Canada is set to introduce legislation regulating fiat-backed currencies under its federal budget for 2025, following in the footsteps of the US, which passed stablecoin laws in July.
StableCoin issues are required to hold sufficient reserves, establish redemption policies and implement various risk management frameworks, including measures to protect personal and financial data, according in the 2025 government budget released on Tuesday.
The Bank of Canada will allocate $10 million over two years, starting in the 2026-2027 fiscal year, to ensure everything goes smoothly, followed by an estimated $5 million in annual costs to be offset from StableCoin Issuers regulated under the Payment Activities Act.
It comes nearly four months after the US passed the StableCoin-Regulate Genius Act, which puts pressure on Canada to pass its own rules for tokens.
While the document did not specify when the law would be tabbed, it is part of a broader plan to modernize payments and make digital transactions faster, cheaper, and safer for the country’s 41.7 million people.
Coinbase Canada CEO Lucas Matheson is bullish on the proposal, and said CBC this Monday will “change how Canadians interact with money and the internet forever,”.
Institutional stablecoin adoption is growing
The StableCoin market currently sit down to $ 309.1 billion, with the estimate of the US Treasury in April that it will climb to $2 trillion by 2028.
Institutional adoption is on the rise, with the likes of western union, swift, moneygram, and Zelle integrating, or announcing plans to integrate, StableCoin solutions in recent months.
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Payment platform Tetra Digital is one of the leading players in the Canadian StableCoin scene, having raised $10 million to create a digital version of the Canadian Dollar after receiving investments from Shopify, Wealthsimple, and the National Bank of Canada.
It comes as Canada drops its plans to issue a Central Bank Digital Currency In September 2024, with Bank of Canada governor Tiff Macklem saying that there is not a compelling case to move forward with it at that time.
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