Canada has opened a 60-day consultation on draft rules for non-bank stablecoin issuers. The proposal keeps the ban on paying interest to holders, while allowing rewards tied to transactions.
The Canadian government started a 60-day public consultation on draft regulations that maintain a ban on yield payments. The rules also require non-bank issuers to deposit their reserves with Canadian financial institutions. The consultation ends Dec. 23.
What the draft rules require
Under the draft, non-bank issuers of fiat-pegged stablecoin tokens would hold reserves equal to the value of their circulating tokens. Those reserves would sit with qualified Canadian financial institutions, including banks, credit unions and trust companies.
Customers would be able to exchange their stablecoins for regular currency within three business days, with redemption fees capped at 1%. Issuers would also need to register with the Bank of Canada, according to Crypto Briefing.
The proposal would prohibit issuers from paying interest, including through third parties, to encourage customers to hold their tokens. It would still allow rewards linked to transactions.
Banks push for the ban as some exchanges already pay rewards
The consultation comes as Canada's banking industry presses for a ban on yield payouts, echoing concerns in the U.S. that customers could move money out of bank accounts. Some crypto exchanges in Canada, however, already pay rewards to stablecoin holders. Coinbase Canada received permission from the Ontario Securities Commission this year to offer yields on eligible tokens, provided it warned customers about the risks and made clear the funds are not covered by deposit insurance.
Banks and prudentially regulated financial institutions fall outside these particular rules, according to Crypto Briefing. They remain free to work on tokenized deposits or Canadian-dollar stablecoins under existing supervisory frameworks.
Rules expected toward the end of 2027
The framework is expected to come into effect toward the end of 2027. Late last month, Canada's six largest banks said they were exploring a Canadian-dollar tokenized system to move money faster among traditional financial institutions.
Crypto Briefing lists the redemption window, the fee cap and the definition of transaction-based rewards as the items to watch before the consultation closes. Those details remain proposals.
Sources: CoinDesk, Crypto Briefing
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