TL;DR
- Canada’s draft stablecoin rules would require reserves equal to outstanding tokens, using only specified high-quality liquid assets held with qualified Canadian custodians.
- Issuers would need to redeem stablecoins one-to-one within three business days, while redemption fees would be capped at 1% under the proposal.
- The framework maintains a ban on interest or yield tied to holding stablecoins, while allowing rewards linked solely to transactions and remaining open for public consultation.
Canada has published draft stablecoin regulations that would establish detailed reserve, redemption and supervisory requirements for fiat-backed issuers operating under the country’s Stablecoin Act. The proposal requires reserves worth at least the par value of outstanding tokens at the end of every day. The framework builds a 1:1 backing standard around liquid reserve assets rather than requiring issuers to hold only bank deposits, extending Canada’s broader approach to stablecoin design and backing models.
Canada Defines Reserve Assets and Redemption Standards
Eligible reserves would be limited to high-quality liquid assets, including demand deposits, government debt maturing within three months, one-day reverse repurchase agreements backed by eligible government securities, and money market funds invested entirely in permitted assets. Reserves must also be held by a Canadian-incorporated qualified custodian. The draft combines asset-quality rules with domestic custody requirements intended to keep backing available for redemption, placing reserve management alongside the wider regulatory focus on stablecoin liquidity and custodial risk.
Issuers would have to redeem tokens one-to-one in the reference currency within three business days after a holder submits a request, with no minimum redemption amount. Redemption fees would be capped at 1%, although daily redemptions could be limited when reserve markets suffer a liquidity shortfall. Canada is pairing full par redemption with a defined settlement window and fee ceiling, creating operational standards comparable in purpose to other emerging stablecoin reserve and redemption frameworks.
The proposal also clarifies restrictions on interest and yield. Issuers could not directly or indirectly pay returns designed to encourage holders to keep more stablecoins or hold them for longer, including arrangements funded through income sharing. Rewards tied only to using a stablecoin in a transaction would remain permitted. The distinction separates transaction incentives from returns generated simply by holding a stablecoin, echoing international debates over where stablecoin yield should sit inside regulated payment frameworks.
Non-bank issuers would need to register with the Bank of Canada, while prudentially regulated institutions such as banks, credit unions and insurance companies fall outside the Stablecoin Act’s issuer regime. The consultation remains open for 60 days after publication, and the government intends the regulations to take effect in fall 2027 alongside the Act. The proposal remains a draft rather than a final rule, leaving stakeholder feedback to shape Canada’s implementation before the framework becomes operational across the domestic payments market.
