Parliament approved the federal Canada Strong budget on Nov. 18, 2025 by a narrow 170 to 168 vote, introducing the first national framework that places stablecoin oversight directly under the Bank of Canada. The decision sets strict rules for reserves, redemptions and yield restrictions, and it marks a turning point in how digital payments will be regulated in the country.
A New Federal Oversight Model
A stablecoin is a digital token built to mirror the value of a fiat currency and keep volatility low for everyday transactions. The new framework, part of a budget that helped Prime Minister Mark Carney avoid an early election, requires issuers of fiat-backed stablecoins to hold 1:1 reserves in the reference currency or in high-quality liquid assets. Issuers must guarantee immediate redemption for holders, and they must comply with strong standards for risk management, cybersecurity and operational continuity.
Under the plan, the Bank of Canada becomes the central supervisory authority. It will oversee a registry of approved issuers and receive about $10 million for its first two years of implementation starting in 2026 to 2027, followed by roughly $5 million annually. This expansion of responsibilities transforms the central bank into the operational regulator of a digital payment instrument, and it significantly broadens its traditional monetary mandate.
The budget also amends the Retail Payment Activities Act to establish a category of prescribed stablecoins meant to keep payment service providers under federal oversight instead of provincial securities regulation. Yet several lawyers warn that any token offering yield could be treated as a security, shifting jurisdiction to provincial authorities. Industry concerns have grown over the absolute ban on non-bank issuers offering any form of yield, and many fear the rule could stifle innovation and limit competitiveness.
Industry reactions have already surfaced. Lucas Matheson, CEO of Coinbase Canada, called the move a step in the right direction but urged Ottawa to create a transitional pathway for CAD-backed stablecoins and reconsider the yield restrictions. Others point to possible conflicts of interest in giving the Bank of Canada both supervisory and registration powers. The government plans to publish the detailed regulations and a dedicated bill in the coming weeks, and the effectiveness of the new framework will ultimately depend on how well it balances strict controls with the need to foster innovation.