Canada's Department of Finance has opened a 60-day public consultation on draft stablecoin regulations that would prohibit issuers from paying interest while permitting rewards tied to transactions. The consultation ends Dec. 23.
The draft rules are intended to bring the Stablecoin Act, passed earlier this year, into force and set out requirements for issuers to register with the Bank of Canada, the government said.
Reserve and redemption requirements
Non-bank stablecoin issuers would have to hold reserves equal to the value of their circulating fiat-pegged tokens at qualified Canadian financial institutions, including banks, credit unions and trust companies. Customers would have to be able to redeem tokens for regular currency within three business days, with redemption fees capped at 1%.
Yield ban draws banking support, crypto pushback
The proposal would bar issuers from paying interest, including through third parties, to encourage customers to hold their tokens. Rewards linked to transactions would still be allowed. Canada's banking industry has pressed for a yield ban, echoing U.S. concerns that customers could move money out of bank accounts, leaving traditional institutions with less to lend. 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.”
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, provided it warned customers about the risks and made clear the funds are not covered by deposit insurance.
Timeline and industry moves
The stablecoin framework is expected to take effect toward the end of 2027. Late last month, Canada's six largest banks said they were exploring a Canadian-dollar tokenized system to move money faster among traditional 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.”
Tetra Trust Company, which was Canada's first regulated digital asset custodian, rolled out CADD, a Canadian-dollar stablecoin approved by Alberta Treasury Board and Finance, in May.
