- The Bank of Canada will oversee the framework, allocating CA$10 million initially and CA$5 million annually thereafter.
- The Retail Payment Activities Act will be amended to include payment services related to stablecoins.
- Canada’s reforms align with similar regulatory frameworks in the UK, EU and Australia.
The federal Budget 2025, announced on November 4, places fiat-backed stablecoins at the center of Canada’s plan to modernize its national payments system.
This initiative marks a clear policy shift from researching central bank digital currencies toward regulating 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 secure, transparent and suitable for everyday transactions while protecting financial stability.
The Bank of Canada will administer the framework and integrate stablecoin oversight into the Retail Payment Activities Act.
Controlled pathway for fiat-backed stablecoins
Under the new framework, issuers will be required to maintain adequate reserves, implement risk management systems and meet data protection standards.
The legislation also includes national security provisions to safeguard the integrity of the financial system and protect consumers.
The Bank of Canada will allocate CA$10 million over a two-year period beginning 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 handling stablecoin transactions under formal regulatory supervision.
Introduced in 2021, the RPAA already regulates domestic and foreign payment firms operating in Canada. Expanding it to cover stablecoin use reflects the government’s intent to fold digital currency into existing financial oversight structures.
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 now addressed by the new stablecoin legislation.
Officials have acknowledged that Canada’s reforms have lagged behind some major economies.
Ron Morrow, Executive Director of Payments at the Bank of Canada, previously warned that Canada could fall behind the United Kingdom, Australia and the European Union, all of which already have digital asset frameworks.
By regulating rather than issuing digital assets, Canada adopts a hybrid model that permits private innovation while maintaining government oversight. The approach aims to foster payment innovation without compromising regulatory control.
Building a modern, secure payments system
The stablecoin framework is part of a broader plan to modernize payments.
In parallel, the government intends to advance user-driven banking, open data portability and a Real-Time Rail system designed to enable instant fund transfers by 2026.
For consumers, the reforms promise faster, more reliable transactions and potential reductions in 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 increasingly mainstream.
Toward an integrated digital financial system
The new stablecoin regulations complement existing crypto rules in Canada, which already impose strict compliance obligations on exchanges and trading platforms.
Several major international firms have withdrawn from the market in recent years, citing complex regulatory demands.
Additionally, the Crypto Asset Reporting Framework, effective 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 approaches digital finance. By replacing experimental central bank projects with clear regulation, the government is laying the groundwork for a secure and inclusive digital economy.