Canada Proposes Draft Stablecoin Rules Capping Fees and Banning Yield

draft stablecoin rules — Canadian authorities have published draft rules for stablecoins that would cap redemption fees at 1% and explicitly prohibit issuers from paying interest or yield to holders.

The proposed regulations, released by Canada’s Department of Finance, mandate that stablecoin issuers hold a reserve of assets with a market value at least equal to the value of the outstanding stablecoins. These reserves must be segregated from the issuer’s own assets and held with a qualified custodian.

A key provision requires issuers to redeem stablecoins for users at par value, with any redemption fee capped at 1% of the amount redeemed. The draft rules also maintain a ban on paying interest or providing any other benefit to stablecoin holders, effectively prohibiting yield-bearing stablecoin models.

The government has opened a 60-day public consultation period on the draft rules, which are part of a broader effort to regulate the crypto-asset sector under the country’s Financial Consumer Protection Framework.