Canada proposes stablecoin rules banning yield payments

• Canada has proposed stablecoin rules banning interest payments on holdings.
• The draft caps redemption fees at 1% and requires redemption within three business days.
• The framework would introduce federal registration and supervision for covered stablecoin issuers.

Canada has proposed stablecoin regulations that would ban yield payments on holdings, cap redemption fees at 1% and require redemptions within three business days.

The draft regulations would establish federal requirements for fiat-backed stablecoins used in domestic and cross-border payments.

The proposal prohibits issuers from paying interest or yield simply for holding covered stablecoins, while allowing transaction-based rewards.

Issuers would need to maintain reserves covering outstanding stablecoins on a one-to-one basis and publish clear redemption policies.

The draft also limits redemption fees to 1% of the amount redeemed, setting a proposed ceiling on charges for converting tokens into fiat currency.

Covered non-bank issuers would need to register with the Bank of Canada, which would oversee compliance with the proposed requirements.

The government intends the regulations to take effect in autumn 2027, subject to formal approval, with public comments due by 23 December 2026.

The proposal would bring covered stablecoin issuers under federal oversight while setting requirements for reserves, redemptions and consumer protection.