Canada Proposes Stablecoin Rules Capping Redemption Fees at 1%, Banning Yield

Canada proposed draft stablecoin regulations Saturday requiring issuers to back every token one-to-one with cash and short-term government debt held in segregated accounts at a Canadian custodian, with redemptions within three business days and fees capped at 1%. The rules, published in the Canada Gazette, maintain a ban on paying holders interest or routing yield through third parties, including sharing issuer income. Rewards tied to using a coin rather than holding it remain permitted. Issuers may retain reserve earnings provided reserves stay at least equal to tokens outstanding. Issuers would be barred from presenting coins as bank deposits or claiming deposit insurance or government guarantees. Complaints must be acknowledged within seven days and resolved within 30. The Stablecoin Act became law on March 26, 2026, with the Bank of Canada as registrar and supervisor. Penalties reach C$1 million for serious violations and C$10 million for very serious ones, such as inadequate reserves. The notice assumes five issuers plus roughly 30 payment companies under Bank of Canada oversight. Ottawa accepts comments for 60 days, until roughly December 23, with regulations intended to take effect in fall 2027.