The Canadian government has planted a flag committing itself to legislation that'll regulate stablecoins backed by its dollar, following in the recent footsteps of its U.S. neighbors who passed a new law to govern stablecoin issuers there over the summer.

With the release of Budget 2025 on Tuesday, the government said it is focused on setting clear standards for 1-1 reserves, and will put administration of the effort in the hands of the Bank of Canada."This legislation will require issuers to maintain and manage adequate asset reserves, establish redemption policies, implement risk management frameworks, and protect the sensitive and personal information of Canadians," according to the budget document that emerged this week.

Following on the heels of the new U.S. law known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) Act, the Canadian development was greeted with praise from crypto advocates there.

The Canadian Web3 Council said it's "encouraged by the government’s commitment to enable innovators to issue stablecoins, which will foster competition in Canada’s payments market and reduce transaction costs for consumers and businesses."

The budget indicated the government will have to make amendments to the Retail Payment Activities Act. It also called for "national security safeguards" ensuring the safety of the Canadian financial system.

"Canada has fallen behind the global standard for this innovative technology and this is an excellent step forward by [Minister of National Revenue] François-Philippe Champagne and [Prime Minister] Mark Carney to increase financial sector innovation," said Didier Lavallée, the CEO of Tetra Digital Group, which bills itself as Canada's first fully-regulated digital asset custodian and financial services provider. He added that the approach "sends a strong signal that stablecoins need to be regulated as payment instruments and not as securities."

With the commitment made, the attention will shift toward how it's being put in place.

"It’s great to see real progress," said Eric Richmond, general counsel of Shakepay, in a post on social media site LinkedIn. "Now the focus turns to implementation: making sure the framework stays open, proportional, and accessible, so fintechs can help build the next generation of trusted payment rails for Canadians."

Read More: Tetra Digital Raises $10M to Create a Regulated Canadian Dollar Stablecoin