Budget signals strong commitment to fostering innovation

The Honourable François-Philippe Champagne, Minister of Finance and National Revenue, recently delivered the Liberal Party’s first federal budget under Prime Minister Mark Carney (Budget 2025). Budget 2025, as delivered on November 4, 2025, introduces several measures poised to promote competition and shape the innovation landscape for Canada’s technology sector. Subsequently, on November 18, 2025, the federal government introduced Bill C-15, Budget 2025 Implementation Act, No. 1, the first piece of legislation to advance the objectives of Budget 2025.

Budget 2025 announces significant investments in artificial intelligence (AI) and quantum computing, as well as forward-looking regulatory changes for stablecoins and consumer-driven banking. In doing so, this budget underscores the federal government’s commitment to fostering a thriving ecosystem for startups and emerging technologies.

Transformational Investments in AI and Quantum Computing

The government has identified AI and quantum computing as key drivers of Canada’s future economic growth. Budget 2025 highlights the transformative potential of these technologies, emphasizing their ability to boost productivity and unlock significant economic benefits.

To support these priorities, Budget 2025 proposes, among other things,

• C$925.6 million over five years to develop a large-scale sovereign public AI infrastructure, to support cutting-edge AI research and development; and
• C$334.3 million over five years to strengthen Canada’s quantum ecosystem.

In addition, the government plans to release a new AI strategy by the end of 2025, following consultations launched earlier this fall. The strategy is expected to outline further incentives and support for AI development, potentially unlocking additional funding opportunities for Canadian startups and innovators.

The government’s decision to channel substantial investments into AI and quantum computing reflects a strategic commitment to position Canada at the forefront of emerging technologies. By capitalizing on Canada’s highly skilled workforce, the government aims to retain top talent, foster international partnerships and enhance Canada’s reputation as a global leader in these fields.

Regulatory Innovation: Stablecoins and Open Banking

Stablecoins

Budget 2025 introduces the Stablecoin Act as part of Bill C-15, signalling the federal government’s intention to regulate fiat-backed stablecoins, with administration and rule-making responsibility delegated to the Bank of Canada.

Prospective stablecoin issuers will be required to apply for registration with the Bank of Canada. The Minister of Finance may review applications for national security purposes and retains the ability to impose conditions, and to restrict or prohibit issuance where risks to national security, monetary policy or financial stability are identified. The Bank of Canada may not register a stablecoin issuer without the Minister’s clearance during the review period.

In addition, the proposed framework includes the following requirements for issuers:

• Establish and publicly disclose a policy for redeeming outstanding stablecoins.
• Maintain a reserve of assets that has a value that is equal to or greater than the par value of outstanding stablecoins.
• Establish, implement and maintain a data security policy.
• Prohibit the payment of interest or yield to holders, whether in cash, digital assets or other consideration.
• Ensure that reserves consist exclusively of the reference currency or other high-quality liquid assets denominated in the reference currency, as specified by regulation under the Stablecoin Act or, in the absence of such regulations, as approved by the Bank of Canada.
• Establish and maintain a governance policy.
• Provide the Bank of Canada with specified reporting information, such as information about the issuer’s financial condition, the number of outstanding stablecoins and the composition and the fair market value of the issuer’s reserve of assets.

This move aligns with international efforts, such as the GENIUS Act in the United States, which establishes a regulatory framework for stablecoins, including reserve requirements, reporting obligations and consumer protection mechanisms. The Stablecoin Act also proposes amendments to the Retail Payment Activities Act to regulate payment service providers that use prescribed stablecoins. However, details remain forthcoming on what distinguishes prescribed stablecoins from other types.

Currently, provincial securities regulators oversee stablecoins as securities or derivatives under Staff Notice 21-333, which imposes comprehensive reporting, disclosure and reserve requirements. It remains to be seen exactly how the federal regime will interact with existing provincial frameworks, but the explicit exclusion of yield-bearing stablecoins from the Stablecoin Act suggests that provincial securities regulators could continue to play a role in the regulation of certain stablecoins. Regardless of the specific working details, the introduction of a federal stablecoin regime represents a significant step toward regulatory clarity, which is expected to encourage innovation and investment in Canada’s digital asset ecosystem.

