Canada’s Crypto Future and the U.S. Shift: Entering a New Digital Assets Age

Canada made headlines in 2021 by becoming the first country to approve and launch a bitcoin exchange-traded fund (ETF)—the Purpose Bitcoin ETF. At the time, this positioned Canada as a prospective major player in the crypto space. The same year, then ex-president Donald Trump publicly dismissed bitcoin as a scam, viewing it not as innovation but as direct competition for the U.S. dollar.

The bitcoin price has since crashed and recovered extraordinarily, reaching historic highs in the last year, including a new record price of 124,457.12 USD (171,165.88 CAD) on August 13. In the United States, this year, Trump has spearheaded Crypto Week, fast-tracking bills like the CLARITY Act and the Anti-CBDC Surveillance State Act, both of which received House approval, as well as the GENIUS Act which was signed into law that week. It is evident the United States is aiming to become the “crypto capital of the planet”. 

On the other hand, in Canada, a comprehensive framework governing digital assets has not been made yet—instead, companies dealing in digital assets have to navigate a regulatory landscape with oversight shared among securities regulators like the Ontario Securities Commission and the Autorité des marchés financiers, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the Bank of Canada and the Canada Revenue Agency (CRA). Each agency plays a different role depending on the nature of the digital asset and the activities involved—whether cryptocurrency are deemed securities or whether the company is conducting activities relating to money services businesses or restricted/investment dealers.

This article tackles the major differences between the United States and Canada in terms of crypto regulations, anticipating the impacts the signing into law of the GENIUS Act, marking a new era in crypto leadership, could have on Canada.

In Sum

• The U.S. has adopted a pro-innovation stance with the GENIUS Act, establishing a clear regulatory framework for stablecoins, while Canada’s current framework remains fragmented, presenting challenges for digital asset innovation—but upcoming legislation shows great potential to close this gap.
• Canada distinguished itself early in the crypto space—being first to approve a bitcoin ETF and as the birthplace of Ethereum—and has since taken a more measured approach, with a multi-agency regulatory landscape prioritizing consumer protection and financial stability,
• While the U.S. has taken clear steps to position itself as a global leader in crypto regulation, Canada’s early achievements have not yet been followed by a unified regulatory framework, resulting in a more measured pace of progress compared to jurisdictions like the EU, the UK and Singapore.
• The GENIUS Act allows foreign stablecoin issuers to operate in the U.S. under compatible regulations, encouraging global standardization—Canada's in-development framework may help the country catch up if aligned accordingly.

In Numbers

• Bitcoin (BTC) peaked at 124,457.12 USD or 171,165.88 CAD on August 13, 2025.
• Tether’s (USDT) market cap increased by 18.1675% since the introduction of the GENIUS bill in February 2025.
• USD Coin’s (USDC) market cap increased by 21.0313% since the introduction of the GENIUS bill in February 2025.
• USDC could grow at an annual compound rate of 40% from 2024 to 2027.

Different Approaches to Digital Assets Regulation

As cryptocurrency gained traction over the last decade, attempts have been made by regulatory bodies around the world to bring them under formal supervision—some friendly, others not so much, as well as some more comprehensive than others.

This last year has proved itself to be colossal for the crypto community, as the United States actively positions itself to become the global hub for digital assets, significantly advancing digital assets-friendly regulations. This had the effect of reversing much of Operation Choke Point 2.0—an unofficial coordinated effort by U.S. regulators and banking authorities that sought to restrict crypto companies' access to the banking system by pressuring financial institutions to avoid working with them.

Major differences now separate the American and the Canadian crypto regulatory scenes. 

Divergent Frameworks: Current U.S. and Canadian Approaches to Crypto Oversight

The United States’ focus currently rests on stablecoins, with a strategy rooted in the belief that stablecoin preeminence as payments instruments will contribute to continued U.S. dollar dominance, according to Blackrock. As such, the GENIUS Act, signed into law on July 18 and to become effective either on January 18, 2027 or 120  days after regulators finalize implementing rules, leaves room for innovation in regards to stablecoin issuing and technology while ensuring strict rules are laid out in order to protect consumers.

The new American approach to digital assets can indeed be summarized as such: supporting responsible innovation, marked by the unveiling of its first comprehensive regulatory framework for stablecoins. Broader digital asset oversight is soon to follow.

