- The Bank of Canada will oversee the framework, initially allocating CAD 10 million and providing CAD 5 million annually thereafter.
- The retail payment services law will be amended to include stablecoin payment services.
- Canada’s reforms align with comparable regulatory frameworks in the United Kingdom, the European Union and Australia.
Canada’s federal Budget 2025, released on November 4, places fiat-backed stablecoins at the center of a national plan to modernize the payments 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 on issuance, redemption and supervision, 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 incorporate stablecoins into the retail payments law.
Regulated path for fiat-backed stablecoins
Under the new framework, issuers must maintain adequate reserves, implement risk management systems and comply with privacy standards.
The legislation also includes national security provisions to preserve the integrity of the financial system and protect consumers.
The Bank of Canada will allocate CAD 10 million for two years beginning in 2026 to administer the framework, and regulated issuers will face CAD 5 million in annual operating costs.
Changes to the Retail Payments Activities Act (RPAA) will bring payment service providers handling stablecoin transactions under formal supervision.
Introduced in 2021, the RPAA already regulates domestic and foreign payment firms operating in Canada. Expanding it to cover stablecoin activity reflects the government’s intent to integrate 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 Bank of Canada decided not to launch a retail central bank digital currency and shifted its focus to analyzing global payment trends.
That decision left a gap which the new stablecoin legislation now addresses.
Authorities have acknowledged that Canada’s reforms have lagged behind those in some other major economies.
Ron Morrow, the Bank of Canada’s head of payments, previously warned that Canada risks falling behind the United Kingdom, Australia and the European Union, all of which already have digital asset frameworks.
Rather than mandating public issuance of digital currency, Canada is adopting a hybrid model that allows private innovation while retaining state oversight. The approach is intended to encourage payment innovation without sacrificing regulatory safeguards.
Building a modern, secure payments system
The stablecoin framework is part of a wider plan to modernize payments.
Alongside this, the government intends to promote consumer-focused banking, open data mobility and a real-time rails system expected to enable instant fund transfers by 2026.
For consumers, the reforms promise faster, more reliable payments and the potential to reduce the cost of cross-border transfers. Issuers and payment providers face the challenge of meeting new compliance obligations while remaining competitive.
The legislation’s emphasis on privacy and national security also reflects the government’s goal to build public trust in digital finance as it becomes a mainstream part of the economy.
Toward a digitally integrated financial system
The new stablecoin rules complement Canada’s existing crypto regulations, which already require strict compliance from exchanges and trading platforms.
Several major international firms have withdrawn from the market in recent years, citing complex regulatory requirements.
Additionally, a crypto asset reporting framework that takes effect in 2026 will obligate crypto service providers to report customer and transaction information to tax authorities.
Taken together, these developments reflect a strategic shift in how Canada approaches digital finance. By replacing experimental central bank projects with clear regulation, the government is laying the foundation for a secure and inclusive digital economy.