Following the United States' passage of landmark stablecoin regulations in July this year, Canada also plans to introduce relevant regulatory legislation in its federal budget for 2025.
According to the budget proposal released by the government on Tuesday, stablecoin issuers will be required to hold sufficient reserves and establish redemption mechanisms. Additionally, several risk management measures must be implemented, including the protection of personal and financial data.
The Bank of Canada will allocate CAD 10 million over two years starting in the 2026-2027 fiscal year to ensure the smooth operation of the relevant mechanisms, with an expected annual cost of CAD 5 million to be borne by stablecoin issuers regulated under the Retail Payment Activities Act.
Since the U.S. passed the GENIUS Act to regulate stablecoins nearly four months ago, Canada has faced pressure to establish its own token regulatory rules.
Although the document did not specify the timeline for legislative submission, this initiative is part of a broader plan to modernize the payment system, aimed at providing a more efficient, low-cost, and secure digital transaction experience for the country's 41.7 million residents.
Lucas Matheson, CEO of Coinbase Canada, expressed optimism about the proposal in an interview with CBC on Monday, stating that it would "forever change the way Canadians interact with money and the internet."
The current stablecoin market size is USD 309.1 billion, and the U.S. Treasury estimated in April that the market will grow to USD 2 trillion by 2028.
Institutional adoption is increasing, with companies like Western Union, SWIFT, MoneyGram, and Zelle recently integrating or announcing plans to integrate stablecoin solutions.
Payment platform Tetra Digital is one of the key players in Canada's stablecoin space, having raised USD 10 million to create a digital version of the Canadian dollar after securing investments from Shopify, Wealthsimple, and the National Bank of Canada.
Meanwhile, Canada has abandoned plans to issue a central bank digital currency (CBDC) as of September 2024, with Bank of Canada Governor Tiff Macklem stating that there was not sufficient reason to advance the project at that time.
Related: The EU's plan to centralize crypto regulation under ESMA has sparked industry divisions.
Original: “Canada's Federal Budget Commits to Regulating Stablecoins, Following U.S. Lead”
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