Canada Drafts Stablecoin Rules That Ban Yield, Cap Redemption Fees

Canada's Department of Finance has published draft stablecoin rules that bar issuers from paying yield and cap redemption fees at 1%. Comments are due Dec. 23 at 11:59 p.m. EST, per the Canada Gazette.

The draft, printed in the Gazette on Oct. 24, is what Ottawa needs to switch on its Stablecoin Act. The department's stated goal is to have it in force in fall 2027.

Who it covers

The rules apply to issuers that are not banks or other regulated financial institutions. Those issuers would register with the Bank of Canada and hold reserves at least equal to the tokens in circulation. The department's analysis expects about five issuers, naming QCAD (Stablecorp), CADC (Loon) and Circle's USDC.

Holders would get their money back within three business days, with no minimum amount. The Gazette says market redemption fees now top out around 0.1%, but a cap that low could squeeze smaller Canadian issuers.

Rewards yes, interest no

Issuers couldn't pay interest for simply holding a coin, including through deals with third parties. Rewards tied to a transaction would be allowed. Supervision is paid for by issuers: those with under $500 million outstanding would pay a $25,000 base fee, and larger ones $350,000.

Room on reserves

Responding to industry feedback, the Gazette says, the draft sets no limits on how reserves are split among eligible assets, as long as they stay fully backed.

U.S. readers will see a familiar line. The OCC's GENIUS Act rule also bans issuers from paying interest just for holding a payment stablecoin.