Regulate fiat-backed stablecoins with Bank of Canada oversight

The federal government will introduce legislation in its 2025 budget to regulate fiat‑backed stablecoins, imposing reserve, redemption and risk‑management requirements on issuers and placing oversight with the Bank of Canada, the budget document released Tuesday shows. The measure is part of a wider effort to modernize Canada’s payments system and to bring private digital tokens into the country’s financial regulatory framework.

Under the proposed framework, stablecoin issuers would be required to hold adequate fiat reserves, establish clear redemption policies and implement robust risk‑management systems, including protections for personal and financial data and national security safeguards. Oversight and supervision would be carried out under an amended Retail Payment Activities Act, bringing payment service providers that handle stablecoin transactions into formal supervision.

The Bank of Canada will receive CA$10 million over two years beginning in fiscal 2026–27 to support implementation and initial oversight. Annual operating costs are estimated at about CA$5 million thereafter; those expenses are expected to be recovered from regulated issuers under the Retail Payment...