The Liberal government is committed to implementing new legislation to ensure some digital currencies are secure and stable enough for consumers and businesses to use.
The initiative announced in the 2025 budget is part of the government’s payments modernization plan that it says will “deliver safer, innovative payments for Canadians.”
The budget said the upcoming legislation will require issuers of stablecoins, a type of cryptocurrency backed by real currencies or commodities such as gold, to maintain asset reserves to manage risk and protect consumers.
The legislation will also require issuers to comply with national security standards to protect the personal and confidential information of Canadians.
Stablecoins have been around since 2014, when American company Tether launched the first of its kind, a cryptocurrency pegged to the US dollar. Other companies have launched stablecoins since then. some of which have collapsed.
The US government passed its own regulatory legislation last summer. The GENIUS Law
It opened the door for major US companies like Walmart to issue stablecoins backed by the US dollar.
Keep Canada in the game
Those concerned that Canada is falling behind on cryptocurrencies have been urgently pressing the federal government to regulate stablecoins so that companies have a framework to issue their own cryptocurrencies backed by Canadian dollars.
And while the Bank of Canada abandoned its central bank digital currency project last year, Calgary-based financial company Tetra Digital has raised $10 million to create a digital version of the Canadian dollar, backed by Shopify, Wealthsimple and National Bank.
The budget says the cost of administering the legislation by the Bank of Canada will be $10 million over two years starting in 2026-27, and will come from government revenue.
The ongoing costs of around $5 million annually to administer the system will be borne by stablecoin issuers who will be regulated under the new legislative framework.
The budget says the policy change will directly or indirectly benefit men and youth by improving prosperity and good governance.
Lucas Matheson, CEO of Coinbase Canada, the country’s largest registered crypto trading platform, said the government’s move “indicates that Canada is ready to lead digital innovation.”
“Today’s news will forever change the way Canadians interact with money and the Internet. Stablecoins will make payments faster, cheaper and more accessible for everyone,” he said.
As part of the payments modernization plan, the Retail Payment Activities Act will be amended to regulate electronic payment service providers that use cash-backed stablecoins to facilitate payments.
Stablecoins have the advantage of being as easy to trade as major cryptocurrencies while avoiding some of the volatility. But critics say they also lack some of the security infrastructure that banks have to detect and prevent illegal financial transactions.
The budget does not provide details on what “national security safeguards” will be implemented to prevent illegal transactions, or when legislation will be introduced.
The budget also says it will give the Bank of Canada $19 million over two years to oversee the Consumer Banking Act.
The law, which became law in 2024, allows individuals and small businesses to securely share their data with entities of their choice.
The budget allocates $25.7 million to the Canadian Security Intelligence Service and the RCMP to support information-sharing safeguards under the law.
