Canada Moves to Regulate Stablecoins in New Budget

In its 2025 budget, Canada announced plans to regulate fiat-backed stablecoins, establishing a legal framework for their issuance and use. The initiative is backed by a $10 million allocation over two years for the Bank of Canada to administer the new regulations. This framework mandates issuers to maintain sufficient asset reserves, implement risk management frameworks, and protect personal information. Canada’s move aims to clarify stablecoin usage as they currently represent approximately 30% of global crypto transactions, with over $4 trillion processed in 2025 alone. Regulatory adjustments will also be made to the Retail Payment Activities Act to oversee payment providers utilizing stablecoins. This regulation aligns Canada with other jurisdictions like the U.S. and European Union that have established similar rules. Although praised by industry groups for promoting competition and reducing transaction costs, there are concerns regarding potential disadvantages for Canadian firms compared to their U.S. counterparts. The Bank of Canada emphasizes the need for stablecoins to be as secure as traditional bank holdings before allowing their broader adoption.

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