Canada drafts stablecoin rules capping cash-out fees at 1% and barring yield
Canada's Department of Finance has published draft regulations under the Stablecoin Act, requiring issuers to offer par cash redemptions within three business days while capping exit fees at 1% and banning yield payments on held tokens.
Canada's Department of Finance published draft Stablecoin Regulations in the Canada Gazette on Oct. 24, launching a 60-day public consultation that runs through Dec. 23. The proposed framework is designed to implement the Stablecoin Act, which received royal assent in March 2026, establishing requirements for non-bank token issuers before the rules take effect in late 2027.[2][4][5][7][8]
Under the draft rules, covered stablecoin holders can redeem tokens directly for cash at par with no minimum balance requirement. Issuers must settle redemptions within three business days and cannot charge redemption fees exceeding 1%. However, issuers may impose daily redemption limits if reserve-market illiquidity prevents them from meeting every withdrawal request.[1][2][3][4][8]
The framework maintains a strict ban on paying interest or yield for simply holding tokens, extending to third-party arrangements and income-sharing deals. Finance stated it wants to prevent stablecoins from functioning like interest-bearing bank deposits. In contrast, rewards tied strictly to token use and transactions will remain permitted to encourage adoption.[2][4][5][6][8][9]
Issuers must maintain 1:1 reserve backing at the close of each day, restricted to cash, demand deposits, short-term government debt maturing within three months, overnight reverse repos, or qualifying money market funds. Reserve custodians must be Canadian-incorporated financial institutions. Supervised by the Bank of Canada, existing operators will have 30 days once the rules take effect to seek registration or cease operations, facing potential fines of up to C$10 million for serious violations.[2][4][5][8]
Key facts
- Canada's Department of Finance opened a 60-day public consultation on draft Stablecoin Regulations ending Dec. 23, with the rules expected to take effect in late 2027.
- Stablecoin holders can redeem tokens directly at par with no minimum balance requirement.
- Redemption fees are capped at 1%, and settlements must be completed within three business days.
- Issuers may set daily redemption limits if reserve-market illiquidity impairs their ability to fulfill requests.
- The framework prohibits interest or yield payments for holding coins, including via third-party arrangements, but allows transaction-based usage rewards.
- Non-bank issuers must hold 1:1 backing in qualifying assets at Canadian-incorporated financial institutions at the close of each day.
- The Bank of Canada will register and oversee issuers, with penalties for very serious violations reaching up to C$10 million.
Sources · 9 sources
- CR
CryptoSlate@CryptoSlatePost on X ·
Canada proposes letting covered holders redeem stablecoins directly, with no minimum amount and a 1% issuer fee cap. Daily limits could override normal timing if reserve-market illiquidity stops an issuer meeting all requests. via @akibablade https://t.co/fiSB0FF22I
Open source - CB
Coin Bureau@coinbureauPost on X ·
JUST IN: 🇨🇦Canada opens consultation on STABLECOIN rules draft but maintains its BAN on interest and yield payments to holders. The proposed framework requires: - 1:1 reserves held at qualified Canadian financial institutions. - Users must be able to exchange stablecoins for cash within THREE business days. - Fees for converting stablecoins back into cash capped at 1%. The 60-day consultation ends December 23, with the rules expected to take effect in late 2027.
Open source - CR
CryptoSlateArticle ·
Canada proposes direct stablecoin cash-outs for small holders with a 1% fee cap Covered holders could redeem without a minimum amount, while reserve-market illiquidity could limit daily exits and banking access would still matter. Read the full story on CryptoSlate Understand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Open source - CO
CoindeskArticle ·
Canada opens consultation on draft stablecoin rules, maintains ban on yields Under the draft rules, non-bank stablecoin issuers must back tokens 1:1 with reserves held at qualified Canadian institutions and settle redemptions within three business days.
