The government of Canada has officially revealed its plans for a new regulation of stablecoins in Canada. The historic proposal was included in the 2025 federal budget document, presented this November 5th. The legislation seeks to establish a clear framework for issuers of digital assets pegged to fiat currencies. The information comes directly from the official budget document, confirming the country’s move toward formal oversight of the sector.
The upcoming legislation will impose strict and comprehensive requirements on stablecoin issuers. They must demonstrate that they hold and manage adequate reserves to back the value of their tokens. They must also establish clear and accessible redemption policies for consumers. Furthermore, robust risk management frameworks will be required, along with the implementation of protocols to protect users’ personal information. The budget document also mentions the inclusion of “national security safeguards” to support the integrity of the financial framework.
To administer this new and complex oversight, the Bank of Canada will receive specific funding. According to the budget, the entity will retain $10 million from its remittances from the Consolidated Revenue Fund. This amount will cover the initial costs for the two years beginning in 2026-27. Subsequently, annual administrative costs are estimated at $5 million. The government plans for these costs to be fully covered by fees imposed on the regulated stablecoin issuers themselves.
Can Canada balance innovation and financial security with this law?
The government is also preparing parallel amendments to the Retail Payment Activities Act. This action is crucial, as it will formally activate regulation over payment service providers (PSPs) that use stablecoins in their operations. The stated goal of this entire legislative initiative is to “promote the safe innovation of digital assets.” However, the move follows intensive discussions with the industry and regulators. Previous reports indicated concerns about the exact classification of stablecoins and the risk of capital flight toward US dollar-backed tokens.
This announcement from Canada is not happening in a vacuum. It follows a clear global regulatory trend accelerated after the passage of the GENIUS Act in the United States last July. The European digital economy is already operating under the strict MiCA (Markets in Crypto-Assets) regulation. Meanwhile, Asian powers like Japan and South Korea are also advancing rapidly on their own digital asset regulations. With the total stablecoin supply already reaching $291 billion, dominated by assets pegged to the US dollar, the new regulation of stablecoins in Canada seeks to ensure the country does not fall behind in security and adoption.
