CoinDesk
Canada opened a 60-day public consultation on draft stablecoin regulations that maintain a ban on yield payments while laying out the registration and reserve requirements issuers will need to operate legally. The consultation runs to Dec. 23 and is required to bring the Stablecoin Act, passed earlier this year, into force through Bank of Canada registration rules.
Under the draft framework, non-bank issuers must back their fiat-pegged tokens 1:1 with reserves held at qualified Canadian financial institutions, including banks, credit unions and trust companies. Customers must be able to redeem tokens for regular currency within three business days, with fees capped at 1%. Interest payments are prohibited, including indirect payouts through third parties, though rewards linked to actual transactions remain allowed. The framework is expected to take effect toward the end of 2027.
Why it matters
The yield ban mirrors the debate in the United States: Canadian banks worry that interest-bearing stablecoins would pull deposits out of traditional accounts, shrinking the funds institutions have to lend. The Canadian Bankers Association has said it "firmly supports" the Act's explicit prohibition on yield, both direct and indirect.
The rules arrive amid rapid domestic buildout. Canada's six largest banks are exploring a Canadian-dollar tokenized system for interbank settlement, the banking regulator has confirmed tokenized deposits are legally equivalent to traditional deposits, and Tetra Trust launched CADD, an Alberta-approved Canadian-dollar stablecoin, in May.
Market impact
There is a live friction point: Coinbase Canada received Ontario Securities Commission permission this year to pay yields on eligible tokens under risk-disclosure conditions, and federal draft rules would prohibit issuers from paying interest, including through third parties. How that conflict resolves will shape whether Canadian users can access yield-bearing products or see rewards pushed into transaction-based formats.
Frequently asked questions
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When do Canada's draft stablecoin rules take effect?
The framework is expected to come into effect toward the end of 2027, following the 60-day consultation that closes Dec. 23 and final registration rules through the Bank of Canada.
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Can stablecoin issuers pay interest to Canadian holders under the draft rules?
No. The draft rules prohibit issuers from paying interest, including indirect payouts through third parties. Rewards linked to actual transactions remain allowed.
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What reserve requirements apply to non-bank stablecoin issuers in Canada?
Non-bank issuers must hold reserves equal to the value of their circulating fiat-pegged tokens, placed with qualified Canadian financial institutions such as banks, credit unions and trust companies.
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How quickly must Canadian stablecoin redemptions be settled?
Customers must be able to exchange stablecoins for regular currency within three business days, with redemption fees capped at 1%.
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How does the Coinbase Canada yield program conflict with the federal rules?
Coinbase Canada received Ontario Securities Commission permission this year to pay yields on eligible tokens under disclosure conditions, but the federal draft rules would prohibit issuers from paying interest, including through third parties.
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