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In a landmark move, the Carney government's 2025 federal budget signals Ottawa's clearest policy direction yet on digital assets—with stablecoins front and center.
What's New
Budget 2025 announces forthcoming legislation to regulate fiat-backed stablecoins in Canada. The new framework will require issuers to:
- Maintain adequate and high-quality reserves;
- Establish clear redemption policies and liquidity protections;
- Implement risk management frameworks and cybersecurity protocols;
- Safeguard personal and sensitive data;
- Comply with national security measures.
Oversight will fall under the Bank of Canada. Related amendments to the Retail Payment Activities Act (RPAA) will also bring stablecoin-based payment service providers under federal supervision.
Why It Matters
Canada has lagged behind the U.S. in defining clear guardrails for stablecoins. Without a domestic framework, Canada risks seeing its digital payments ecosystem dominated by USD-denominated stablecoins—typically backed by U.S. Treasury assets—raising concerns over monetary sovereignty and regulatory dependency.
Budget 2025 marks a policy inflection point: federal lawmakers now aim to "promote safe innovation of digital assets" while reinforcing consumer protection and systemic trust. This initiative could also pave the way for further digital payments modernization.
What's Next
Stablecoin issuers, wallet providers, PSPs, and financial institutions should begin preparing for new prudential obligations. This includes internal assessments of reserve quality, redemption mechanics, and data compliance structures.
Consultations and draft legislation are expected in late 2025 or early 2026, with full implementation likely over the following fiscal cycle.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
