Canada Opens Consultation on Stablecoin Rules, Maintains Yield Ban

Canada has launched a 60-day public consultation on draft regulations for non-financial institution stablecoin issuers, with the framework expected to come into force in fall 2027. The proposed rules, developed under the Stablecoin Act passed earlier this year, aim to align Canadian policy with international standards while reducing regulatory burdens for multi-jurisdictional operators.

Key Regulatory Provisions

The draft regulations impose strict constraints on stablecoin operations to protect financial stability:

• Ban on Yields: Issuers are prohibited from offering interest or yield payments. This maintains the stance of the Canadian Bankers Association, which argues that yield-bearing tokens could drain deposits from traditional banks.
• Redemption Requirements: Tokenholders must be able to redeem their coins within three business days without fees exceeding 1% of the total value.
• Bank of Canada Registration: Non-bank issuers will be required to register with the central bank prior to issuing any stablecoins.

Industry Context and Disagreement

While the government maintains a hard ban on yields, there is nuance in how the market currently operates. Some crypto exchanges, such as Coinbase Canada, have received permission from the Ontario Securities Commission to offer rewards on eligible tokens, provided they disclose risks and clarify that funds lack deposit insurance coverage. This creates a divergence between the proposed federal framework and existing provincial securities approvals.

The consultation runs until December 23. The timing coincides with similar regulatory developments globally, including the US GENIUS Act (effective January 2027) and the EU’s MiCA framework, suggesting a coordinated push toward standardized stablecoin oversight.