Canada Moves to Regulate Stablecoins, Following U.S. Lead

Canada Moves to Modernize Digital Payments

Canada is finally stepping into the stablecoin regulation arena, signaling a major shift in its approach to digital assets. The government’s latest 2025 federal budget confirms that fiat-backed stablecoin issuers operating in the country will soon be required to hold sufficient reserves, follow redemption policies, and implement strong risk management standards. The move aligns Canada closely with the United States, which passed the landmark GENIUS Act earlier this year.

A Turn Toward Clear Digital Asset Standards

According to the federal budget announcement, the Bank of Canada will oversee the rollout and allocate approximately $10 million over the first two years to support implementation. After that, annual operational costs-estimated at around $5 million-will be largely covered by regulated stablecoin issuers under the Retail Payment Activities Act.

The government has framed this initiative as part of a broader modernization of Canada’s payment infrastructure. The goal is to make digital transactions cheaper, faster, and more secure across the country’s financial system, used daily by more than 41 million Canadians.

Pressure From the U.S. and Global Markets

Canada's regulatory push closely follows the U.S. passing the GENIUS Act in July, which created the world’s most comprehensive stablecoin oversight system to date. That move has served as a catalyst, pushing allied markets like Canada, the EU, and South Korea to accelerate their own legislation.

For Canada, the urgency is clear: without domestic frameworks, Canadian capital risks flowing into U.S. stablecoins, potentially weakening national monetary sovereignty. Policymakers are now signaling that stablecoin oversight is no longer optional - it’s strategic.

Stablecoins Are Becoming the Backbone of Global Payments

The stablecoin market is booming, currently valued at $309 billion, and projected by the U.S. Treasury to reach $2 trillion by 2028. Institutions are increasingly adopting stablecoins for cross-border settlements, remittances, and corporate treasury operations.

In the last year alone, Western Union, SWIFT, MoneyGram, and Zelle have either integrated or announced plans to integrate stablecoin-based settlement systems, signaling a global infrastructure shift.

In Canada, Tetra Digital is emerging as a major stablecoin player, backed by Shopify, Wealthsimple, and the National Bank of Canada, and is developing a digital Canadian dollar for retail and business use.

Canada Steps Back From CBDC Plans - For Now

The move comes months after the Bank of Canada formally paused its CBDC project, arguing there was “no compelling case” for a state-issued digital currency at this time. Instead, policymakers appear to be embracing private-sector stablecoins as the more efficient near-term path to digital payments modernization.

For now, Canada is choosing market-driven adoption, backed by careful regulation, rather than pushing a government-built digital currency into circulation.