With the recent Royal Assent of Bill C-15, Canada is now said to be moving forward on a proper framework for stablecoins. The nation’s Department of Finance has started the development of applicable regulations to support safe, reliable digital payment options for Canadian consumers. As explained in the update, this supports the government’s ongoing commitment to enable innovation and competition in the financial services sector, helping Canadians access seamless, more flexible options for payments and money transfers.
As noted in the announcement, a stablecoin is a type of digital asset designed to maintain a stable value that is relative to an underlying asset. And a fiat-backed stablecoin is a particular kind of stablecoin that is usually pegged to one fiat currency of reference like the Canadian or US dollar.
At present, there is no comprehensive regulation of the issuance of fiat-backed stablecoins in Canada.
And this now happens to be the main focus of the new federal framework.
This particular framework, proposed via the Budget 2025 with the legislation introduced in Bill C-15, will aim to make stablecoins safer to hold and use in Canada.
This sort of approach may help with ensuring that issuers maintain adequate reserves, provide / support redemption at par in the referenced fiat currency, maintain and uphold relevant data security practices, and have proper corporate and financial governance.
The suggested framework will now intend to effectively complement existing federal and provincial regimes, such as the Retail Payment Activities Act.
The stated goal of the suggested stablecoin regulatory framework is to enable safe innovation and competition in the financial services sector via regulations for Canadian financial tech firms to innovate and issue stablecoins, while ensuring that consumers are being protected at all times.
The framework will now aim to apply to local and international issuers.
The framework follows developments of legislative and regulatory frameworks for stablecoins in other major jurisdictions, like the United States as well as the EU.
In August of last year, the US had moved forward with enacting the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, after the full adoption of the Markets in Crypto Assets regulations in the European Union in 2024.
Canada’s stablecoin framework is meant to be fully compatible with these frameworks, with certain elements that are said to be fairly consistent with recommendations of the Financial Stability Board.
While this update is a step in the right direction, Canada is still well behind the US now when it comes to providing a supportive regulatory framework for digital assets. Under the Trump Administration, US consumers and businesses finally have more regulatory clarity and access to some of the most innovative financial products (which are not available to consumer residing in most other jurisdictions).