Canada is moving to regulate non-bank stablecoin issuers with rules that bar paying interest or yields, require 1:1 reserve backing, and mandate redemption within three business days of a holder’s request, with fees capped at 1% of total value.

Issuers must have Canadian-domiciled custodians holding reserves and must ensure reserves are held separately, with foreign non-financial issuers offering fiat-backed tokens to Canadians also subject to the framework.

The regime requires reserves to be held in Canada and prohibits interest payments on stablecoins, allowing only limited indirect payments via third parties and rewards tied to actual transactions rather than holdings.

Ottawa emphasizes Bank of Canada supervision and a national security review, signaling a distinct Canadian approach while aligning with international moves toward stablecoin regulation.

Banks warn that widespread yields could drain deposits and affect lending, a concern echoed in broader U.S. regulatory debates.

The draft includes ongoing disclosures certified by an accountant and legal opinions, and outlines registration and oversight roles for issuers, with the Bank of Canada leading compliance and enforcement alongside Finance.

Context includes developments like a CADD-backed Canadian-dollar stablecoin from Tetra Trust Company and broader moves toward tokenized deposits and cross-institution settlement.

Regulatory developments cover both Canadian and U.S. conversations on stablecoins, rewards, and deposits.

Implementation hinges on regulatory decisions, with a 60-day consultation and a planned start in fall 2027; preexisting issuers would get transitional relief to apply for registration.

Global regulatory divergence is noted, with some jurisdictions banning stablecoins while others pursue clearer frameworks to foster competition with banks.

U.S. regulators and banks discuss stablecoins and yield rewards, with the OCC finalizing GENIUS Act-based standards addressing backing, exchangeability, safekeeping, and risk management in early 2027.

Canada opened a 60-day public consultation on proposed stablecoin regulations targeting non-financial issuer, with comments due by late December; the Stablecoin Act envisions fall 2027 implementation with par redemption in the reference currency.