Canada is exploring stablecoin legislation | Source: Pexels
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Key Takeaways
Canada’s 2025 budget introduces legislation to regulate fiat-backed stablecoins, echoing the U.S. GENIUS Act.
Bitwise CIO Matt Hougan recently predicted that the stablecoin could expand tenfold or more.
Despite widespread support, no concrete security measures have yet been outlined in the government’s proposal.
Canada has announced plans in its 2025 Budget to introduce new stablecoin legislation, a move which strongly mirrors the approach the U.S. took with its GENIUS Act.
Despite national support, concerns remain about the threat of fresh security and systemic risks surrounding the fiat-backed digital assets.
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Under the proposal, stablecoins will fit into a broader “payments modernization plan” designed to make financial transactions faster and more secure.
Cryptocurrencies pegged to fiat currencies like the Canadian or U.S. dollar will be required to hold sufficient reserve assets and comply with strict national security standards.
According to the budget, the Bank of Canada will administer the new system, with $10 million allocated over two years beginning in 2026–27.
An estimated $5 million in annual costs will be incurred for ongoing expenses, which will be offset by stablecoin issuers regulated under the new act.
Security Concerns
Although the budget claims the legislation will “include national security safeguards” around stablecoins, no specific measures have been listed.
The collapse of TerraUSD (UST) in May 2022 erased more than $60 billion in market value after the token lost its peg to the U.S. dollar.
“The incident underscored the dangers of experimental token models and inadequate collateralization,” Chainalysis said.
Even established assets such as USDC and DAI have not been immune.
Chainalysis reported that the Euler Finance hack in March 2023 drained about $197 million, much of it denominated in stablecoins, while a Curve Finance exploit in July the same year put hundreds of millions more at risk.
“These cases show how stablecoin-related breaches can cascade across decentralized finance (DeFi), centralized exchanges, and even institutions with crypto exposure,” the firm said.
Chainalysis added that as banks and payment companies begin holding or transacting in stablecoins, their exposure to crypto-specific risks grows.
“A significant depegging event could compel institutions to realize losses, with knock-on effects for their conventional operations,” the firm warned.
Industry Response
Crypto advocacy group Stand With Crypto Canada welcomed the budget announcement, describing it as a “major step toward embracing faster, cheaper, and borderless payments.”
“With 60,000 advocates strong, Stand With Crypto Canada will continue to push for effective, forward-looking stablecoin policy,” the group said in a statement on X.
“From running live demos with MPs in Ottawa to petitioning for fair and inclusive regulations around issues like debanking, we’re working to ensure Canada builds a thriving blockchain ecosystem that powers innovation and economic growth.”
🇨🇦 Canada just made a big step forward.
Today’s federal budget includes new guidance on stablecoin regulation, signaling progress toward embracing faster, cheaper, and borderless payments.
With 60,000 advocates strong, Stand with Crypto Canada will continue to be a driving… pic.twitter.com/C0ZiO3GLsR
— Stand With Crypto Canada 🇨🇦 (@StandWCrypto_CA) November 4, 2025
Other crypto industry leaders, including Lucas Matheson, CEO of Coinbase Canada, welcomed the announcement as a “turning point for innovation,” saying the legislation “signals that Canada is ready to lead on digital money.”
“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 told CBC.
Mirroring the U.S. GENIUS Act
Canada’s plan mirrors the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, landmark legislation passed by the U.S. Congress in June 2025.
The act aims to protect users, preserve the role of the U.S. dollar, and ensure stablecoins can function safely as payment tools, goals Canada’s new framework appears to emulate closely.
The GENIUS Act also establsished clear legal definitions for “payment stablecoins,” distinguishing them from securities and commodities.
🚨 Senator Bill Hagerty just delivered a powerful speech urging support for the GENIUS Act, set to modernize America’s payment system with stablecoins! Final Senate vote starts soon, follow for instant updates on the results! 🇺🇸 #GENIUSAct#Crypto#Innovation#bitcoin… pic.twitter.com/wTAv5vxTrU
It requires issuers to maintain 1:1 reserve backing with high-quality, liquid assets such as cash or Treasury bills, undergo regular audits, and comply with anti–money laundering (AML) and know-your-customer (KYC) obligations.
Large issuers with more than $10 billion in circulation fall under federal supervision, while smaller players operate under state-level oversight.
Stablecoin Market Booming
Bitwise Chief Investment Officer Matt Hougan recently predicted that the tokenization and stablecoin markets are on the verge of explosive growth.
“I have a lot of confidence that the stablecoin and tokenization infrastructure market will grow,” he said on Thursday, Oct. 10.
Bullish on stablecoins | Source: X
“I think people dramatically underestimate how much and how quickly these technologies will remake markets,” Hougan added. “It’s easy for me to imagine this market growing by 10x or more.”
Stablecoins have become a cornerstone of the crypto ecosystem, with total supply hitting a record $187.5 billion in January.
The top 10 stablecoins have over a combined 8.7 million holders, with USDT, USDC, and DAI accounting for 97% of total users.
USDT by far dominates with over 5.8 million wallets, more than double USDC’s footprint.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
