Oct 26, 2026, 10:23 a.m. EDT
2 min read
Summary
- Canada initiated a 60-day public comment period, closing on Dec. 23, concerning stablecoin policies that forbid issuers from distributing interest while permitting transaction-driven incentives.
- The proposed guidelines mandate that nonbank issuers hold backing reserves equivalent to their outstanding tokens inside approved Canadian financial institutions, facilitate stablecoin redemption within three business days, and limit redemption fees to a maximum of 1%.
- These regulations are anticipated to become active in late 2027 concurrently with the development of tokenized deposits and Canadian-dollar stablecoins by domestic banks and regulated enterprises.
The administration in Canada commenced a 60-day public feedback period centered on preliminary stablecoin guidelines, which retain a prohibition against yield distributions and mandate that non-bank entities maintain their reserve funds within domestic Canadian financial institutions.
The review period, concluding on December 23, unfolds as the national banking sector lobbies intensely for bans on yield generation, mirroring anxieties previously highlighted in the United States regarding potential deposit outflows that could diminish the lending capital available to conventional lenders. Natalle Begeron, speaking for the Canadian Bankers Association, communicated to The Logic this June that the organization “strongly endorses the Stablecoin Act’s definitive restriction on direct and indirect yields.”
The federal legislature enacted the Stablecoin Act earlier in the year. The preliminary rules are “essential to enact the SCA and will outline the criteria necessary for issuers seeking registration with the Bank of Canada,” according to official statements.
Conversely, certain digital asset trading platforms operating in Canada currently distribute earnings to holders of stablecoins. Coinbase Canada secured authorization from the Ontario Securities Commission (OSC) during the year to grant returns on qualifying digital tokens, provided it issues clear risk warnings and discloses the absence of deposit insurance coverage.
The proposed regulatory framework for fiat-pegged assets would bar issuers from handing out interest payments, inclusive of third-party distribution channels, aimed at incentivizing token retention. Nevertheless, rewards tied strictly to operational transactions remain permissible.
Under the prospective framework, non-bank stablecoin creators must sustain reserve assets matching the full capitalization of their circulating fiat-referenced tokens. Furthermore, those reserves are required to reside within certified Canadian financial entities, encompassing chartered banks, trust firms, and credit unions.
End-users must retain the ability to convert their stablecoins back into fiat currency within a three-business-day window, subject to a 1% ceiling on redemption costs.
Full implementation of the broader stablecoin regulatory architecture is projected for late 2027.
Near the close of the previous month, six of Canada’s largest banking institutions announced explorations into a digital tokenized system anchored to the Canadian dollar to accelerate institutional fund transfers.
This declaration followed an official communication on September 10 from the Office of the Superintendent of Financial Institutions, asserting that tokenized money representations share identical legal footing with standard bank deposits.
Meanwhile, Tetra Trust Company, historically Canada’s inaugural licensed digital asset custodian, introduced CADD, a domestic stablecoin backed by the Alberta Treasury Board and Finance, this past May.
Originally published at https://www.coindesk.com/policy/2026/10/26/canada-opens-consultation-on-draft-stablecoin-rules-maintains-ban-on-yields.
