Canada to Regulate Stablecoins Under 2025 Federal Budget Plan

TLDR

• Canada plans to regulate fiat-backed stablecoins under its 2025 budget, focusing on reserves and redemption.
• Issuers must adopt risk frameworks and data protection policies to meet new federal compliance standards.
• Bank of Canada gets $10M over two years starting 2026 to support stablecoin oversight and enforcement.
• U.S. GENIUS Act passed in July influenced Canada’s decision to implement local stablecoin regulations.
• Tetra Digital secured $10M to build a Canadian dollar stablecoin backed by major national investors.

Canada is moving ahead with a new legal framework to regulate stablecoins, aligning its approach with recent U.S. developments. The federal budget for 2025 includes plans to impose specific reserve and redemption rules on fiat-backed stablecoin issuers.  These measures form part of a broader national strategy to modernize the country’s payment systems. The government aims to support safer, faster, and more affordable digital transactions for its population of over 41 million.

Stablecoin Issuers to Face Stricter Oversight

Under the proposed changes, stablecoin issuers must maintain adequate fiat reserves and offer reliable redemption policies. They are also required to establish formal risk management systems and protect users’ financial and personal information. These obligations are outlined in the 2025 budget, which was released on Tuesday.

Canada’s central bank will receive $10 million over two years starting in 2026 to implement the plan. An ongoing cost of $5 million per year is expected, which will be recovered through fees from regulated issuers under the Retail Payment Activities Act. The move follows the U.S. approval of the GENIUS Act in July, which introduced its own stablecoin regulatory framework. Canadian officials have faced increased pressure to establish local laws to manage the growth of these digital assets. The budget did not indicate when the legislation will be introduced in Parliament.

Institutional Adoption Continues to Expand

The global stablecoin market is currently valued at $309.1 billion. The U.S. Treasury forecasts that figure could reach $2 trillion by 2028. Major financial institutions including SWIFT, Western Union, MoneyGram, and Zelle have either adopted or plan to adopt stablecoin infrastructure.

Tetra Digital has emerged as a key Canadian stablecoin company. The firm raised $10 million to build a digital version of the Canadian dollar. Its investors include Shopify, Wealthsimple, and the National Bank of Canada. In September 2024, the Bank of Canada announced it would not proceed with a central bank digital currency due to insufficient public demand.

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