In Canada, a dedicated regulatory framework for digital assets has not yet been introduced. Instead, cryptocurrencies are currently addressed through existing financial regulations, such as those governing securities and derivatives. While this approach reflects a commitment to applying established legal principles and a risk-focused approach, it can pose challenges for the digital asset ecosystem, as virtual currencies often do not fit neatly within traditional categories. This has contributed to some regulatory uncertainty, further shaped by the fact that oversight is shared across multiple agencies.

Although this cautious stance reflects Canada’s broader regulatory culture and its commitment to consumer protection, it may also slow the pace of product development and technological advancement in the digital asset space. A C.D. Howe study noted a growing regulatory burden in Canada, which has contributed to higher compliance costs and may impact the country’s overall competitiveness in the evolving financial landscape.

While Canada has not yet implemented a dedicated regulatory framework for stablecoins or broader digital assets, it maintains a strong commitment to financial system integrity and consumer protection through its existing AML/CTF obligations. These obligations reflect Canada’s broader policy stance of managing risk, maintaining public trust and preventing illicit activity within its financial system. As stablecoins and other cryptoassets become more widely adopted, Canada's emphasis on compliance and consumer safety is expected to continue playing a central role in shaping its upcoming regulatory framework.

How This Could Evolve: Impacts of American Crypto Leadership

Changes regarding other aspects of the Canadian approach are to come, according to a report stating that a stablecoin regulatory framework is under development, with the aim of keeping up with innovations in other countries. This initiative represents a positive step forward, as it could help bring much-needed clarity around stablecoin issuance—a topic that has remained somewhat ambiguous in Canada. Greater clarity would support the responsible development and use of Canadian dollar-backed stablecoins, particularly in payment use cases where regulatory uncertainty has posed challenges in recent years.

This is a move that reflects growing global momentum around digital asset regulation. Since 2023, jurisdictions such as the UK, the EU, the UAE, Japan, Hong Kong and Singapore have taken steps to introduce robust crypto oversight, and the United States has recently positioned itself as a leader in this space.

Since the first introduction of the GENIUS bill on February 4th, 2025, the market capitalization—which represents a company value, or in this case, the general sentiment surrounding it—for the two most prominent U.S. dollar-tied stablecoins has steadily increased. Tether’s market cap has grown 18.1675% since February, whereas USDC’s market cap has seen a 21.0313% increase during the same period.

As international regulatory standards continue to take shape and as public interest for stablecoins grows, Canada’s engagement presents an opportunity to contribute meaningfully to the evolving global conversation on responsible digital asset innovation.

Canada distinguished itself early on as a potential leading force: not only was it the first country to approve of a bitcoin ETF, it was also the birthplace of Ethereum, one of the major blockchains and which enables the deployment of smart contract functionality. Since then, Canada has taken a more measured regulatory approach, while jurisdictions such as the U.S., the EU and Singapore have begun implementing clearer, innovation-focused frameworks designed to support the growth and adoption of digital assets.

In order to align its crypto industry with competitors and potential collaborators alike, Canada has an opportunity to update its approach on crypto. This is necessary if Canada wants to play a meaningful role in the growing digital asset ecosystem. With a regulatory framework for stablecoins currently in development—and Canada’s financial regulator, Superintendent Peter Routledge, aiming to stay aligned with innovations in the United States and elsewhere—there are encouraging signs that Canada may be heading in the right direction.

Stablecoin Categorization

Another key distinction between the regulatory frameworks of the United States and Canada—and a question that has become increasingly prominent over the past year—is how stablecoins are classified. According to the United States Securities and Exchange, non-investment stablecoins do not fall under securities laws, something the GENIUS Act codifies in defining payments stablecoins which are subject to the Act.

This distinction made between investment stablecoins and payment stablecoins facilitates the use of stablecoins as digital money, powering a potentially more efficient and cost-effective payments system. Strict consumer protections are drawn in the GENIUS Act, limiting who can issue stablecoins, while encouraging digital asset integration in the existing financial infrastructure in view of solving current pitfalls and inefficiencies. 

How Security Classification Affects Stablecoin Use

A security is generally defined as a tradable investment, such as stocks, bonds or derivatives. Unlike in the United States, there is not yet an explicit distinction in law nor in statement between investment stablecoins and non-investment stablecoins in Canada.

