Canada is set to introduce legislation regulating fiat-backed stablecoins under its federal budget for 2025, following the footsteps of the US, which passed landmark stablecoin laws in July.
Stablecoin issuers will be required to hold sufficient reserves, establish redemption policies and implement various risk management frameworks, including measures to protect personal and financial data, according to the government’s 2025 budget released on Tuesday.
The Bank of Canada would allocate $10 million over two years, starting in the 2026-2027 fiscal year, to ensure everything runs smoothly, followed by an estimated $5 million in annual costs that will be offset from stablecoin issuers regulated under the Retail Payment Activities Act.
It comes nearly four months after the US passed the stablecoin-regulating GENIUS Act, which put pressure on Canada to pass its own rules for the tokens.
While the document didn’t specify when the legislation will be tabled, it is part of a broader plan to modernize payments and make digital transactions faster, cheaper, and more secure for the country’s 41.7 million people.
Source: Stand With Crypto Canada
Coinbase Canada CEO Lucas Matheson is bullish on the proposal, and told CBC on Monday that it would “change how Canadians interact with money and the internet forever,”.
Institutional stablecoin adoption grows
The stablecoin market currently sits at $309.1 billion, with the US Treasury estimating in April that it would climb to $2 trillion by 2028.
Institutional adoption is on the rise, with the likes of Western Union, SWIFT, MoneyGram, and Zelle integrating, or announcing plans to integrate, stablecoin solutions in recent months.
Payments platform Tetra Digital is one of the top players in the Canadian stablecoin scene, having raised $10 million to create a digital version of the Canadian dollar after receiving investments from Shopify, Wealthsimple, and National Bank of Canada.
It comes as Canada dropped its plans to issue a central bank digital currency in September 2024, with Bank of Canada Governor Tiff Macklem stating there wasn’t a compelling case to move forward with it at the time.
