Federal budget promises framework for Canadian dollar-backed cryptocurrency
The federal government is preparing to introduce new legislation that would establish a framework for Canadian dollar-backed digital currencies, often called stablecoins. The goal, according to the 2025 budget, is to make digital payments in Canada more secure, stable, and innovative.
As part of its broader payments modernization plan, Ottawa says the move will “deliver more secure and innovative payments for Canadians.”
Setting rules for stablecoins
Under the upcoming legislation, stablecoin issuers — companies that create cryptocurrencies tied to real-world assets like the Canadian dollar or gold — will be required to:
- Hold sufficient asset reserves to manage financial risks and protect consumers; and
- Meet national security standards to safeguard Canadians’ sensitive and personal data.
Stablecoins, first introduced in 2014 with the launch of Tether, are designed to combine the flexibility of crypto with the price stability of traditional money. However, several high-profile failures in recent years have shown that poorly backed stablecoins can collapse quickly, leaving investors exposed.
Keeping Canada competitive
The U.S. passed its own stablecoin legislation earlier this year through the GENIUS Act, paving the way for major corporations — including Walmart — to issue U.S. dollar-backed digital coins.
In Canada, some have warned that without clear rules, the country risks falling behind its global peers in the digital finance space.
One of the most prominent Canadian efforts is led by Tetra Digital, a Calgary-based fintech company that has raised $10 million to create a digital version of the Canadian dollar. The project is backed by Shopify, Wealthsimple, and National Bank.
Costs and oversight
According to the budget, the Bank of Canada will receive $10 million over two years beginning in 2026–27 to administer the new legislation, funded by government revenues. After that, ongoing annual costs of around $5 million will be covered by regulated stablecoin issuers themselves.
The government says the policy will support prosperity and good governance, and notes it may particularly benefit men and youth through greater financial innovation and access.
Industry reaction
Lucas Matheson, CEO of Coinbase Canada, the country’s largest registered crypto exchange, welcomed the announcement.
“This signals that Canada is ready to lead on digital innovation,” he said. “Stablecoins will make payments faster, cheaper, and more accessible for all Canadians. Today’s news will change how Canadians interact with money and the internet forever.”
As part of the payments modernization effort, Ottawa will also amend the Retail Payment Activities Act to regulate payment service providers that use cash-backed stablecoins to process transactions.
Balancing innovation and security
Stablecoins are often praised for offering the efficiency and borderless utility of crypto while avoiding extreme volatility. However, critics warn they lack the robust security systems that traditional banks use to detect and prevent money laundering and other illegal financial activity.
The 2025 budget does not yet specify what national security safeguards will be implemented or when the legislation will be tabled.
Additional digital finance measures
Beyond stablecoins, the budget also allocates $19 million over two years to the Bank of Canada to oversee the Consumer-Driven Banking Act, which came into effect in 2024. The act allows individuals and small businesses to securely share their financial data with trusted entities of their choice.To support data protection under this framework, the Canadian Security Intelligence Service (CSIS) and the RCMP will receive an additional $25.7 million to strengthen information exchange safeguards.