Data Portability and Open Banking

Bill C-15 introduces a data-mobility right in the Personal Information Protection and Electronic Documents Act (PIPEDA), aligning with Quebec’s right to data portability and similar rights available in other jurisdictions, such as Australia’s Consumer Data Right and the EU GDPR’s right to data portability. This would empower consumers to transfer their personal data from one organization to another to facilitate economy-wide data sharing. In practice, this means individuals will be able to transfer their personal data (e.g., health or financial data) between providers, allowing them to switch services more easily or use additional service providers. Further details are expected in future regulations, which will ultimately shape the operation of the data mobility framework.

Specifically in relation to the financial sector, Budget 2025 confirms the government’s intention to implement open banking in Canada through the Consumer-Driven Banking Act, introduced in Bill C-15 (repealing the existing Act and enacting a new statute with the same name). Budget 2025 delegates oversight of the Consumer-Driven Banking Act to the Bank of Canada, in addition to its supervisory role of payment service providers under the Retail Payment Activities Act. As a result, the same government institution will supervise both open-banking and real-time payments environments, which may streamline regulatory oversight and reporting processes.

Importantly, Bill C-15 enables “read access” by 2026 and Budget 2025 contemplates “write access” by mid-2027 once Canada’s real-time rail system is live and in widespread use. The initial “read access” framework will allow accredited third parties to access consumer financial data with the consumer’s consent, but not allow the third party to edit the financial data on a bank’s servers. Write-access refers to the ability for accredited third-party service providers to edit consumers’ financial data on a bank’s servers. Such access would allow accredited third-party service providers to initiate payments and create accounts on behalf of consumers. Of note is the proposal in Bill C-15 to prohibit companies from using an interface or application to access a consumer’s data using their login information – also known as “screen scraping,” – owing in large part to the potential security and privacy risks involved. This rule is subject to regulations from the Department of Finance, and the government intends to consult with stakeholders to determine an appropriate timeline for bringing the prohibition into force, once the consumer-driven banking framework is fully operational.

The Canadian government’s recent moves to establish a regulatory framework for stablecoins and implement open banking represent meaningful steps toward modernizing Canada’s financial regulatory landscape. These initiatives are expected to create a more competitive environment for fintechs and non-traditional financial service providers, fostering innovation and delivering better services for Canadians.

Support for Startups: SR&ED and VCCI

Scientific Research and Experimental Development (SR&ED)

Budget 2025 proposes enhancements to the SR&ED program, including increasing the expenditure limit for the enhanced 35% refundable tax credit and restoring investment tax credits for SR&ED capital expenditures. Additional changes to the SR&ED program aim to improve the program’s predictability and administration.

Moreover, the new “Productivity Super-Deduction,” encompasses a set of tax incentives that permit accelerated deductions for certain capital expenditures, including, but not limited to, productivity-enhancing assets such as patents, data network infrastructure and computers, and capital expenditures for SR&ED.

For a detailed analysis of the SR&ED changes and other tax measures in Budget 2025, please refer to our earlier bulletin.

Venture and Growth Capital Catalyst Initiative (VCCI)

To further support Canada’s venture capital ecosystem, Budget 2025 allocates C$1 billion over three years to the Business Development Bank of Canada to launch the fourth round of the VCCI in 2026–27. This iteration will prioritize emerging fund managers in key sectors, including life sciences, and aims to address early growth-stage funding gaps for Canadian firms.

The enhancements to the SR&ED and VCCI programs underscore the government’s recognition of the vital role that innovation and access to capital play in the growth of Canada’s tech sector. The SR&ED program has long been a cornerstone of Canada’s tech landscape, and its expansion is a welcome development that will further incentivize domestic innovation. Similarly, the bolstering of the VCCI program reflects a proactive approach to addressing capital accessibility challenges faced by Canadian startups. Together, these measures demonstrate a clear intent to cultivate a robust ecosystem in which innovative companies can flourish domestically.

Final Thoughts

Budget 2025 introduces transformative measures for Canada’s technology sector, from significant investments in AI and quantum computing to forward-looking regulatory frameworks for stablecoins and open banking. These initiatives, combined with enhancements to the SR&ED program and continued support for venture capital, signal a strong commitment to fostering innovation and providing the foundation for Canada to compete in the global technology landscape. Startups and emerging technology companies stand to benefit significantly from these measures, which aim to create a more dynamic and supportive ecosystem for innovation and growth.