Canada Introduces Stablecoin Regulation Framework in 2025 Budget

• Canada introduces stablecoin regulations in its 2025 budget, aligning with U.S. GENIUS Act.

• Issuers must maintain full reserves, clear redemption rules, and strong risk management.

As a major move towards the regulation of digital assets, Canada has announced detailed regulatory actions on fiat-backed stablecoins as part of its 2025 federal budget. The relocation is based on the same regulatory step by the United States, which passed stablecoin legislation in the form of the GENIUS Act four months ago, in July. The Canadian government is striving to establish a safe and open system of digital currency transactions in the financial system of the country.

Regulatory Requirements and Implementation Timeline

The suggested bill will require the issuers of stablecoins to have sufficient reserves and have well-defined redemption policies in case users need to withdraw their funds. Firms in this arena should have elaborate risk management measures including protection of customer financial and personal information.

To monitor implementation, the Bank of Canada will be funded with $10 million within a period of two years, starting with the 2026-2027 fiscal year. After this initial phase, the annual operational expenses of about $5 million will be recouped by charging fees to regulated issuers of stablecoins. These requirements will be governed by the current Retail Payment Activities Act, and the digital currency regulation will be incorporated into the current regulatory framework in Canada.

The regulatory clarity has been embraced by industry leaders, and the chief executive of Coinbase Canada has said the framework is transformative to Canadian digital transactions. The stablecoin market is now worth a total of $309.1 billion around the world, and it is estimated that the market will reach $2 trillion by 2028, according to Treasury estimates. 

Recently, major financial institutions such as Western Union, SWIFT, MoneyGram and Zelle have incorporated or announced payment solutions based on stablecoins into their operations. Tetra Digital, a Canadian fintech firm, raised $10 million with the help of such investors as Shopify and Wealthsimple to create a digital Canadian dollar. This regulatory impetus follows the abandonment of central bank digital currency plans by Canada in September 2024, with the shift to private stablecoin solutions.

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