Canada opens consultation on draft stablecoin rules that keep yield ban

Key points

• The consultation runs 60 days and closes on 23 December.
• Non-bank issuers must hold reserves equal to circulating tokens at qualified Canadian institutions and redeem within three business days, with fees capped at 1%.
• Coinbase Canada won Ontario Securities Commission permission in 2026 to offer yields on eligible tokens with risk warnings.

Canada has opened a 60-day public consultation on draft stablecoin rules that keep a ban on yield payments, with the window closing on 23 December. The proposals would require non-bank issuers to hold reserves matching their circulating tokens at qualified Canadian financial institutions, including banks, credit unions and trust companies.

Under the draft rules, customers would be able to redeem stablecoins for ordinary currency within three business days, and redemption fees would be capped at 1%. Issuers would be barred from paying interest, directly or through third parties, to persuade customers to hold their tokens, though rewards tied to transactions would still be allowed. The government said the regulations are needed to bring the Stablecoin Act, passed earlier in 2026, into force and to set out what issuers must do to register with the Bank of Canada.

The framework is expected to take effect towards the end of 2027. Canada's banks have pushed for a yield ban, echoing US concerns that customers could move money out of bank accounts and leave lenders with less to lend.

Some Canadian exchanges already pay rewards to stablecoin holders.

What to watch: The consultation closes on 23 December, with the framework expected to take effect towards the end of 2027.

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