The open banking movement, real-time rail and stable coin legislation are all promised in Budget 2025.
Thanks to Budget 2025, financial innovators may finally have what they've been asking for.
The recently released federal budget includes significant changes to long-awaited files in Canada's financial services sector, including open banking and the stablecoin issuance structure.
“This is a huge budget for FinTech.”
Adriana Vega
Fintech Canada
BetaKit was first to report that FinTech leaders expected a move on open banking in the budget. They got significantly more: a commitment to pass the remainder of the legislation needed to make financial data sharing a reality, with the goal of providing “write access,” or the ability to switch accounts or make bill payments, by mid-2027.
Open banking legislation, which was already developed during last year's Fall Economic Statement, will be included in the Budget Implementation Act in two weeks. The legislation will see the open banking system finally enter the “second phase” of implementation originally outlined by the 2021 Open Banking Advisory Committee. final report.
The government also said it would add the right to data mobility to the Personal Information Protection and Electronic Documents Act. The budget also provides $25.7 million over five years and $5 million annually on an ongoing basis to the Canadian Security Intelligence Service and the Royal Canadian Mounted Police to support “national security protections” under the Consumer Banking Act.
Canadian FinTech leaders have been calling for a consumer-focused finance system for years. The measure, they say, will improve competition in financial services and lower prices for consumers. Proponents argue that open banking will provide a secure way for customers to share their financial information with third parties and eliminate the need for insecure “secure transactions.”clearing the screen”, where clients share login information.
“This is a huge budget for FinTechs,” Fintechs Canada executive director Adriana Vega told BetaKit.
IN Post on LinkedInVega characterized the budget commitments as increasing competition in the financial sector, calling them “the result of years of collaboration between policymakers and industry.”
The budget update also entailed major changes in oversight. Responsibility for the open banking system has now been transferred from the Financial Consumer Agency of Canada (FCAC) to the Bank of Canada, and the $36.9 million previously allocated to the FCAC has been returned.
The feds have instructed the FCAC control open banking in the 2024 budget and said it would introduce a second bill in the fall. But the 2024 Fall Economic Statement (FES) delayed passage of the law and the launch of the system until 2026.
“Given that the Bank of Canada already controls the country's payments system, it makes good sense that it would also control open banking,” Borrowell CEO Andrew Graham told BetaKit. “The Bank of Canada has a strong reputation as a competent authority.”
Another repeatedly delayed initiative received an official update in the Budget: the Real Time Rail (RTR) system, an infrastructure designed to enable instant and cheaper payments. The budget confirmed that RTR will start operating in 2026, just like the last time. update from Payments Canada. The federal government's goal of achieving “write access” for open banking by mid-2027 appears to depend on the release and “widespread use” of the RTR. Many fintech companies have joined the Bank of Canada. registered PSP list You can now become a Payments Canada member and gain access to RTR.
Movement on stablecoins
In contrast to the previous Liberal government's approach to payments innovation, the current government indicates it wants to quickly legislate for the issuance of stablecoins. BetaKit previously reported this language regarding stablecoins will appear in the 2025 budget.
Stablecoins are a form of cryptocurrency pegged to a fiat currency such as the US dollar. The legislation, to be introduced as part of the Budget Implementation Act, would require issuers to maintain and manage adequate asset reserves, establish repayment policies, implement risk management mechanisms, and protect sensitive consumer data. The legislation will also include national security guarantees.
Industry groups have repeatedly advocated for a stablecoin system, arguing that Canada would remain at the mercy of a U.S.-dominated payments system without a strategy. Ninety-nine percent of stablecoins in the global market are pegged to the US dollar, according to JPMorgan.
Lucas Matheson, CEO of Coinbase Canada, publicly argued for the Canadian stablecoin structure. In a statement to BetaKit, he said he was “encouraged to see real change” in the budget.
“The government's commitment to introduce stablecoin legislation signals that Canada is ready to lead digital innovation,” Matheson said.
CONNECTED: Stablecoins are at a regulatory crossroads in Canada. What's next?
Kolea Carringtain, chief executive of the Canadian Bitcoin Consortium, told BetaKit that she was “pleased” with the update. “These measures signal that Canada is moving toward recognizing stablecoins as important payments infrastructure,” she said.
Despite government action on the issue, legislation will not necessarily establish all stablecoins as payment instruments, as industry groups have done. demandedbut will only regulate the output stablecoins. How digital assets are used will determine whether they are considered payment instruments or securities. For example, payment instruments will be subject to the rules of the Retail Payment Activities Act (RPAA). The RPAA will be amended to allow PSPs to provide payment services using “prescribed stablecoins,” the budget says, with more details to come in legislation. If stablecoins are used as securities, they are subject to applicable provincial securities regulations.
To move forward, the budget allocated $10 million over two years starting in 2026-27 from cash transfers into the Consolidated Revenue Fund, which effectively serves as the government's account at the central bank. Future administrative costs are estimated at $5 million per year and will be reimbursed by stablecoin issuers.
Image provided Bank of Canada via Flickr.
