Cryptoupdated 1h ago2 min read
Archive photo · 14 May 2009Canada Opens 60-Day Stablecoin Consultation, Caps Redemption Fees At 1% And Bars Interest
6 Other3 Western AlternativePhoto: Taxiarchos228, CC BY-SA 3.0 · Cropped for layout
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Canada opens 60-day public consultation on non-bank issuer stablecoin rules. Redemption fees capped at 1% of redeemed amount.
Canada drafts stablecoin limits
Canada opened a 60-day public consultation on draft stablecoin regulations for non-bank issuers, with comments due by Dec. 23.
The draft would cap redemption fees at 1% and require issuers to hold reserves equal to the value of their outstanding tokens.
The draft would also require issuers to let holders redeem stablecoins within three business days and would bar issuers from paying interest to holders, including through a third party.
The government said the proposed framework is intended to align with rules in the United States and other jurisdictions, and it aimed for the regulations to take effect in fall 2027.
The draft regulations were published in the Canada Gazette and were intended to set requirements for non-financial institution stablecoin issuers to register with the Bank of Canada.
Yield ban, redemption mechanics
The draft regulations would maintain a ban on yield payments by restricting non-financial institution stablecoin issuers from offering interest or yield to discourage HODLing. The draft would require customers to be able to exchange stablecoins for regular currency within three business days, and it would cap redemption fees at 1% of the value redeemed. The draft would still allow rewards tied to transactions, while it would prohibit issuer-funded arrangements that reward larger holdings or longer holding periods.
Natalle Begeron, a spokesperson for the Canadian Bankers Association, told The Logic in June that the group “firmly supports the Stablecoin Act’s explicit prohibition on yield, both direct and indirect.” The draft also said the intention was for the proposed Regulations to come into force in fall 2027, and it would require issuers in Canada that are not financial institutions to apply for registration with the Bank of Canada before issuing a stablecoin.
Bank of Canada oversight
The draft framework would place reserves with qualified Canadian financial institutions, including banks, credit unions and trust companies, and it would require separate accounts protected from an issuer’s creditors in bankruptcy.
“Proposed penalties range from C$1 million for serious violations to C$10 million for very serious ones.”
The Bank of Canada would register and supervise issuers, and it would monitor issuance and redemption risks while taking enforcement action.
The notice estimated that five issuers and about 30 additional payment companies, including crypto platforms holding customers’ coins in wallets, would fall under its oversight.
The draft also set proposed penalties ranging from C$1 million for serious violations to C$10 million for very serious ones, including failing to maintain adequate reserves or redeeming below par value.
The consultation would close on Dec. 23, and the Stablecoin Act became law on March 26, 2026, with the proposed regulations intended to supply requirements needed to implement it.