Canada opens 60-day stablecoin consultation while keeping yield ban

Canada has opened a 60-day consultation on proposed stablecoin regulations that retain its ban on issuer-paid yield and require reserves to be held with qualified Canadian financial institutions. Summary Canada’s stablecoin consultation runs until Dec. 23, covering reserve custody, redemption rights and issuer obligations. Issuers cannot pay yield on holdings, but transaction-based rewards remain permitted under the draft. Redemption fees would be capped at 1%, with fiat transfers initiated within three business days. Foreign non-financial issuers serving Canadians fall within the framework, regardless of their stablecoin’s reference currency. The Department of Finance published the draft in the Canada Gazette on Oct. 24, with comments due Dec. 23, 2026. Canada’s stablecoin proposal permits transaction rewards The proposed regulations prohibit issuer-funded arrangements that reward larger holdings or longer holding periods, while allowing rewards tied only to transactions. The draft requires 1:1 backing, Canadian-domiciled custodians and redemption fees no higher than 1%. Its three-business-day redemption deadline covers liquidating reserves and initiating the fiat transfer, accord...