Canada has proposed stablecoin rules that would ban interest payments to holders and require issuers to back tokens with reserves held at approved domestic financial institutions. The draft regulations outline how non-bank companies could issue stablecoins under the country’s Stablecoin Act.
The 60-day public consultation runs until December 23. The proposal would permit transaction-related rewards but prohibit incentives designed to encourage customers to hold stablecoins.
Canada Sets Reserve and Redemption Rules
Under the draft, issuers would need reserves equal to the full value of their stablecoins in circulation. Funds would have to remain with approved Canadian banks, credit unions or trust companies.
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Issuers would also need to process redemptions into Canadian dollars or other applicable fiat currencies within three business days. Fees would be capped at 1%, and companies would have to register with the Bank of Canada. The framework is expected to take effect toward the end of 2027.
Banks Oppose Stablecoin Yields
The Canadian Bankers Association backs the proposed yield ban, warning that stablecoin rewards could draw money away from traditional bank deposits.
Coinbase Canada, however, has received permission from the Ontario Securities Commission to offer eligible token rewards, provided it meets customer disclosure requirements.
Canada’s banking sector is also exploring alternatives. The country’s six largest banks are working on plans for a shared tokenized deposit system. Separately, Tetra Trust launched CADD, a stablecoin pegged to the Canadian dollar, in May.
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