- The Bank of Canada will oversee the framework and initially allocate CA$10 million, with CA$5 million annually thereafter.
- The Retail Payment Activities Act will be amended to cover payment services related to stablecoins.
- Canada’s reforms align with comparable regulatory frameworks in the United Kingdom, the EU and Australia.
The Canadian federal 2025 budget, released on November 4, places fiat-backed stablecoins at the center of its plan to modernize the national payment system.
The initiative marks a clear policy shift away from exclusive study of central bank digital currencies toward the regulation of private digital assets within the country’s financial framework.
By introducing detailed rules for issuance, redemption and oversight, the government aims to ensure stablecoins are 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.
Regulated path for fiat-backed stablecoins
Under the new framework, issuers will be required to maintain adequate reserves, implement risk management systems and comply with data protection standards.
The legislation also includes national security provisions to preserve the integrity of the financial system and safeguard consumers.
The Bank of Canada will allocate CA$10 million over two years beginning in 2026 to manage the framework, with 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 process stablecoin transactions under formal oversight.
Introduced in 2021, the RPAA already governs both domestic and foreign payment firms operating in Canada. Its extension to include stablecoin use reflects the government’s intention to fold digital currencies into the existing financial supervision structure.
From central bank money to private innovation
This step represents a turning point in Canada’s digital currency policy. In September 2024, the central bank opted not to issue a retail central bank digital currency and shifted its focus to analyzing global payment trends.
That decision left a gap now addressed by the new stablecoin legislation.
Officials acknowledged that Canada’s reforms had been slower than in other major economies.
Ron Morrow, Executive Director of Payments at the Bank of Canada, had previously warned that Canada risked falling behind the United Kingdom, Australia and the European Union, which already have digital asset frameworks.
By choosing regulation over issuing its own digital currency, Canada adopts a hybrid model that permits private innovation while maintaining government oversight. The goal is to foster payment innovation without compromising regulatory control.
Building a modern, secure payments system
The stablecoin framework is part of a broader payments modernization plan.
Alongside this, the government plans progress on consumer-focused banking, open data mobility and a Real-Time Rail system intended to enable instant fund transfers by 2026.
For consumers, the reforms promise faster, more reliable transactions and potential cost reductions for cross-border payments. 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 a core part of the economy.
Toward a digitally integrated financial system
The new stablecoin rules complement existing crypto regulations in Canada, which already require strict compliance from exchanges and trading platforms.
Several large international firms have withdrawn from the market in recent years, citing complex regulatory demands.
Additionally, a crypto-asset reporting framework coming into effect in 2026 will require crypto service providers to report customer and transaction data to tax authorities.
Together, these developments reflect a strategic shift in how Canada views digital finance. Replacing experimental central bank projects with clear regulation, the government is laying the groundwork for a secure and inclusive digital economy.