Canada Opens Stablecoin Rules Consultation and Keeps Ban on Yield

TLDR

• Canada’s Department of Finance opened a 60-day public consultation on draft stablecoin rules that ends Dec. 23.
• Non-bank issuers must back tokens 1:1 with reserves held at qualified Canadian institutions.
• Issuers could not pay interest on stablecoins, but rewards tied to transactions would still be allowed.
• Holders must be able to redeem tokens within three business days, with fees capped at 1%.
• The rules are expected to take effect in fall 2027.

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The Canadian government has opened a 60-day public consultation on draft stablecoin regulations. The consultation ends Dec. 23. The rules would apply to issuers that are not financial institutions.

JUST IN: 🇨🇦Canada opens consultation on STABLECOIN rules draft but maintains its BAN on interest and yield payments to holders.

The proposed framework requires:
– 1:1 reserves held at qualified Canadian financial institutions.

– Users must be able to exchange stablecoins for… pic.twitter.com/XnBBu312Fh

— Coin Bureau (@coinbureau) October 26, 2026

The draft rules fall under the Stablecoin Act, which passed in March. The government said the regulations are required to bring the law into force. They also set out how issuers would register with the Bank of Canada.

What the Draft Rules Require

Non-bank issuers would need to hold reserves equal to the value of their tokens in circulation. Those reserves would have to be placed with qualified Canadian financial institutions. These include banks, credit unions and trust companies.

Customers would be able to swap their stablecoins for regular currency within three business days. Redemption fees would be capped at 1% of the value of the coins.

The rules would bar issuers from paying interest, including through third parties, to encourage people to hold tokens. Rewards linked to transactions would still be allowed.

The government said the framework aims to match stablecoin rules in the United States and other places. It said this would reduce the regulatory burden on issuers that operate in several countries.

Banks and Exchanges Differ on Yield

The Canadian Bankers Association has pushed for a ban on yield payouts. A spokesperson told The Logic in June that the group “firmly supports” the act’s ban on yield, both direct and indirect. Banks share concerns raised in the U.S. that customers could move money out of bank accounts, leaving banks with less to lend.

Some crypto exchanges in Canada already pay rewards to stablecoin holders. Coinbase Canada received permission from the Ontario Securities Commission this year to offer yields on eligible tokens. It must warn customers about the risks and state that the funds are not covered by deposit insurance.

Once the rules take effect, non-bank issuers must apply for registration with the Bank of Canada before issuing a stablecoin. The government said it intends for the regulations to come into force in fall 2027.

Other developments are moving in parallel. Late last month, Canada’s six largest banks said they were exploring a Canadian-dollar tokenized system to move money faster between financial institutions. That followed a Sept. 10 statement from the Office of the Superintendent of Financial Institutions that tokenized deposits are “not legally distinct from traditional deposits.”

In May, Tetra Trust Company rolled out CADD, a Canadian-dollar stablecoin approved by Alberta Treasury Board and Finance. Tetra was Canada’s first regulated digital asset custodian.

The U.S. GENIUS Act is scheduled to take effect in January 2027. In the European Union, MiCA rules could give exchanges until January to halt services for stablecoins that do not comply. That could include Tether’s USDt, the largest stablecoin by market capitalization.