The Canadian government announced that it will introduce a comprehensive regulatory framework for fiat-backed stablecoins as part of its 2025 federal budget, marking a major step toward establishing legal clarity and oversight in the country’s fast-growing digital finance sector.
? Canada will introduce its first federal framework for fiat-backed stablecoins under the 2025 budget, following the US model.#Canada #Stablecoinhttps://t.co/PjX4xPix3x
— Cryptonews.com (@cryptonews) November 5, 2025
The new framework aims to regulate both the issuance and use of stablecoins in Canada, ensuring transparency, consumer protection, and national financial security as blockchain-based payment systems become increasingly integrated into mainstream finance.
Comprehensive Oversight for Stablecoin Issuers
According to the budget documents, the forthcoming legislation will require stablecoin issuers to:
Maintain adequate asset reserves fully backing issued tokens.
Implement robust redemption policies ensuring holders can redeem stablecoins at par value.
Establish risk management systems and operational safeguards.
Ensure the protection of Canadian citizens’ personal and confidential data.
The framework will also include “national security protection measures” to safeguard Canada’s financial infrastructure against potential misuse or cyber risks.
To support this initiative, the Bank of Canada will receive CAD 10 million (approximately USD 11.6 million) from the Consolidated Revenue Fund over two fiscal years starting in 2026, to operate and oversee the framework.
After the initial phase, the annual operating cost, estimated at CAD 5 million (around USD 5.8 million), will be funded through supervisory fees paid by regulated stablecoin issuers.
Expanding Oversight to Payment Providers
In addition to regulating issuers, the government plans to amend the Retail Payment Activities Act, extending supervision to payment service providers that facilitate stablecoin transactions.
Officials said the move aims to strengthen consumer protection and enhance market stability, while supporting innovation in digital payments and fintech.
“This framework is designed to protect Canadian consumers and businesses while enabling safe, responsible innovation in the digital economy,” the government stated in the budget release.
Positioning Canada as a Global Fintech Regulator
Analysts say the move positions Canada among the first G7 nations to formally legislate a stablecoin oversight model, a policy that could serve as a blueprint for other jurisdictions balancing financial innovation with systemic safeguards.
The framework comes as stablecoins have emerged as key financial instruments, with global daily transaction volumes exceeding hundreds of billions of dollars and issuers like Tether (USDT) and Circle (USDC) under increasing scrutiny worldwide.
Canada’s approach appears focused on fiat-backed (non-algorithmic) stablecoins, ensuring transparency in reserves and redemption, which is similar to emerging frameworks in Singapore, Hong Kong, and the European Union’s MiCA regulation.
