Canada released draft detailed rules that would cap stablecoin redemption fees at 1 percent and bar issuers from paying interest to holders.

On Oct. 26 local time, blockchain outlet Decrypt reported that the Canadian government released the draft on Oct. 24 and began a 60-day consultation. Submissions are due by Dec. 23, and the target implementation is autumn 2027.

The draft would require issuers to hold reserves exceeding the value of stablecoins in circulation. Reserve assets would be limited to highly liquid assets such as cash, government bonds with remaining maturities of 3 months or less, and money market funds comprised of qualifying assets. Reserves would be kept in segregated accounts at qualified custodians in Canada, to protect them from claims by general creditors even if the issuer or custodian goes bankrupt.

It also specified redemption procedures. Issuers must accept redemption requests with no minimum amount and, in principle, begin fiat currency transfers within 3 business days of a request. Redemption fees cannot exceed 1 percent of the redemption amount.

Paying interest or returns for holding coins would be prohibited. The ban would also cover indirect payments through third parties or sharing profits. Rewards linked to transactions or use, rather than simple holding, would be allowed.

It would also prohibit presenting stablecoins like bank deposits or promoting them as if deposit insurance and government guarantees apply. Issuers must notify complainants within 7 days that a complaint has been received and must resolve it within 30 days.

The Bank of Canada would handle issuer registration and supervision. The enabling law, the Stablecoin Act, received assent on March 26, 2026. Authorities estimated 5 issuers would come under supervision. They also expected that revisions to related retail payment rules would bring about 30 more payment service providers, including crypto platforms that hold customer assets, under supervision.

The maximum administrative fine for violations would be either 1 million Canadian dollars or 10 million Canadian dollars depending on the type of breach. If an issuer fails to meet reserve requirements or does not fulfill its obligation to redeem at par value, it could face a fine of up to 10 million Canadian dollars.

The regulatory overhaul also aligns with the need to improve cross-border payments. Ron Morrow (론 모로), head of payments and oversight at the Bank of Canada, stressed at an Ottawa event in September 2025 that faster, cheaper, more transparent and more accessible cross-border payment services are urgent.

The United States has also built a regulatory framework aimed at limiting issuers' interest payments. The stablecoin regulatory law known as the GENIUS Act, signed by U.S. President Donald Trump on July 18, 2025, prohibits issuers from paying interest to holders. After that, conflict continued between banks and the industry over the scope of permitted yields offered by crypto platforms. Banks worried such rewards could encourage deposits to move into the crypto market.

Canada's draft also focuses on supporting payment uses of stablecoins while distinguishing them from deposits or interest-paying products. In the consultation and finalisation process, reserve management, redemption procedures and the permissible scope of usage-linked rewards are expected to be major issues.