Canada Opens Stablecoin Consultation, Keeps Ban on Holding-Based Yield

The Department of Finance Canada has opened a 60-day consultation on proposed stablecoin rules that would keep a ban on holding-based yield while setting reserve and redemption requirements for covered issuers.

The proposal covers non-financial institution issuers. It would set requirements for issuers to register with the Bank of Canada. Issuers would need reserve assets worth at least the par value of outstanding stablecoins at each day’s end. The assets would have to be held with a Canadian-incorporated qualified custodian; banks, credit unions and trust companies are among the named institutions.

Issuers could not pay people interest or other yield for holding tokens, including through third-party arrangements. Rewards tied to using tokens in transactions could still be allowed, while rewards for merely holding them would remain barred.

The proposed rules would set a three-business-day redemption deadline and cap fees at 1% of the amount redeemed. They would also allow issuers to limit daily redemptions when a market-liquidity shortfall prevents them from meeting all requests.

The Stablecoin Act received royal assent in March 2026. The government intends the proposed regulations to take effect in fall 2027. On Sept. 22, Canada’s six largest banks announced they were exploring a Canadian-dollar tokenization system to speed transfers among traditional financial institutions.

Public comments on the proposed rules are due Dec. 23.