Canada launches public consultation on draft stablecoin regulations while maintaining prohibition on yield-bearing stablecoin products.
DeFi & Yields ·
Canada has launched a 60-day public consultation on draft stablecoin regulations, concluding December 23, that would establish a framework for non-bank issuers while maintaining restrictions on yield products. The rules prohibit interest payments—whether direct or indirect—but permit rewards tied to specific transactions. Non-bank issuers would be required to maintain reserves matching their circulating token supply at qualified Canadian financial institutions and process redemptions within three business days, with fees limited to 1%.
The proposed framework flows from the Stablecoin Act passed earlier this year and is designed to set conditions for issuer registration with the Bank of Canada. The ban on yield echoes concerns raised by traditional banking institutions that interest-bearing stablecoins could redirect customer deposits away from conventional accounts. Some Canadian crypto platforms, including Coinbase Canada, have already received regulatory permission to offer yields on eligible tokens, though with mandatory risk disclosures and no deposit insurance coverage.
Implementation is targeted for late 2027, as the country's major banks and regulated entities begin developing tokenized deposits and Canadian-dollar stablecoins. A Canadian-dollar stablecoin, CADD, was already deployed in May by a regulated digital asset custodian with approval from Alberta's treasury board. The timeline and detailed mechanics of how existing yield-bearing products will transition remain unspecified.