Canada solicits comments on draft stablecoin regulations, continues to prohibit issuers from paying interest
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AT A GLANCE
Canada's Department of Finance launches a 60-day public consultation on draft stablecoin regulations and proposes to continue prohibiting interest payments to holders.
Article
Canada solicits comments on draft stablecoin regulations, continues to prohibit issuers from paying interest
BlockBeats News,October 26, Canada's Department of Finance has launched a 60-day public consultation on draft stablecoin regulations, with a deadline of December 23. The draft continues to prohibit stablecoin issuers from paying interest to holders directly or through third parties, while allowing rewards tied to transaction activity.
Under the draft, non-bank stablecoin issuers must provide 1: 1 backing for fiat-pegged stablecoins in circulation with reserve assets of equivalent value, and hold the reserves at eligible Canadian financial institutions, including banks, credit unions, and trust companies. Users' stablecoin redemptions must be completed within 3 business days, and redemption fees may not exceed 1%.
Canada previously passed the Stablecoin Act. These regulatory details are intended to clarify the requirements issuers must meet to register with the Bank of Canada. The relevant framework is expected to take effect around the end of 2027.
The draft comes as Canada's banking sector pushes to prohibit stablecoins from paying yield, to prevent funds from shifting from traditional bank deposits to stablecoins. Meanwhile, some Canadian crypto platforms have been approved to offer yield to eligible stablecoin holders.
Original link https://m.theblockbeats.info/flash/373790
Key points
01
Canada's Department of Finance has launched a 60-day public consultation on draft stablecoin regulations, with a deadline of December 23。
02
The draft continues to prohibit stablecoin issuers from paying interest to holders directly or through third parties, while allowing rewards tied to transaction activity.
03
Non-bank stablecoin issuers must provide 1: 1 backing for fiat-pegged stablecoins in circulation with reserve assets of equivalent value.
04
Reserves must be held at eligible Canadian financial institutions, including banks, credit unions, and trust companies.
05
Users' stablecoin redemptions must be completed within 3 business days, and redemption fees may not exceed 1%。
06
The relevant regulatory framework is expected to take effect around the end of 2027.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
This is a regulatory draft that is still open for comment. It requires issuers to maintain full reserves and restricts them from paying interest to users who hold stablecoins; rewards tied to transaction activity are temporarily allowed.
Why it matters to readers
If the rules are ultimately implemented in their current form, stablecoin issuers will need to meet reserve, custody, and redemption requirements, and some yield-bearing products may also be restricted.
Stablecoins are typically designed to remain relatively stable against fiat currency. The new rules primarily affect how issuers safeguard reserves, process redemptions, and whether they can offer yield to holders.
Risks and unknowns
It is currently still in the public consultation stage, and the final rules may change.
The evidence comes from a BlockBeats report and does not provide an official original link from Canada's Department of Finance.
The evidence does not elaborate on the specific registration requirements of the Bank of Canada.
The specific scope of application of the holder-interest prohibition to yield products offered by Canadian crypto platforms remains unclear.
Related Developments
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Related concepts
Stablecoin
An asset that seeks to track a reference value and is subject to risks including depegging, reserves, and redemption.