This approach can introduce tax and compliance considerations that may present challenges for using stablecoins in everyday transactions. It may also create additional complexities for launching Canadian dollar-pegged stablecoins within the current regulatory environment.

How This Could Evolve: Thinking Globally 

Canada’s current approach to stablecoin regulation differs from that of the United States, as well as from jurisdictions like the EU and Singapore, where value-referenced payment stablecoins are generally treated under distinct regulatory frameworks rather than as securities—similar to the approach outlined in the GENIUS Act.

European law divides stablecoins between two distinct frameworks: the Markets in Crypto-Assets (MiCA) regulation and the Markets in Financial Instruments Directive 2014 (MiFID II), the latter of which govern securities markets and investment intermediaries. Stablecoins which are structured like payment instruments will fall under MiCA, whereas stablecoins which are structured like traditional investment products will fall under securities law governed by MiFID II.

Given the commitment of Canadian financial regulators to remain responsive to international innovation, the forthcoming stablecoin framework is expected to bring greater clarity to this question. Such clarity would be especially timely, as stablecoins are gaining broader recognition globally as legitimate payment instruments. A Goldman Sachs report estimates a compound annual growth rate of 40% from 2024 to 2027 for USDC. While Canada played an early role in advancing digital asset innovation, recent years of regulatory caution have made it more difficult to sustain that momentum—something this new framework may help to address.

Cross-Border Compliance and the Path to Regulatory Convergence

Cryptocurrency and stablecoin issuers aiming to expand globally must navigate a patchwork of distinct regulatory frameworks in each jurisdiction—sometimes even at the subnational level, such as state-based filings in the U.S.

This creates added complexity, particularly for small and medium-sized enterprises (SMEs), which may face challenges in securing the legal resources required to ensure compliance across borders. In some cases, this can lead to companies limiting their market reach or focusing solely on domestic operations.

U.S. Treatment of Foreign Stablecoin Issuers Under the GENIUS Act

GENIUS, on the other hand, provides for foreign issuers to offer their stablecoins in the U.S. if they operate under a foreign framework fundamentally similar to that of the United States, encouraging standardized international norms which protect consumers while stimulating innovation and competition.

With this provision in mind, both regulators and companies can proactively design their stablecoin frameworks to align with international standards. Doing so not only ensures consumer protection and regulatory compatibility, but also positions these frameworks for a smoother entry into the U.S. market under the GENIUS Act’s recognition of comparable foreign regimes.

How This Could Evolve: Potential Standardization

This provision in the GENIUS Act is expected to serve as a model for other governments seeking to regulate stablecoins, encouraging the development of similar regulatory frameworks. For jurisdictions like Canada, aligning with such standards could be strategically beneficial—especially if Canadian stablecoin issuers aim to operate in the United States or in other countries that adopt comparable legislation.

To conclude, in recent years, Canada has taken a cautious, risk-focused approach to digital assets, which—while grounded in strong consumer protection—has at times limited the pace of innovation and growth in its blockchain industry.

In contrast, recent regulatory developments in the United States mark the beginning of a new chapter for digital assets. For Canada to remain aligned with forward-looking jurisdictions—such as the United States, the European Union, the United Kingdom, the United Arab Emirates, Japan, Singapore and Hong Kong—continued progress toward a clear, comprehensive and innovation-supportive regulatory framework will be important. Such a framework would help ensure Canada’s digital asset ecosystem remains globally competitive and well-positioned to participate in the next phase of financial innovation.

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Frequently Asked Questions

What was Canada’s early role in the global crypto market?

Canada made headlines in 2021 as the first country to approve a bitcoin ETF (Purpose Bitcoin ETF). It is also the birthplace of Ethereum. These milestones positioned it as an early leader in crypto innovation.

Is Canada working on a new framework for stablecoins?

Yes, a new Canadian stablecoin regulatory framework is under development. It aims to provide clarity and align with international innovations, especially in response to the evolving global regulatory environment led by countries like the U.S., the EU and Singapore.

How has Canada’s fragmented regulatory structure affected innovation?

Canada’s regulatory oversight is shared across multiple agencies, including securities regulators and FINTRAC. In the absence of a dedicated digital asset framework, businesses must navigate existing rules that were not originally designed with cryptocurrencies in mind. This has created some uncertainty and compliance complexity, which has posed challenges for innovation and slowed the rollout of new crypto products—particularly stablecoins.