Canada has just taken a major step toward regulating stablecoins – and it did it through the national budget.
On November 17, Parliament narrowly approved Budget 2025, clearing a spending plan that also advances a new policy for fiat-backed stablecoins. The package, presented on November 4 by Finance Minister François-Philippe Champagne in Prime Minister Mark Carney’s first budget, had been heavily debated before the final vote.
Buried among measures on AI, defense and public-service cuts is a clear message: Canada intends to bring stablecoins under federal law, and the Bank of Canada will become their primary watchdog.
For the global crypto and stablecoin market, that makes Canada one of the first G7 countries to put its central bank squarely in charge of regulating these digital dollars.
What Did Canada Just Approve?
The budget doesn’t itself create a full law, but it does something almost as important: it locks in the government’s intention to legislate a stablecoin framework and allocates money to implement it.
Legal and policy analyses of Budget 2025 describe a forthcoming legislative regime for fiat-backed stablecoins – tokens pegged to a currency like the Canadian dollar or U.S. dollar.
Key design choices include:
- Bank of Canada as regulator. The central bank will administer the regime, adding stablecoins to its growing oversight role in payments and “consumer-driven banking.”
- Budget support. Ottawa is earmarking roughly C$10 million over two years from 2026 for the Bank to stand up the framework, with ongoing costs recouped from the firms it regulates.
- Focus on fiat-backed tokens. The rules target stablecoins backed by traditional assets, not volatile algorithmic designs.
Core Requirements for Stablecoin Issuers
While the detailed bill is still to come, government and law-firm summaries are aligned on the core obligations for stablecoin issuers under Canada’s new policy.
1. One-to-one reserves
Issuers of fiat-backed stablecoins will have to hold asset reserves equal to the value of tokens in circulation. Those reserves must be in reference currency or highly liquid assets – think cash and short-term government securities, not speculative crypto.
This is meant to reassure users that a Canadian stablecoin really is fully backed and can be redeemed at par.
2. Immediate redemption rights
The framework will require clear redemption policies, giving holders the right to cash out stablecoins for their underlying currency quickly and at face value. Several commentaries note that “immediate” or prompt redemption is a core principle baked into the design.
3. Risk management and cybersecurity
Issuers will need to implement robust risk-management frameworks, including operational, liquidity and cyber-security controls. The idea is to prevent a technical failure at a stablecoin issuer from turning into a broader payments or financial-stability incident.
4. Privacy and national-security safeguards
Budget 2025 also emphasizes protection of personal data and national-security safeguards. That means stablecoin firms will have to meet privacy standards and guard against misuse for money laundering, terrorism financing or sanctions evasion.
5. No interest from non-bank issuers
One of the most debated points: non-bank issuers will be barred from paying interest or yield on stablecoin holdings. Market summaries highlight this as a clear policy choice to keep fiat-backed stablecoins as a payments and settlement tool, not a retail savings product that competes directly with bank deposits.
Banks that issue stablecoins under banking rules may be treated differently, but those details will emerge in the eventual legislation.
Why the Bank of Canada Is in the Driver’s Seat
Putting the Bank of Canada at the center of stablecoin oversight is not a random pick. In recent years, the central bank has been given new powers over payment service providers and will also administer the forthcoming Consumer-Driven Banking Act (Canada’s open-banking regime).
Stablecoins sit at the intersection of:
- Retail payments
- Digital-asset markets
- Financial stability
So policymakers see the central bank as best placed to coordinate supervision, especially where stablecoins are used as everyday payment instruments or as settlement assets in capital markets.
An earlier CoinDesk analysis of Budget 2025 described Canada as aligning itself with jurisdictions like the U.S., EU and Singapore, which have moved to explicitly regulate stablecoins, often with central banks or prudential regulators in key roles.
How the Crypto and Payments Sectors Are Reacting
Industry and legal commentary in Canada has largely welcomed the clarity on stablecoin regulation, while also warning that the details will matter.
- Payments Canada, the national payments association, publicly backed the idea of a legislative and regulatory framework for stablecoins, arguing it will help ensure safety for consumers and businesses that use digital dollars.
- Law firms such as Baker McKenzie, DLA Piper and others describe the budget’s stablecoin chapter as a “pivotal” or “major” step toward modernizing Canada’s digital-asset oversight, but they note unanswered questions about how banks, fintechs and foreign issuers will fit into the regime.
Crypto companies, including major exchanges, are already signaling that they want to engage with the Department of Finance and the Bank of Canada during the consultation phase to ensure the rules don’t stifle innovation or delay Canadian-dollar stablecoins.
For now, the signal is that Canadian crypto regulation is moving from patchwork guidance into a more comprehensive, statute-based approach.
What This Means for Stablecoin Users and Issuers
For ordinary Canadians who use or hold stablecoins in Canada, the end-state could look like this:
- Stablecoins that pass the new regime should be fully backed, redeemable and supervised, giving more confidence that “one token really equals one dollar.”
- Some yield-bearing products may disappear or be offered only through regulated banks, as non-bank issuers lose the ability to pay interest directly on fiat-backed stablecoins.
For stablecoin issuers and crypto businesses, the path is more complex:
- They’ll likely face licensing or registration requirements with the Bank of Canada.
- Capital, reserve, disclosure and cyber-security standards will increase costs but may also confer greater legitimacy.
- Firms that want to serve Canadian users with CAD-pegged stablecoins will need to weigh those obligations against the market opportunity.
Commentators stress that now is the time for issuers and platforms to build relationships with regulators and shape the details of Canada’s stablecoin policy before draft legislation lands in 2026.
Canada Joins the Stablecoin Rule-Setters
With the 2025 budget now passed, Canada has moved from talk to action on stablecoin regulation. The next year will bring draft bills, consultation papers and, eventually, a full legal regime for fiat-backed stablecoins under the watchful eye of the Bank of Canada.
For the global stablecoin market, that means one more major economy is stepping up with rules on reserve backing, redemptions and risk management — and doing so in a way that treats stablecoins less like wild crypto tokens and more like a serious part of the payments system.