Canada Moves to Regulate Stablecoins in 2025 Federal Budget, Following US Lead

As part of its 2025 federal budget, Canada is set to introduce its first comprehensive regulation for fiat-backed stablecoins, closely reflecting the regulatory approach taken by the United States earlier this year.

Key Takeaways

Canada plans to launch its inaugural federal framework for fiat-backed stablecoins within the 2025 budget, modeling its approach after the U.S.
The Bank of Canada will allocate $10 million over two years to manage this rollout, recouping these costs from regulated issuers.
This initiative is part of Ottawa’s effort to modernize payment systems in light of the growing adoption of stablecoins globally.

According to the budget details released on Tuesday, the new legislation will mandate stablecoin issuers to hold complete reserves, define clear redemption policies, and adopt strong risk management systems for the protection of personal and financial information.

The intention behind these regulations is to bolster confidence in digital payment systems and provide clarity for issuers within Canada's evolving cryptocurrency landscape.

Canada Moves to Regulate Stablecoins in 2025 Federal Budget, Following US Lead

Bank of Canada Allocates $10 Million for Stablecoin Regulation

The Bank of Canada is projected to spend $10 million over a two-year period, beginning in the fiscal year 2026-2027, to oversee the stablecoin implementation.

This annual supervision, estimated at $5 million, will be funded back from the issuers governed under the Retail Payment Activities Act.

This initiative follows closely after the U.S. passed the GENIUS Act in July, a significant stablecoin bill that has set the pace for global regulatory changes.

Ottawa's actions reflect its ambition to modernize payment systems while aligning with international trends.

While the government has not yet announced a specific timeline for introducing the bill, this framework is part of a broader strategy to enhance the speed, cost-effectiveness, and security of digital transactions for Canada's 41.7 million citizens.

Lucas Matheson, CEO of Coinbase Canada, praised the proposal in a statement to CBC, saying it could “transform how Canadians interact with money and the internet permanently.”

Currently, the global stablecoin market is worth $309.1 billion, with the U.S. Treasury predicting that this figure could surge to $2 trillion by 2028.

Institutional interest is accelerating, with major players like Western Union, SWIFT, MoneyGram, and Zelle either integrating or planning to adopt stablecoin solutions.

In Canada, Tetra Digital is emerging as a key player, having recently secured $10 million in funding from Shopify, Wealthsimple, and the National Bank of Canada to establish a Canadian dollar-pegged stablecoin.

This effort follows the Bank of Canada's decision to halt its plans for a central bank digital currency (CBDC) in September 2024, citing a lack of compelling justification to proceed.

Western Union Plans Dollar-Backed Stablecoin on Solana

Western Union is also entering the stablecoin arena, planning to launch the US Dollar Payment Token (USDPT) on the Solana blockchain in the first half of 2026.

This token, issued by Anchorage Digital Bank, will enable users to transfer money internationally with reduced fees and quicker settlement times, offering an alternative to conventional banking systems and volatile currency conversions.

CEO Devin McGranahan remarked that this initiative is a continuation of Western Union's 175-year legacy of simplifying money transfers, now enhanced through blockchain technology.

He explained that Solana was chosen for its speed, scalability, and cost-effective transactions, essential for the company's extensive remittance operations.

By utilizing blockchain technology, Western Union aims to make remittances nearly instantaneous and more transparent.