The Liberal government is committing to roll out 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 more secure innovative payments for Canadians.”
The budget said the forthcoming legislation will require issuers of stablecoins, a type of cryptocurrency that is backed by real currencies or commodities like gold, to maintain asset reserves to manage risk and protect consumers.
The legislation will also require issuers to meet national security standards to protect Canadians’ sensitive and personal information.
Stablecoins have been around since 2014, when U.S. company Tether launched the first of its kind, a cryptocurrency tied to the U.S. dollar. Other companies have launched stablecoins since then, some of which have come crashing down.
The U.S. government passed its own regulatory legislation this past summer. The GENIUS Act
opened the door for major American companies like Walmart to issue stablecoins backed by the U.S. dollar.
Keeping Canada in the game
Those concerned that Canada is falling behind on cryptocurrencies have been urgently pushing the federal government to regulate the stablecoins so companies will have a framework to issue their own loonie-backed crypto.
And while the Bank of Canada dropped its central bank digital currency project last year, Calgary-based finance company Tetra Digital has raised $10 million to create a digital version of the Canadian dollar, with backing from 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 beginning in 2026-27, and will come out of government revenues.
Ongoing costs of about $5 million annually to administer the system will be picked up by stablecoin issuers that 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, the CEO of Coinbase Canada, the country’s largest registered crypto trading platform, said the government’s move “signals that Canada is ready to lead on digital innovation.”
“Today’s news will change how Canadians interact with money and the internet forever. Stablecoins will make payments faster, cheaper and more accessible for all,” he said.
As a part of the payments modernization plan, the Retail Payment Activities Act will be amended to regulate electronic payment service providers that use the 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 banks have to detect and prevent illegal financial transactions.
The budget does not provide details of what “national security safeguards” will be put in place to prevent illegal transactions, or when the legislation will be tabled.
The budget also says that it will give the Bank of Canada $19 million over two years to oversee the Consumer Driving Banking Act.
The act, which became law in 2024, allows individuals and small businesses to share their data with entities of their choice in a safe and secure way.
The budget is allocating $25.7 million to the Canadian Security Intelligence Service and the RCMP to support the information exchange safeguards under the act.
