The Canadian government has announced legislation to regulate stablecoins backed by its dollar, following the recent actions of its U.S. neighbors who implemented a new law for stablecoin issuers over the summer.
With the release of Budget 2025 on Tuesday, the government stated its commitment to establishing clear standards for 1-1 reserves, with the Bank of Canada overseeing the initiative. “This legislation will require issuers to maintain adequate asset reserves, establish redemption policies, implement risk management frameworks, and protect sensitive and personal information of Canadians,” the budget document indicated.
In light of the new U.S. Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) Act, the Canadian initiative was welcomed by crypto advocates.
The Canadian Web3 Council expressed encouragement regarding the government’s commitment to enabling innovators to issue stablecoins, which would enhance competition in Canada’s payments market and lower transaction costs for consumers and businesses.
The budget also mentioned necessary amendments to the Retail Payment Activities Act and called for “national security safeguards” to ensure the safety of the Canadian financial system.
“Canada has fallen behind the global standard for this innovative technology, and this is an excellent step forward by [Minister of National Revenue] François-Philippe Champagne and [Prime Minister] Mark Carney to boost financial sector innovation,” stated Didier Lavallée, CEO of Tetra Digital Group, claiming to be Canada’s first fully-regulated digital asset custodian and financial services provider. He noted that the approach “signals that stablecoins need to be regulated as payment instruments, not as securities.”
With this commitment, the focus will now shift to the implementation process.
“It’s great to see real progress,” stated Eric Richmond, general counsel of Shakepay, in a social media post. “Now the focus turns to implementation: ensuring the framework remains open, proportional, and accessible, allowing fintechs to build the next generation of trusted payment systems for Canadians.”
Read More: Tetra Digital Raises $10M to Create a Regulated Canadian Dollar Stablecoin
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