Canada Moves to Regulate Stablecoins in New Budget

The Canadian government has announced plans to create a legal framework for fiat-backed stablecoins in its 2025 budget. Allocating $10 million over two years, the Bank of Canada will oversee the implementation of regulations aimed at ensuring that issuers maintain adequate asset reserves and protect consumer information. As stablecoins now account for 30% of global crypto transaction volume, with a total exceeding $4 trillion in 2025, the new legislation aims to promote security and consumer trust. The framework will also introduce safeguards related to national security and allow regulators to supervise payment providers using stablecoins. The move aligns Canada with other jurisdictions like the U.S., which has already enacted similar regulations. Industry representatives have welcomed this initiative, citing the potential for reduced transaction costs and enhanced competition in the payments sector. However, the Bank of International Settlements has raised concerns regarding financial stability risks posed by the widespread use of stablecoins. This regulatory framework is seen as a vital step for Canada to modernize its payment structures and catch up with other nations in the digital finance landscape.

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