Canada published draft stablecoin regulations on Saturday that would require issuers to keep real money behind every coin and hand it back on request. The proposal, released October 24 in the Canada Gazette, the government's official newspaper, opens a 60-day public comment period, with the rules targeted to take effect in fall 2027.

Stablecoins are crypto tokens designed to hold a steady value, usually pegged one-to-one to the U.S. dollar. For anyone who holds these tokens or might use them to send money abroad, the rules decide whether real cash comes back if the company behind the coin collapses, how fast it arrives, and what it costs.

Under the draft rules, every coin must be backed one-to-one by reserves limited to cash and government debt maturing in three months or less, along with money market funds—pools of short-term safe assets—holding only such instruments. Those reserves must sit with a Canadian custodian in separate accounts that creditors cannot reach if the issuer goes bankrupt. Holders could redeem any amount within three business days, with fees capped at 1%.

A Ban on Yield

Issuers could not pay interest for simply holding a coin, or route it through third parties: any arrangement that lets someone earn yield from holding a coin, including by sharing the issuer's income, would count 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 says.

Issuers could still keep what their reserves earn, as long as reserves stay at least equal to the coins outstanding. They also could not present a coin as a bank deposit or claim deposit insurance or a government guarantee. Complaints would need to be acknowledged within seven days and resolved within 30.

Bank of Canada Oversight

The draft follows the Stablecoin Act, which 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, and it also bars issuers from paying holders interest. The fight since then has been over letting crypto platforms offer yield to users, which banks oppose because they say deposits could drain toward crypto. The dispute was divisive enough that it helped lead to the failure of the Clarity Act in the Senate, a separate piece of legislation meant to set broader rules for the crypto market. The banking lobby opposed the Clarity Act on grounds that it did not sufficiently close what it viewed as a loophole in the GENIUS Act, which currently allows platforms such as Coinbase to offer yield to customers who hold USDC stablecoins in their accounts.

Penalties and Timeline

As the stablecoin debate moves to the United States' northern neighbor, penalties would reach 1 million Canadian dollars for serious violations and 10 million for "very serious" ones, such as failing to hold adequate reserves or redeem at par value. The notice assumes five issuers, and about 30 more payment companies—including crypto platforms that hold customers' coins in wallets—would fall under Bank of Canada oversight.

Ottawa is taking comments for 60 days, until roughly December 23. That consultation is the next formal step before the proposed framework's targeted fall 2027 start date, and the final rules will determine how the draft requirements apply to issuers and payment companies. "The intention is for the proposed Regulations to come into force in fall 2027," the notice said.