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Canada’s Draft Stablecoin Rules Cap Redemption Fees at 1% and Ban Yield
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- DeepHorus
Canada proposed draft stablecoin rules on October 24 requiring one-to-one reserves and redemption within three business days. The Canada Gazette notice caps redemption fees at 1% and bans yield payments to holders. A 60-day comment period ends around December 23, with rules targeted for fall 2027.
The Stablecoin Act became law on March 26, 2026, after Ottawa announced the plan in its November budget. The Bank of Canada will register and supervise issuers. The draft assumes five issuers and 30 payment companies, including crypto platforms, would fall under oversight.
Issuers must hold reserves in cash, government debt maturing in three months or less, and money market funds holding only such assets. Those reserves must sit with a Canadian custodian in separate accounts protected from creditors if the issuer fails. Complaints would need acknowledgment within seven days and resolution within 30.
Issuers could not pay interest for holding a coin or route it through third parties; arrangements letting someone earn yield from holding count as indirect payment. Rewards tied to using a coin would remain allowed. Penalties would reach C$1 million for serious violations and C$10 million for very serious ones.
The notice says the yield ban aims to distinguish stablecoins from products competing with bank deposits. Issuers also could not present a coin as a bank deposit or claim deposit insurance or a government guarantee. Bank of Canada executive director Ron Morrow said in September 2025 there was a pressing need for faster, cheaper, more transparent cross-border payments services.
In the United States, the GENIUS Act, signed July 18, 2025, also bars issuers from paying interest. A dispute over platform yield helped sink the Clarity Act in the Senate. Ottawa is taking comments until about December 23 and intends the regulations to take effect in fall 2027.
