Canada stablecoin regulations keep the yield ban and cap redemption fees at 1%
Ottawa has opened a 60-day consultation on draft rules that would force non-bank issuers to hold reserves at Canadian institutions, redeem within three business days and pay no interest to holders.
Canada has put numbers on its stablecoin regime. Draft Canada stablecoin regulations published by the Department of Finance in the Canada Gazette set out how issuers will register with the Bank of Canada, where their reserves must sit, how fast they must pay holders back and what they may not offer in return for holding tokens.
What happened
The public consultation runs for 60 days and closes on Dec. 23, CoinDesk reported. The draft is needed to bring the Stablecoin Act, passed earlier this year, into force, and the framework is expected to take effect toward the end of 2027.
Under the proposal, non-bank issuers must keep reserves equal to the value of tokens in circulation and place them with qualified Canadian financial institutions such as banks, credit unions and trust companies. Holders must be able to redeem within three business days with no minimum amount, and any redemption fee could not exceed 1% of the sum being redeemed. The Gazette notice says the three-day window is meant to fit the T+1 settlement of Canadian securities and T+2 for foreign ones held in reserves.
On yield, Ottawa held firm. Issuers could not pay interest on balances, including through third parties, but rewards tied to using a stablecoin rather than holding it would be allowed, according to the notice.
Why it matters
The yield question splits regulators worldwide. Canadian banks have pushed for a ban, fearing deposits will drain into tokens; the Canadian Bankers Association told The Logic in June that it firmly supports the prohibition, CoinDesk noted. Yet Coinbase Canada already won permission from the Ontario Securities Commission this year to offer yields on eligible tokens with risk warnings, so the federal rules may force some products to change.
Europe is having the same argument, with French authorities urging the EU to let platforms pay limited rewards while the ECB wants a wider ban, Bitcoin.com reported. The U.S. GENIUS Act prohibits issuer interest but leaves third-party rewards open, an approach we examined in the OCC's final stablecoin rule. Canada's draft sits closer to the strict end, much like the caps proposed in the Bank of England stablecoin plan.
Domestic competition is building too. Canada's six largest banks said last month they are exploring a Canadian-dollar tokenized system, and Tetra Trust launched CADD, a Canadian-dollar stablecoin approved in Alberta, in May, according to CoinDesk.
What's next
Issuers, exchanges and banks now have until Dec. 23 to file comments. The final Canada stablecoin regulations could still change on the fee cap; the Gazette notice concedes that a lower ceiling might be too restrictive for small issuers, while a much higher one could discourage use. The full text is in the Canada Gazette notice, and the Canada stablecoin regulations will matter for any dollar token that wants Canadian users.
This article is for information only and is not investment advice.