Canada Sets Federal Guardrails for Stablecoins — and Ties Them to Its Open-Banking Push

TL;DR

• In its 2025 budget, Canada lays the groundwork for stablecoin regulation, proposing a framework with 1:1 reserves and Bank of Canada oversight.
• The plan connects stablecoin regulation to the Open Banking Canada framework to modernize retail payments.
• If enacted, these rules could integrate fiat-backed stablecoins into Canada’s regulated payment infrastructure.

Canada’s 2025 Federal Budget takes a decisive step toward regulating fiat-backed stablecoins through a new national framework overseen by the Bank of Canada. The proposal links stablecoin rules with the country’s open-banking reforms, aiming to modernize retail payments while tightening consumer protection. For Ottawa, it’s not just about stablecoin regulation. It’s about building a safer, more competitive digital-finance system that can stand alongside those in the U.S. and Europe.

Canada’s First National Crypto-Payments Framework

Through its 2025 budget, Ottawa has proposed Canada’s first stablecoin framework, setting rules for fiat-backed stablecoins and integrating them into the country’s broader payments modernization plan. The government presents the policy as both a financial-stability measure and a catalyst for innovation under its digital-finance roadmap. It mirrors recent U.S. and U.K. initiatives, signaling that Canada aims to catch up with global peers on crypto-asset supervision.

What the Federal Budget Proposes

The proposed stablecoin framework establishes federal standards for issuers that wish to operate within Canada. However, only fiat-backed stablecoins will qualify, and each must maintain stablecoin reserves 1:1 in high-quality liquid assets. Holders must be able to redeem at par on demand.

The Bank of Canada will oversee compliance with reserve and reporting requirements under a federal supervisory framework, ensuring transparency and risk management. Ottawa plans to amend the Retail Payment Activities Act (RPAA) to include stablecoin service providers under its jurisdiction, giving regulators tools to monitor payments stability and enforce standards. Legislation to implement these measures is expected later in 2025, followed by public consultations.

Oversight and Consumer Protections

Under Bank of Canada oversight, issuers will face scrutiny comparable to payment system operators. Consequently, supervisors will verify that reserves remain fully backed and segregated from corporate funds. Redemption delays or opaque accounting could prompt enforcement actions.

The framework also embeds privacy, anti-money-laundering, and cybersecurity requirements, echoing existing financial-sector norms. Algorithmic or unbacked tokens will remain outside the perimeter of Canadian stablecoin law, focusing regulation strictly on redeemable, asset-backed instruments.

The Open-Banking Connection

The 2025 budget positions Canada’s stablecoin framework as part of a wider effort to modernize retail payments through its Open Banking framework. The government plans to finalize data-sharing standards by 2027, allowing consumers to authorize banks and fintechs to exchange financial data securely.

In this vision, regulated stablecoins could operate alongside traditional payment networks, leveraging API-based rails. Updates to the RPAA will clarify how such tokens can settle transactions in real time, while Bank of Canada oversight ensures interoperability and consumer protection.

Industry and Market Implications

Fintech and crypto-payment firms have welcomed the prospect of regulatory clarity. A defined stablecoin framework could grant them bank-grade credibility and open doors to mainstream adoption. Although compliance costs and licensing requirements may limit smaller entrants.

For larger providers, stablecoin licensing under the new model could pave the way for participation in regulated payment systems and cross-border remittance services. Market analysts note that Canada’s approach aligns with global best practices established in the U.S., U.K., and under the EU MiCA rules.

>>> Read more: US Stablecoin Law 2025: Key Changes for Compliance and DeFi

Broader Context and What Comes Next

Beyond stablecoins, the 2025 budget outlines investments in AI governance, digital ID, and fintech supervision, forming a cohesive digital-economy agenda. Draft legislation for Canada’s stablecoin regulation is expected later in 2025, followed by consultations extending into 2026.

If enacted, the Canadian stablecoin law would mark a turning point in North American policy alignment. Canada, long cautious about crypto regulation, now positions itself as an emerging leader in payments innovation and regulatory modernization through the Open Banking Canada framework.