Canada has proposed a regulatory framework for stablecoins that would require issuers to maintain one-to-one reserves, allow holders to redeem their tokens within three business days and cap redemption fees at 1%. The draft rules would also prohibit issuers from paying interest or other forms of yield to people who simply hold the coins.
Published in the Canada Gazette on October 24, the proposal begins a 60-day public comment period expected to run until about December 23. The regulations are intended to take effect in fall 2027, subject to the outcome of that process.
Stablecoins are crypto tokens designed to maintain a relatively steady value, commonly by tracking a currency such as the U.S. dollar. The proposed Canadian rules address what holders could recover if an issuer failed, how quickly they could receive their money and what costs could apply when they seek redemption.
Reserve, redemption and custody requirements
Under the proposal, each stablecoin would have to be backed by reserves equal to the total number of coins in circulation. Eligible reserves would be limited to cash, government debt that matures within three months and money market funds investing only in those short-term assets.
The reserves would need to be held by a Canadian custodian in segregated accounts. Those accounts would be structured so that creditors could not access the reserve assets if the issuer entered bankruptcy proceedings. The arrangement is intended to keep the assets backing the coins separate from the issuer’s other property.
Holders would be able to redeem any amount of a stablecoin within three business days. The issuer could charge a fee, but the fee could not exceed 1% of the redemption amount. Issuers would also have to redeem the tokens at their stated value, rather than paying less than the amount represented by the coin.
The proposal would prevent issuers from describing their stablecoins as bank deposits or suggesting that they carry deposit insurance or a government guarantee. Customer complaints would have to be acknowledged within seven days and resolved within 30 days.
Yield restrictions and Bank of Canada oversight
The draft would prohibit interest payments to people for holding a stablecoin. The restriction would also cover indirect arrangements, including schemes that allow holders to receive a share of the issuer’s income through another company or platform.
Rewards connected to using a stablecoin, rather than merely keeping it, would remain permitted under the proposal. Issuers could also retain income generated by their reserve assets, provided the reserves continued to equal at least the value of all outstanding coins.
The notice says the restrictions are designed to keep stablecoins distinct from products that compete directly with bank deposits or other interest-bearing financial instruments. The issue has become a central point in the wider debate over crypto regulation because banks have argued that yield-bearing crypto products could encourage customers to move money away from traditional deposits.
The Bank of Canada would register and supervise stablecoin issuers under the framework. The proposed penalties range from C$1 million for serious violations to as much as C$10 million for very serious breaches. Examples of the most severe violations include failing to maintain adequate reserves or failing to redeem coins at their stated value.
The regulatory impact assessment assumes that five issuers would be covered, along with roughly 30 other payment companies. That broader group would include crypto platforms that hold customers’ stablecoins in wallets.
Canadian rules follow wider stablecoin debate
The Stablecoin Act became law on March 26, 2026, following Ottawa’s plan, announced in its November budget, to establish a framework for these digital payment instruments. According to Decrypt, the proposed regulations now provide the detailed operating requirements that issuers and related payment companies would need to meet.
The Canadian initiative follows action in the United States. President Donald Trump signed the GENIUS Act, the U.S. stablecoin law, on July 18, 2025. That legislation also bars issuers from paying interest to stablecoin holders, although the treatment of yield offered by crypto platforms remains disputed.
In the United States, banks have objected to what they view as a loophole that allows platforms such as Coinbase to offer yield to customers holding USDC in their accounts. The disagreement contributed to the failure in the Senate of the separate Clarity Act, which was intended to create broader crypto-market rules.
Canadian payments officials have highlighted the potential need for faster, cheaper, more transparent and more accessible cross-border payment services. The proposed stablecoin framework attempts to support that use while imposing safeguards around reserves, redemption and consumer complaints. The next step is the 60-day consultation before Ottawa decides how the final regulations will be implemented.
Moneyiar market picture
Moneyiar data at the stated times showed mixed moves among the listed crypto assets on October 25, 2026:
- Cardano (ADA): $0.2052460416, down 0.31% over 24 hours and 6.04% over seven days, as of 22:39 +03:30.
- Stable (STABLE): $0.0265498473, down 2.51% over 24 hours but up 10.84% over seven days, as of 22:39 +03:30.
- Cap (CAP): $0.1084662705, up 35.1% over 24 hours and 55.28% over seven days, as of 22:38 +03:30.
- Comedian (BAN): $0.0575169485, down 4.44% over 24 hours and up 7.23% over seven days, as of 22:38 +03:30.
