direction
Canada dropped active plans for a retail central bank digital currency in 2024. The Bank of Canada judged there was no compelling case to proceed then. Now, Ottawa is placing emphasis on regulated private stablecoins as a near-term payments solution.
The proposal also contemplates links between tokenized deposits and wholesale central bank tools. Officials said they will study how tokenized deposits and stablecoins could interact with existing payment rails. They noted the need to preserve the “singleness of money” so digital tokens remain equivalent to cash. The government invited industry feedback on the roadmap and regulatory approach. Stakeholders have until March 1, 2026, to submit comments and proposals.
Related: Stablecoin Market Soars to $311B as USDT and USDC Lead
Some industry leaders already praised the direction. Coinbase Canada’s chief executive said clearer rules could reshape how people use money online. Other firms urged the government to balance safety with room for innovation.
The budget did not explain how enforcement would operate across jurisdictions. Officials said they will coordinate with domestic regulators and international partners. The plan signals alignment with other major markets that are also formalizing stablecoin rules.
