Article
【Canada opens consultation on stablecoin draft, maintains ban on yield】
Canada’s Department of Finance has launched a 60-day public consultation on a draft stablecoin regulatory framework, which will end on December 23. The draft maintains a ban on stablecoin issuers paying interest or yield to holders, including arrangements that encourage customers to hold tokens through third parties, although transaction-related rewards may still be permitted. The draft requires non-bank issuers to use reserves held at eligible Canadian financial institutions, on a 1: 1 basis, to back fiat-linked tokens in circulation. Eligible institutions include banks, credit unions, and trust companies. Holders must be able to redeem stablecoins for conventional currency within business days, with redemption fees capped at 1%. The government passed the Stablecoin Act earlier this year, stating that the draft contains what is necessary to bring the Act into force and will specify the requirements for issuers to register with the Bank of Canada. The stablecoin framework is expected to take effect at the end of 2027. Earlier this year, a spokesperson for the Canadian Bankers Association June told The Logic that the association firmly supports the Stablecoin Act’s explicit prohibition on direct and indirect yield. The banking sector is concerned that stablecoin yield could cause deposit outflows and reduce funds available for lending.Coinbase Canada has received permission from the Ontario Securities Commission this year to offer yield on eligible tokens, provided it warns of risks and states that funds are not covered by deposit insurance. At the end of last month, Canada’s six largest banks said they were exploring a Canadian-dollar tokenization system to accelerate fund transfers among traditional financial institutions.