Canada’s stablecoin draft caps redemption fees at 1%, bans holder yield and hands the gate to the Bank of Canada 🪙

Canada’s proposed stablecoin rules would cap holder redemption fees at 1%, according to a draft published Saturday in the Canada Gazette.

Stablecoins—crypto tokens designed to hold a steady value, usually one U.S. dollar—would need reserves limited to cash and government debt maturing in three months or less, along with money market funds holding only such assets. Those reserves must sit with a Canadian custodian in separate accounts that creditors cannot reach if the issuer goes bankrupt. Holders could request redemption of any amount within three business days, with fees capped at 1%.

The draft also bars issuers from paying holders interest for simply holding a coin or routing it through third parties; any arrangement that lets someone earn yield from holding it, including by sharing the issuer’s income, counts as indirect payment. Rewards tied to using a coin, rather than holding it, would remain allowed. “These prohibitions are intended to distinguish stablecoins from financial products that compete directly with bank deposits or other interest-bearing instruments,” the notice said. Issuers could still keep what their reserves earn, provided reserves remain at least equal to the coins outstanding.

Issuers also could not present a coin as a bank deposit or claim deposit insurance or a government guarantee, and complaints would need to be acknowledged within seven days and resolved within 30 days. The Stablecoin Act became law on March 26, 2026, after Ottawa announced the plan in its November budget. The Bank of Canada will register and supervise issuers. “There is a pressing need for faster, cheaper, more transparent and more accessible cross-border payments services,” Ron Morrow, the Bank of Canada’s executive director of payments, supervision and oversight, said at an Ottawa conference in September 2025.

In the United States, President Donald Trump signed the GENIUS Act, the U.S. stablecoin law, on July 18, 2025, which also bars issuers from paying holders interest. The fight since then has centered on whether crypto platforms can offer yield to users; banks oppose it because they say deposits could drain toward crypto. The dispute was divisive enough to help lead to the failure of the Clarity Act in the Senate. The U.S. Senate on Tuesday failed to clear a key procedural hurdle for the Clarity Act. In a 49 to 50 vote, senators rejected cloture on the motion to proceed, a step that limits debate on whether to take up the legislation, setting back efforts to establish a federal framework for crypto markets.