Canada Accelerates Stablecoin Rules to Counter U.S. Financial Influence

Canada is accelerating the development of a regulatory framework for stablecoins, with Finance Minister François-Philippe Champagne set to unveil the measures in the November 4 federal budget, according to a Cointelegraph report. The move aims to prevent capital flight to U.S.-backed stablecoins, which now dominate the global market and pose risks to Canadian financial sovereignty, according to a Coinotag article.

The urgency stems from the explosive growth of stablecoins—digital tokens pegged to fiat currencies—particularly those linked to the U.S. dollar. With daily transactions reaching $2.7 billion and annual volumes approaching $1 trillion, experts warn that unregulated adoption of foreign stablecoins could weaken Canada's control over its money supply and drive demand for American debt, according to a CryptoNews article. John Ruffolo, vice chair of the Council of Canadian Innovators, argues that Canadian savers may increasingly turn to U.S. stablecoins for cross-border transfers, effectively subsidizing American institutions while exporting financial data south of the border.

The U.S. has already set a precedent with the GENIUS Act, passed in June 2025, which mandates that stablecoins be fully collateralized with U.S. Treasuries and subjected to anti-money laundering (AML) safeguards. This framework has spurred global demand for dollar-backed stablecoins, which now exceed $300 billion in market value. Canada's central bank and financial regulators have echoed the need for similar clarity, with Ron Morrow, the Bank of Canada's executive director of payments, stating that stablecoins must be "as safe and stable as the balance in your bank account".

The proposed Canadian framework is expected to address classification, consumer protections, and reserve requirements, resolving a years-long ambiguity that has left stablecoins in a legal gray zone. Currently, they are treated as securities or derivatives under existing laws, but industry advocates argue they should be classified as payment instruments to foster innovation while ensuring stability. The Bank of Canada has also emphasized the need for a unified national policy to prevent liquidity risks and systemic instability.

The stakes are high. Mirza Shaheryar Baig, a foreign exchange strategist at Desjardins, notes that over 99% of stablecoin value is tied to the U.S. dollar. With the GENIUS Act requiring 1:1 backing by U.S. Treasuries, foreign adoption of dollar-backed stablecoins fuels sustained demand for American debt, potentially raising Canadian interest rates and eroding monetary policy effectiveness. The Bank of Canada has warned that without intervention, the country risks falling behind the U.S. and Europe in digital payments innovation.

Domestic stablecoin initiatives, such as QCAD and CADC, have struggled to gain traction due to regulatory uncertainty. However, Tetra Trust, a regulated custodian backed by National Bank and Shopify, plans to launch a CAD-backed stablecoin in 2026. The federal budget is expected to provide the clarity needed to spur adoption while aligning with global standards.

A separate market report also examines Canada's data-center colocation market and related supply-demand trends for 2025–2030.