Canada unveils upcoming stablecoin legislation in federal budget

Canada's 2025 federal budget unveiled plans to establish new regulations for fiat-pegged stablecoins.

The budget document states that upcoming legislation will require stablecoin issuers to hold and manage adequate reserves, establish redemption policies, implement risk management frameworks, and safeguard personal information.

"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," the document said.

The Bank of Canada is set to keep $10 million from its Consolidated Revenue Fund remittances over the two years starting in 2026-27 to administer the new legislation. After that, annual administrative costs are estimated at $5 million and will be covered by fees on the stablecoin issuers regulated under the legislation.

Meanwhile, the Canadian government is also preparing amendments to the Retail Payment Activities Act to activate the regulation over payment service providers that utilize stablecoins.

The legislation on stablecoins aims to promote safe innovation of digital assets, and is expected to benefit Canadians by ensuring appropriate policies for stablecoin management, the budget document noted.

Bloomberg reported last week that officials at the Department of Finance Canada and other agencies have held intensive talks over recent weeks with industry stakeholders and regulators over stablecoin regulation. 

The discussion reportedly focused on classifying stablecoins and on avoiding capital flight to U.S. dollar-backed tokens. The 2025 budget paper, however, did not disclose details on the government's conclusion on those matters.

Global movement

This announcement from Canada comes after the U.S. passed its GENIUS stablecoin act in July, which set out key rules for dollar-backed cryptocurrencies that have received strong support from President Donald Trump.

Establishing regulations on stablecoins has become a global trend that accelerated following the passage of the GENIUS Act, ranging from the already-implemented Markets in Crypto-Assets Regulation (MiCA) in Europe to ongoing efforts in Japan and South Korea.

As of Nov. 4, the total stablecoin supply stood at around $291 billion, dominated by U.S. dollar stablecoins, according to The Block's data. Standard Chartered estimates that as much as $1 trillion could exit emerging market bank deposits into U.S. stablecoins by 2028.