Canada opens comment period on stablecoin issuer rules
DeFi & Yields ·
Draft regulations published in the Canada Gazette would force stablecoin issuers to back every token dollar-for-dollar, cap redemption fees, and forbid paying holders interest.
Ottawa released the proposed framework on October 24, launching a 60-day consultation window ahead of an expected implementation in fall 2027. Under the plan, issuers would need to maintain reserves equal to the full value of coins in circulation, limited to cash, short-term government debt maturing within three months, and money market funds holding comparable assets. Those reserves would have to sit with a custodian based in Canada, in accounts shielded from creditors if the issuing company becomes insolvent.
Holders seeking to cash out could redeem any amount within three business days, with issuers barred from charging more than a 1% fee on the transaction. The draft also reaffirms a prohibition on paying interest or yield to coin holders, whether delivered directly or funneled through a third party, including arrangements where users share in an issuer's income. Rewards tied to spending or using a coin, as opposed to simply holding it, would remain permitted. Regulators framed the yield ban as a way to keep stablecoins from functioning like bank deposits or other interest-bearing products, according to decrypt.co.
Issuers would also be barred from marketing a coin as a bank deposit or implying it carries deposit insurance or a government backstop. Complaints from users would need acknowledgment within seven days and resolution within 30. Penalties for the most serious violations could reach C$10 million, with the Bank of Canada handling registration and ongoing supervision of issuers under the Stablecoin Act, which took effect March 26, 2026, following its announcement in the prior November budget.
The move places Canada alongside other jurisdictions tightening stablecoin oversight. In the United States, the GENIUS Act, signed into law July 18, 2025, similarly bars issuers from paying interest to holders, though the broader question of whether crypto platforms can offer yield to users remains contested among US lawmakers and banks, a dispute that contributed to the collapse of separate crypto market legislation in the Senate. A second outlet also noted the redemption fee ceiling and the three-day repayment requirement alongside limits on issuer-funded rewards, pointing to defiprime.com.
What remains unsettled is how the final rules will be shaped once the comment period closes, and whether Canadian regulators will face similar pressure over indirect yield mechanisms as US regulators have. The consultation's outcome, along with any amendments before the fall 2027 target date, will determine how closely Canada's approach to reserves, redemption speed, and yield restrictions tracks or diverges from the US model.