The Canadian government plans to enact stablecoin regulatory legislation under the 2025 federal budget framework, marking a significant step in the country's digital currency regulation. This initiative aims to regulate the issuance and use of fiat-collateralized stablecoins to ensure their market stability and reduce associated risks. According to the content of the 2025 budget, stablecoin issuers will be required to meet a series of strict requirements. These include: ensuring sufficient reserves are held to support the stablecoin's value; establishing clear redemption policies to guarantee holders can exchange stablecoins at any time; and implementing a multi-layered risk management framework focused on protecting the security of personal and financial data.
To ensure the smooth implementation of these regulations, the Bank of Canada will allocate CAD 10 million annually for two years, starting from the 2026-2027 fiscal year, for regulatory work. This funding will be used to enhance the capacity of regulatory bodies and ensure the effective execution of related measures. In addition to the initial funding, ongoing costs of approximately CAD 5 million per year are expected, which will be offset by fees collected from stablecoin issuers under the regulatory framework. The specific amounts will be managed under the Retail Payment Activities Act.
The introduction of this stablecoin regulatory legislation is not coincidental but rather an inevitable choice in the context of global digital currency regulation trends. Four months ago, the United States passed the Stablecoin Regulation GENIUS Act (GENIUS Act), setting a new global standard for stablecoin regulation. This move undoubtedly put pressure on Canada. The U.S. legislative progress has prompted Canada to accelerate its own efforts on the same issue, ensuring its competitiveness in the global payment system remains unaffected.
The launch of this regulatory plan marks a critical step in Canada's "Payment System Modernization" process. The plan aims to create a faster, lower-cost, and more secure digital transaction environment for the country's 41.7 million residents, aligning with the development trends of the global payment system. This not only helps enhance Canada's position in the international financial market but also protects consumer interests and prevents the spread of financial risks.
Although the budget does not specify a precise timeline for submitting the legislation, the plan is undoubtedly a key component in accelerating the digitization of Canada's financial system. As the stablecoin market continues to expand, regulatory measures worldwide are increasingly becoming a focus for governments. Canada's initiative is expected to provide valuable experience for other countries to reference.
In summary, this regulatory plan is part of Canada's strategy to promote the modernization of digital currencies and payment systems. It aims to ensure the healthy development of the stablecoin market through a robust regulatory framework while enhancing the security and efficiency of the global payment system.
