Canada lets stablecoins reward use, not holding
Draft rules under Canada's Stablecoin Act ban yield for holding, cap redemption fees at 1% and aim to take effect in fall 2027.
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Canada has published the draft regulations it needs to bring its Stablecoin Act into force. The Act received royal assent in March 2026; the proposed Stablecoin Regulations, prepublished in the Canada Gazette, Part I, on 24 October, set out how issuers would register with the Bank of Canada and what they would have to do once registered. The government intends them to come into force in fall 2027, and comments are open for 60 days.
The sharpest line concerns yield. Issuers could not pay interest or yield tied to holding a stablecoin, and could not route it through others: arrangements that encourage holders to keep more of the coin, or keep it longer, are prohibited, including income-sharing where the issuer funds another party's interest. A reward tied only to using the coin rather than holding it is allowed, to encourage adoption. The stated aim is to keep stablecoins distinct from products that compete with bank deposits, by stopping issuers from passing on what their reserves earn on short-term government securities.
On redemption, issuers would have to pay out one-to-one in the reference currency within three business days of a request, with no minimum amount; three days is meant to cover the T+1 and T+2 settlement cycles of the securities held in reserve. Redemption fees would be capped at 1 percent, against roughly 0.1 percent in the market today. Reserves would have to equal or exceed outstanding coins at the end of each day, could be held only in demand deposits, government debt maturing within three months, one-day reverse repos and money market funds made of such assets, and could not be pledged.
The government's own cost analysis shows how small the market still is. It assumes five issuers, naming QCAD from Stablecorp, CADC from Loon Technology and Circle's USDC, plus possible entrants. It puts issuers' compliance costs at C$88,521 a year in total, and the Bank of Canada's supervision costs, recovered from issuers, at C$2.5 million a year. A related amendment would bring an estimated 30 more payment service providers, among them crypto trading platforms with custodial wallets and crypto payment processors, under the Retail Payment Activities Act.
Retold from Canada Gazette. This is a summary in our own words; follow the link for the original reporting.