In a decisive move to protect its financial sovereignty and keep pace with technological change, the Canadian government is expediting the launch of regulatory standards for stablecoins ahead of its federal budget on 4 November.
Fear of falling behind in the digital payment’s era drives this regulatory rush. Stablecoins have ballooned into a critical part of the global payment’s infrastructure. In Canada’s view, the proliferation of US-dollar-backed tokens threatens to weaken domestic monetary control and shift liquidity and capital across borders.
What’s Driving the Rush?
At the heart of the Canadian government’s timing is its upcoming budget, which is likely to include a blueprint for stablecoin regulation. Officials from the Bank of Canada (BoC), the Office of the Superintendent of Financial Institutions (OSFI) and other stakeholders have been holding closed-door consultations for several weeks.
In the US, the recently passed GENIUS Act governs stablecoin issuers by treating compliant stablecoins as payment instruments and sets reserve standards and anti-money-laundering requirements. By contrast, Canada still lacks bespoke legislation and currently relies on a patchwork of securities or derivatives laws to oversee stablecoins.
Industry voices are clear. The Council of Canadian Innovators vice-chair, John Ruffolo, has warned that without immediate action, Canadian capital and innovation will drift south of the border. Analysts at Desjardins note that approximately 99% of global stablecoin value is pegged to the US dollar, most backed by US Treasuries—meaning foreign adoption of such tokens effectively boosts US debt demand and drains cross-border monetary influence.
Implications for Canada’s digital finance ecosystem
The lack of regulatory certainty continues to hinder domestic stablecoin initiatives. Tokens backed by Canadian dollars, such as QCAD and CADC, have been created; however, their acceptance has been slow due to ambiguous licensing and compliance frameworks. A regulated Canadian custodian, Tetra Trust, which is backed by the National Bank of Canada and Shopify Inc., has been working on a CAD-backed stablecoin to launch in 2026.
Canada is still on the smaller side of crypto payments adoption: cash accounted for 20% of expenditures in 2023, while Bitcoin payments were around 3%. But certain indicators show growing institutional interest: a 2024 survey by KPMG indicated that 39% of Canadian institutional investors had cryptocurrency exposure in 2024 vs. 31% in 2021.
Without clear frameworks, Canada runs the risk of capital flight and less innovation. The Bank of Canada has highlighted the need for federal regulation by stating that stablecoins can spend like “real money”, which must be “as safe and stable as the balance in your bank account”.
Canada’s upcoming federal budget will update the regulatory framework for stablecoins, establishing a regime recognising stablecoins as payment methods backed by reserves. It is important to act quickly to avoid reliance on US-dollar-based tokens and protect domestic monetary sovereignty. A framework would instead position Canada to lead advancements in digital finance and assistance.
Building a Common Digital Finance Identity Across Borders
At the Commonwealth Union, we believe that the true strength of finance and technology is the ability to connect people, institutions, and ideas across borders.
Through our blockchain network, we are establishing a basis for secure and interoperable digital finance to enhance international coordination, unlock new cross-border opportunities, and direct investment flows to regions for the most substantial impact.
As part of this objective, we will soon launch a Digital Banking Network—a platform to increase the accessibility and inclusiveness of financial services broadly in the Commonwealth and MENA regions.
If our mission resonates with you, we would love to hear from you at Info@commonwealthdigitalbankingclub.com
