Canada’s Draft Stablecoin Rules: 1% Redemption Fee Cap and Yield Ban

Ottawa has unveiled draft stablecoin regulations, launching a 60-day public consultation on rules that would require issuers to maintain one-to-one reserves and offer fast redemption to holders. The proposal, announced by Canadian financial authorities, also keeps in place a ban on paying interest or yield to stablecoin users, a policy that aligns with the country’s cautious approach to crypto assets. The draft rules cap redemption fees at 1%, aiming to protect consumers from excessive charges when converting stablecoins back to fiat currency. These measures come as global regulators intensify scrutiny of stablecoins, which are seen as critical infrastructure for digital asset markets. The one-to-one reserve requirement is designed to ensure that stablecoins are fully backed by liquid assets, reducing the risk of runs or insolvency. The yield ban, meanwhile, prevents issuers from competing with traditional savings products, which could undermine monetary policy or consumer protection frameworks. The consultation period gives industry stakeholders, including crypto exchanges and payment processors, an opportunity to weigh in on the proposed framework. The final rules could shape Canada’s digital currency landscape, influencing how stablecoins are used for payments and trading within the country. The outcome will be closely watched by international counterparts, as Canada positions itself among jurisdictions establishing clear guardrails for the fast-growing stablecoin sector.