Canada passed a law on stablecoins in March. Now there’s a draft of the rules that would make it work, and it’s open for comment until December 23. The proposed Stablecoin Regulations, published in the Canada Gazette on October 24, say who can issue a dollar-linked digital coin, what has to back it, and what a holder can demand back. If you build payments products, run a crypto platform or just wonder whether these coins will ever be usable in Canada, this is the document that decides it.
What the Draft Rules Actually Say
The Stablecoin Act received Royal Assent on March 26, 2026, as part of the federal budget implementation bill. It makes the Bank of Canada the supervisor of issuers and requires those that aren’t already prudentially regulated to be listed on a public registry before issuing in Canada. The draft regulations fill in the detail. According to Gowling WLG’s summary and Parameter’s reporting, the main points are:
- Full backing. Reserves must be worth at least the par value of the coins outstanding, held in segregated accounts with qualified Canadian custodians.
- Redemption. Holders can redeem at par, in any amount, and the issuer generally has to start processing within three business days.
- A 1% fee cap. Redemption fees can’t exceed 1%, and new or higher fees need advance public notice.
- No yield. Issuers can’t pay interest to holders, directly or through intermediaries. Incentives tied to using a coin, rather than sitting on it, are allowed.
BetaKit reports the draft also bars issuers from marketing a coin as legal tender, a bank deposit or a publicly insured product, and lets the finance minister assess applicants for national security risks.
Why the Yield Ban Matters Most
Of everything in the draft, the yield ban shapes the market most. Canada’s draft closes the door on paying holders for sitting on a coin: the coin is meant to behave like a payment instrument, not a savings product. That’s a deliberate choice. It also leaves room for usage-based rewards, so a payments app can still offer cash back for spending.
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The line between holding and using will be tested. A reward that scales with a balance looks like yield; one that scales with purchases looks like a loyalty programme. Expect lawyers to spend the consultation period arguing about the grey area in between.
Who Has to Pay Attention
Issuers are the obvious audience, but the effects spread wider. Parameter reports about 30 payment service providers, including crypto exchanges that custody client coins, would also fall under Bank of Canada supervision. If you’re a fintech that moves money, it’s worth reading this alongside our piece on who has to register with the Bank of Canada to move customers’ money, because the draft draws on the same Retail Payment Activities Act framework.
Banks and credit unions aren’t the target of the registry, but they’ll feel the competition if a regulated, Canadian-dollar coin becomes cheap to move. Founders building cross-border or business-to-business payments have the most to gain from clear rules, since reserve and redemption standards are what let a bank or a merchant trust a coin enough to accept it.
What’s Still Unsettled
Three things are open. First, timing: the government’s own framework page points to the framework coming into force in 2027, and reporting on the draft says the target is fall 2027. Sources differ on whether the Act’s supervisory powers are already live, so check the Gazette notice itself before relying on a date. Second, the details can change after comments close. Third, the draft’s reach into securities law isn’t settled: some industry voices want joint guidance from the Bank of Canada and securities regulators so issuers aren’t answering to two rulebooks.
The consultation also sits alongside other federal payments work. If you’re mapping the whole picture, our look at Canada’s draft open banking rules covers the other regime that will shape how money and data move.
What to Watch
- Comments filed before the December 23 deadline, especially from banks, payment firms and exchanges.
- Whether the final text keeps the three-day redemption window and the 1% cap.
- How the line between usage rewards and prohibited yield is drawn.
- The first names on the Bank of Canada’s registry once the framework is in force.
Frequently Asked Questions
When were the draft stablecoin regulations published?
They were published in the Canada Gazette on October 24, 2026. Comments are open until December 23, and the government is targeting fall 2027 for the rules to take effect.
What must back a Canadian stablecoin?
Reserves must be worth at least the par value of the coins outstanding. They're held in segregated accounts with qualified Canadian custodians.
Can holders redeem a stablecoin for cash?
Yes. Holders can redeem at par in any amount, and the issuer generally has to start processing within three business days. Redemption fees are capped at 1%.
Will stablecoin issuers be allowed to pay interest?
No. The draft bars issuers from paying interest or yield to holders, directly or through intermediaries. Incentives tied to using a coin, rather than holding it, are allowed.
Who would supervise stablecoin issuers?
The Bank of Canada. Issuers that aren't already prudentially regulated would need to be on its public registry before issuing coins in Canada.