- The Bank of Canada will oversee the framework and allocate CA$10 million initially and CA$5 million annually.
- The Retail Payment Activities Act will be amended to include stablecoin-related payment services.
- Canada’s reforms align with similar regulatory frameworks in the UK, EU and Australia.
Canada’s federal budget for 2025, released on November 4, places fiat-backed stablecoins at the center of a plan to modernize the national payment system.
The initiative marks a clear policy shift from exploring central bank digital currencies toward regulating private digital assets within the country’s financial framework.
By introducing detailed rules governing issuance, redemption and oversight, the government aims to make stablecoins safe, transparent and suitable for everyday transactions while protecting financial stability.
The Bank of Canada will supervise the framework and integrate stablecoins into the Retail Payment Activities Act.
A regulated path for fiat-backed stablecoins
Under the new framework, issuers must maintain adequate reserves, implement robust risk management systems and comply with data protection standards.
The legislation also includes national security provisions designed to preserve the integrity of the financial system and protect consumers.
The Bank of Canada will allocate CA$10 million over two years starting in 2026 to administer the framework, with ongoing annual operating costs of CA$5 million to be recovered from regulated issuers.
Amendments to the Retail Payment Activities Act (RPAA) will bring payment service providers that handle stablecoin transactions under formal supervision.
Introduced in 2021, the RPAA already regulates both domestic and foreign payment firms operating in Canada. Extending it to cover stablecoin activity reflects the government’s intent to fold digital currencies into the existing financial oversight structure.
From central bank currency to private innovation
The move represents a turning point in Canada’s digital currency policy. In September 2024 the central bank decided not to launch a retail central bank digital currency and shifted its focus to analyzing global payment trends.
That decision left a gap that the new stablecoin legislation now addresses.
Officials have acknowledged that Canada’s reforms have lagged behind other major economies.
Ron Morrow, the Bank of Canada’s Managing Director for Payments, has previously warned that Canada could fall behind the UK, Australia and the EU, all of which already have digital asset frameworks in place.
By choosing regulation over issuing its own digital currency, Canada adopts a hybrid model that allows private innovation while maintaining public oversight. This approach is intended to encourage payment innovation without compromising supervision.
Building a modern, secure payments system
The stablecoin framework is part of a broader plan to modernize payments.
Alongside this initiative, the government plans to promote consumer-driven banking, open data mobility and a Real-Time Rail system expected to enable instant money transfers by 2026.
For consumers, the reforms promise faster, more reliable transactions and the potential to lower cross-border payment costs. For issuers and payment providers, the challenge will be meeting new compliance requirements while remaining competitive.
The legislation’s emphasis on privacy and national security also signals the government’s intent to build public trust in digital finance as it becomes an everyday part of the economy.
Toward a digitally integrated economy
The new stablecoin rules complement existing crypto regulations in Canada, which already require strict compliance from exchanges and trading platforms.
Several major international firms have withdrawn from the Canadian market in recent years, citing complex regulatory requirements.
In addition, the crypto-asset reporting framework scheduled to take effect in 2026 will require crypto service providers to report customer and transaction data to tax authorities.
Taken together, these developments reflect a strategic shift in how Canada views digital finance. By replacing experimental central bank projects with clear regulation, the government aims to lay the groundwork for a secure and inclusive digital economy.