Open source - CO
CoinDesk@CoinDeskPost on X ·
LATEST: Canada opens a 60-day consultation on draft stablecoin regulations, banning yield payments and requiring non-bank issuers to hold reserves with Canadian financial institutions, with the framework expected to take effect in late 2027. https://t.co/McZk8GGish
Open source - CB
Crypto BriefingArticle ·
Canada opens consultation on stablecoin rules, keeps ban on paying yield Canada's stablecoin rules may limit innovation by restricting yield, but they provide regulatory clarity, potentially boosting market confidence. The post Canada opens consultation on stablecoin rules, keeps ban on paying yield appeared first on Crypto Briefing .
Open source - CT
Coin TelegraphArticle ·
Canada opens consultation on stablecoins, citing US GENIUS Act As part of the potential implementation of its Stablecoin Act, the Canadian government will hear from the public on a proposed framework for tokens from non-financial institutions.
Open source - UN
UnchainedArticle ·
Canada’s Stablecoin Draft Allows Usage Rewards, Bars Issuers Paying Yield via Third Parties Canada’s Department of Finance has published draft Stablecoin Regulations that spell out where a permitted reward ends and a banned yield begins: payments linked to using a stablecoin would be allowed, while arrangements that pay people for holding one, including through third parties, would not. The proposal appeared in the Canada Gazette on Oct. 24 , starting a 60-day comment period that runs to Dec. 23. The regulations are needed to bring the Stablecoin Act into force. That law received royal assent in March 2026 and already contains a ban on issuers paying interest or yield on held coins. Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter . Where Rewards End and Yield Begins Under the draft, a payment or reward linked to a stablecoin transaction, and not to holding the coin, would not count as interest or yield. A reward “tied to only the use and not the holding of a stablecoin” is allowed “to encourage adoption of the stablecoin,” the department wrote in its analysis of the rules. The draft also reaches beyond the issuer itself. A deal between an issuer and any other party, holder or not, would count as indirect yield if it lets that party earn a return from holding the issuer’s coin, income sharing included, or if it prompts that party to pay holders a return. Finance said in the Gazette notice that it wants to keep stablecoins apart from products that “compete directly with bank deposits or other interest-bearing instruments,” and to stop issuers from passing reserve income, such as interest on short-term government debt, to holders. Fintechs and financial institutions both called yield an important part of the framework, according to the department, which said it reached its position after several rounds of consultation. Redemption and Reserves Holders could redeem at par with no minimum amount. Issuers would have three business days to complete a redemption, with fees capped at 1% of the amount redeemed, though they could limit daily redemptions if a liquidity shortfall in the markets for their reserve assets left them unable to meet every request. Finance said it settled on 1% even though redemption fees in today’s market run to roughly 0.1%, arguing a ceiling set at current levels would be too tight for newer and smaller issuers. Reserves would have to match at least the value of outstanding coins at the close of each day, held in cash and demand deposits, government debt maturing within three months, overnight reverse repos, or money market funds holding only those assets. Custodians would have to be financial institutions incorporated in Canada. Issuers could keep returns earned on reserves as long as backing stays at least one-to-one. Next Steps Finance intends the rules to take effect in fall 2027 , alongside the act. The Bank of Canada , which will register and supervise issuers, plans to put out guidelines for consultation once the final rules are published. Issuers already operating would get 30 days after the act takes effect to apply for registration or stop issuing. Finance’s cost analysis assumes five issuers would fall under the act. The current players it cites include Stablecorp’s QCAD , Loon Technology’s CADC and Circle’s USDC , and it expects others to enter once the framework is in place. Penalties could reach C$10 million for a very serious violation. Related Listen: Why Banks Failed to Kill Stablecoin Rewards in the Clarity Act The post Canada’s Stablecoin Draft Allows Usage Rewards, Bars Issuers Paying Yield via Third Parties appeared first on Unchained .
Open source - LS
Laura Shin@laurashinPost on X ·
Canada has published draft stablecoin rules that would let issuers pay rewards tied to transactions, while treating deals that pay holders through third parties for holding coins as banned yield. Comments are open until Dec. 23. https://t.co/JKFq0FNYig
Open source