Canada Races To Finalize Stablecoin Rules Before Budget Reveal – Why?

What Happened

Canada is moving quickly to finalize long-awaited rules for stablecoins ahead of its federal budget announcement on November 4, as policymakers rush to keep pace with the United States and prevent a loss of financial sovereignty amid rising use of U.S. dollar-backed tokens.

Without a clear framework, he said, Canadian investors and savers may increasingly turn to U.S. stablecoins to transfer funds internationally, effectively enriching American institutions and shifting financial data and liquidity outside the country.

While a few domestic projects, such as QCAD and CADC, have introduced Canadian dollar–backed stablecoins, their adoption remains limited due to uncertainty over compliance and licensing requirements.

Tetra Trust, a regulated Canadian custodian backed by National Bank and Shopify, plans to launch its own CAD-backed stablecoin in 2026, but experts say progress will remain slow until federal rules are established.

Market Context

The move comes amid growing concern from policymakers, market participants, and economists that Canada is falling behind other major economies, particularly the United States, in establishing clear rules for the stablecoin industry.

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They are often issued by private companies such as Tether and Circle and backed by assets like U.S. Treasury bills to maintain price stability.

John Ruffolo, vice chair of the Council of Canadian Innovators, has urged Ottawa to act swiftly, warning that inaction could push capital south of the border.

Why It Matters

The rules are expected to be outlined in the upcoming budget to be presented by Finance Minister François-Philippe Champagne.

In contrast, Canada still lacks dedicated legislation. Regulators have said stablecoins could fall under existing securities or derivatives laws, but industry experts argue they should be treated as payment instruments instead.

Baig warned that widespread use of U.S. dollar stablecoins in Canada could weaken the country’s monetary sovereignty and reduce the Bank of Canada’s control over its money supply.

The absence of legislation has already begun to show economic consequences. A Desjardins report in October cautioned that Canada risks falling behind the U.S. and Europe, both of which have implemented stablecoin frameworks.

Details

According to Bloomberg, government officials have spent weeks holding closed-door consultations with regulators and industry stakeholders to develop a regulatory framework for stablecoins.

Officials familiar with the discussions said the government is now working toward addressing stablecoin oversight directly in the budget documents.

Stablecoins, cryptocurrencies pegged to traditional currencies like the U.S. dollar, have grown into a central part of the global digital payments ecosystem.

The United States recently passed the GENIUS Act, granting regulators the authority to supervise stablecoin issuers, set reserve standards, and enforce anti–money laundering rules.

The new law classified compliant stablecoins as payment instruments, giving the U.S. a clear framework that the industry has widely embraced.

Data from Desjardins supports that concern. Foreign exchange strategist Mirza Shaheryar Baig noted that roughly 99% of global stablecoin value is pegged to the U.S. dollar.

Since the GENIUS Act requires issuers to hold primarily U.S. Treasuries, he said, foreign adoption is fueling new and sustained demand for U.S. debt.

The central bank itself has echoed the urgency. Ron Morrow, the Bank of Canada’s executive director of payments, supervision, and oversight, said in September that Canada must “weigh the merits of federal stablecoin regulation, similar to what other countries have done.”

Morrow warned that for stablecoins to function as real money, they must be “as safe and stable as the balance in your bank account.”

The Office of the Superintendent of Financial Institutions (OSFI) has also expressed concern over the lack of regulatory clarity, calling for consistent national rules.

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The report also linked Shopify’s recent move to accept payments in USDC, a dollar-pegged stablecoin, to the growing attractiveness of U.S. digital payment systems.