Canada Begins March Toward Stablecoin Regulations
The Canadian government has announced its commitment to regulate stablecoins backed by its dollar through legislation, as outlined in Budget 2025 released on Tuesday. The legislation mandates that stablecoin issuers maintain adequate asset reserves, establish redemption policies, implement risk management frameworks, and protect personal information. The Bank of Canada will oversee the effort. This development follows the U.S.'s recent adoption of the GENIUS Act for stablecoin regulation. Canadian crypto advocates welcomed the move, highlighting its potential to foster innovation, reduce transaction costs, and enhance competition in the payments market. Amendments will be made to the Retail Payment Activities Act, along with the introduction of national security safeguards. Leaders in Canada's digital asset sector emphasized that stablecoins should be regulated as payment instruments rather than securities, and attention will now turn to implementing the framework to ensure it remains accessible and proportional for fintech growth.
Canada Commits to Stablecoin Regulation
The Canadian government has committed to legislation that will regulate stablecoins backed by its dollar, mirroring similar steps taken by the United States earlier this year. With the release of Budget 2025 on Tuesday, the government announced its focus on establishing clear standards for 1-1 reserves, with the administration of these efforts being entrusted to the Bank of Canada.
Key Requirements for Stablecoin Issuers
According to the budget document, the new legislation will require issuers to:
- Maintain and manage adequate asset reserves
- Establish redemption policies
- Implement risk management frameworks
- Protect the sensitive and personal information of Canadians
This move is geared towards ensuring a robust approach to the regulation of stablecoins in Canada’s financial ecosystem.
Praise from Crypto Advocates
The initiative has been met with praise from crypto advocates, especially following on the heels of the U.S. GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act).
The Canadian Web3 Council expressed encouragement, stating that the government’s commitment to enabling innovators to issue stablecoins will:
- Foster competition in Canada’s payments market
- Reduce transaction costs for both consumers and businesses
Additional Legislative Amendments
To implement this framework effectively, the government indicated it will need to amend the Retail Payment Activities Act. It also emphasized the importance of introducing national security safeguards to ensure the safety of Canada’s financial system.
Expert Opinions on Innovation and Regulation
Industry leaders applauded the step forward. Didier Lavallée, CEO of Tetra Digital Group, described the development as "an excellent step forward" by key Canadian leaders, such as François-Philippe Champagne and Mark Carney.
Lavallée added, "This sends a strong signal that stablecoins need to be regulated as payment instruments and not as securities."
This move is seen as vital for increasing innovation within the Canadian financial sector.
Challenges in Implementation
Attention now shifts towards the implementation of this framework. Eric Richmond, general counsel of Shakepay, emphasized the importance of an open, proportional, and accessible framework in his statement on LinkedIn. He noted that such a framework is essential for fintechs aiming to build next-generation trusted payment rails for Canadians.