Canada has published draft regulations for stablecoin issuers that impose strict requirements on reserves, redemptions, and yield. The proposal, released on October 24 in the Canada Gazette, establishes a framework the government expects will apply to approximately five stablecoin issuers and roughly 30 additional payment companies.
The rules require stablecoins to be backed one-to-one by reserves consisting of cash, government debt maturing within three months or less, or money market funds holding only those assets. All reserves must be held by Canadian custodians in segregated accounts protected from creditors in the event of issuer insolvency.
Redemption and Fee Restrictions
Coin holders can redeem their stablecoins within three business days, with redemption fees capped at 1%. Issuers are prohibited from paying interest directly to holders or routing such payments through third parties, though rewards tied to coin usage rather than holding are permitted.
Issuers may retain earnings from their reserves provided reserves remain at least equal to coins in circulation. The government stated these prohibitions aim to distinguish stablecoins from interest-bearing financial products like bank deposits.
Additional Requirements and Oversight
Issuers cannot describe stablecoins as bank deposits or claim deposit insurance or government guarantees. Customer complaints must be acknowledged within seven days and resolved within 30 days.
The Bank of Canada will register and supervise stablecoin issuers under the Stablecoin Act, which became law on March 26, 2026. Penalties for serious violations reach C$1 million, while very serious violations such as failing to maintain adequate reserves or redeem at full value carry fines up to C$10 million.
The government is accepting public comments until approximately December 23, with the regulations set to take effect in fall 2027.
