Canada Sets November Stablecoin Regulations to Prevent Capital Outflow and Safeguard National Sovereignty

Canada is preparing to introduce a detailed regulatory system for stablecoins in its federal budget on November 4, aiming to meet international benchmarks and limit the outflow of capital into U.S. dollar-based tokens. Finance Minister François-Philippe Champagne’s forthcoming budget will establish clear guidelines for stablecoins, which have previously existed in a legal gray area and were often categorized as securities or derivatives in Canada, according to

. This move comes after several weeks of extensive discussions among government representatives, regulators, and industry participants, as noted by and .

The push for regulation is driven by worries about maintaining economic independence and financial security. Industry figures, such as John Ruffolo from the Council of Canadian Innovators, have cautioned that postponing regulatory action could reduce demand for Canadian bonds, push up interest rates, and undermine the Bank of Canada’s authority over monetary policy. Ruffolo, as cited by

, argues that without homegrown stablecoin solutions, Canadian funds may migrate to U.S. dollar-linked tokens, indirectly supporting American debt and transferring financial data to U.S. entities. This threat is heightened by the overwhelming presence of U.S.-issued stablecoins like and , which together represent almost 99% of the global stablecoin market valued at $300 billion, according to Bloomberg.

The regulatory plan in Canada intends to designate stablecoins as payment tools, similar to the approach taken in the U.S. under the recently enacted GENIUS Act, as reported by Live

News. The American legislation, which sets out reserve and anti-money laundering requirements for stablecoin providers, has been welcomed by some in the cryptocurrency sector for encouraging progress. However, Canadian authorities must coordinate with 13 separate provincial securities regulators, which could slow down the rollout. The Office of the Superintendent of Financial Institutions (OSFI) has already expressed concern about the absence of federal regulation and has called for prompt measures, Bloomberg reports.

The upcoming budget is anticipated to specify licensing criteria for stablecoin providers, standards for reserve assets (such as top-tier securities or cash), and rules for redeeming stablecoins, according to Live Bitcoin News. These steps are designed to strengthen consumer safeguards and reduce systemic threats, especially as stablecoins increasingly rival conventional banks. For instance, Ron Morrow, the Bank of Canada’s executive director for payments, has stressed the importance of national regulation to address vulnerabilities exposed by the rapid adoption of digital assets, as highlighted by Bloomberg.

In a related development, Canada is advancing its own stablecoin ecosystem. Calgary-based fintech company Loon has secured $3 million to launch a regulated Canadian dollar stablecoin, having acquired the CADC token from Paytrie, as detailed in a

. Supported by investors such as Version One Ventures, the initiative aims to build a sovereign digital payments network, allowing instant transactions and decreasing dependence on U.S. dollar reserves. Loon’s CEO, Kevin Zhang, described the project as essential for “unlocking the next generation of innovation in payments and capital markets,” according to the Morningstar release.

On the international stage, Canada’s actions are in step with regulatory efforts in the European Union (through MiCA rules) and in Asian markets, as previously covered by The Block. Nonetheless, some critics, including U.S. Senator Elizabeth Warren, have raised doubts about the effectiveness of the U.S.’s relatively lenient regulations, warning of possible regulatory gaps, as mentioned in The Block’s reporting. In Canada, the discussion continues as policymakers seek to balance the encouragement of innovation with the need to manage systemic risks.