Canada’s Draft Stablecoin Rules Cap Redemption Fees at 1% and Ban Yield

In brief

• Canada's draft stablecoin regulations, published October 24, open a 60-day comment period, with the rules targeted to take effect in fall 2027.
• Issuers would hold one-to-one reserves with Canadian custodians, redeem within three business days for no more than a 1% fee, and could not pay interest for holding a coin.
• Penalties run up to C$10 million for very serious violations, with the Bank of Canada supervising issuers.

Canada proposed rules on Saturday that would force companies issuing stablecoins—crypto tokens designed to hold a steady value, usually one U.S. dollar—to keep real money behind every coin and hand it back on request. The draft, published in the Canada Gazette, the government's official newspaper, also keeps a ban on paying holders interest, otherwise known as yield.

For anyone who holds these tokens or might send money abroad with them, the rules decide whether you get real cash back if the company behind the coin collapses, how fast it arrives and what it costs.

Every coin must be backed one-to-one by reserves limited to cash and government debt maturing in three months or less, along with money market funds (pools of short-term safe assets) holding only such assets.