Canada Sets Out 2025 Roadmap for Stablecoin Regulation

Event Overview

In a landmark policy development, the Canadian federal government has announced plans to introduce stablecoin regulatory oversight in the 2025 federal budget, making the country one of the first G7 nations to formally enact digital currency oversight legislation.

According to newly released budget documents, the government will create a legislative provision in Parliament that will define the rules governing the issuance, reserve management, and redemption of stablecoins. The main goals of this are to ensure transparency, convertibility, and consumer protection, while supporting innovation in Canada's growing digital asset economy.

The move reflects a global shift toward regulating fiat-backed, stablecoin contracts into national financial systems — a trend guided by the US GENIUS Act and Europe’s Markets in Cryptoassets (MiCA) mechanism.

The Core of the Bill

The upcoming legislation will require all stablecoin issuers operating in Canada to:

• Maintain adequate reserves equivalent to 100% of the tokens in circulation in approved liquid assets, such as cash or short-term government securities.

• Guarantees direct redemption to users, allowing 1:1 conversion between stablecoins and Canadian dollars (CAD) or other supported currencies.

• Transparent reserve certification disclosures verified by independent auditors ensure ongoing disclosure of backing components and risk levels.

The Bank of Canada will be designated as the lead supervisor, tasked with enforcing the law, licensing issuers, and conducting ongoing supervision. To fund the establishment of this regulatory system, the 2026–2027 federal budget allocates CAD 10 million to build the initial supervisory and compliance infrastructure.

This centralized supervision mirrors approaches in Singapore and the EU — jurisdictions that have adopted a “ regulated issuance ” model that balances innovation with the integrity of the financial system.

Strategic and Economic Significance

The timing of this legislation is significant. As of November 2025, the global supply of stablecoins reached approximately $306 billion, reflecting the rapid growth of digital liquidity instruments used for payments, transactions, and remittances. Major institutions— including Visa, PayPal, and Tether —are actively expanding the utility of stablecoins across both retail and institutional payment networks.

By acting early, Canada aims to ensure a leading role in the next generation of financial infrastructure. This framework is expected to:

• Facilitate blockchain-based payments and settlements between financial institutions under clear compliance rules.

• Encourage innovation between fintech companies and regulated banks in developing tokenized cash or cryptocurrency systems.

• Prevent shadow liquidity risk, ensure that stablecoins in circulation are fully redeemable and protected from unregulated issuers.

The long-term vision, according to policymakers, is to allow Canadian dollar-backed stablecoins to integrate with both domestic and cross-border payment networks, eventually connecting with digital asset platforms in North America and Europe.

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