TLDR
- Canada published draft stablecoin rules on October 24 that require one-to-one reserves held by Canadian custodians.
- Holders could redeem coins within three business days, with fees capped at 1%.
- Issuers could not pay interest for holding a coin, but rewards tied to using a coin would be allowed.
- The Bank of Canada would supervise issuers, with fines of up to C$10 million for very serious violations.
- Public comments are open until about December 23, and the rules are set to take effect in fall 2027.
Canada has published draft rules for companies that issue stablecoins. The proposal sets strict limits on reserves, redemptions and fees.
Stablecoins are crypto tokens built to hold a steady value, usually one U.S. dollar. The draft was published on October 24 in the Canada Gazette, the government’s official newspaper.
The rules also keep a ban on paying holders interest, also called yield. Ottawa has opened a 60-day comment period before the rules are finalized.
What the Draft Rules Require
Every stablecoin would need to be backed one-to-one by reserves. Those reserves are limited to cash, government debt maturing in three months or less, and money market funds holding only those assets.
The reserves must be held by a Canadian custodian in separate accounts. Creditors could not reach that money if the issuer went bankrupt.
Holders could redeem any amount of their coins within three business days. The redemption fee would be capped at 1%.
Issuers could not pay interest to people for simply holding a coin. They also could not route interest through third parties, including by sharing the issuer’s income.
Rewards tied to using a coin, rather than holding it, would still be allowed. Issuers could keep what their reserves earn, as long as reserves stay at least equal to the coins in circulation.
“These prohibitions are intended to distinguish stablecoins from financial products that compete directly with bank deposits or other interest-bearing instruments,” the government notice says.
Issuers could not describe a coin as a bank deposit. They also could not claim deposit insurance or a government guarantee.
Customer complaints would need to be acknowledged within seven days. They would need to be resolved within 30 days.
Oversight, Penalties and the U.S. Comparison
The Stablecoin Act became law on March 26, 2026, after Ottawa announced the plan in its November budget. The Bank of Canada will register and supervise issuers.
Penalties would reach C$1 million for serious violations. Very serious violations, such as failing to hold enough reserves or redeem at full value, could bring fines of up to C$10 million.
The notice expects five issuers to fall under the rules. About 30 more payment companies, including crypto platforms that hold customers’ coins in wallets, would also come under Bank of Canada oversight.
In the United States, President Donald Trump signed the GENIUS Act on July 18, 2025. That law also bars stablecoin issuers from paying holders interest.
Since then, the U.S. debate has focused on whether crypto platforms can offer yield to users. Banks oppose this, saying deposits could move toward crypto.
The dispute helped lead to the failure of the Clarity Act in the Senate. Banks said the bill did not close what they called a loophole that lets platforms such as Coinbase offer yield on USDC held in customer accounts.
Ottawa is accepting comments until roughly December 23. The government said it intends for the rules to take effect in fall 2027.
