Canada has released proposed regulations that would entitle stablecoin holders to redeem their tokens directly with issuers, with no minimum amount and fees capped at 1% of the redemption value. Redemption terms define the conditions under which a holder can actually obtain the face value a stablecoin is meant to track, and the proposal targets that channel directly. The proposal was published on Oct. 24 and adds operational detail to the Stablecoin Act, which received royal assent on March 26 but whose key provisions have not yet come into force. The draft rules, published in the Canada Gazette, are open to a 60-day consultation, and the government plans for them to take effect in fall 2027.

What the Proposed Rules Would Require

Issuers would normally be required to complete a redemption within three business days. The government says this window allows time for reserve securities to settle and for processing. A small balance would no longer be a valid ground for rejecting a covered request, meaning holders could redeem any amount — putting small holders on the same footing as large ones at the issuer's direct redemption window.

Payment would be required at par, or face value, in the currency the stablecoin tracks. For USDC, that means U.S. dollars, so a Canadian holder wanting Canadian dollars would need a separate conversion arrangement.

The 1% fee is a ceiling, not a set rate. Issuers would have to give at least seven days' notice on their websites before adding or raising fees.

Daily redemption limits would be permitted in one scenario: when a shortage of liquidity in markets where reserve assets trade prevents an issuer from meeting all requests. The 1% fee cap would continue to apply while such limits are in place.

Reserves would have to at least equal the value of outstanding stablecoins. Allowed assets include demand deposits, short-term government debt, qualifying money-market funds and certain overnight repurchase agreements. Reserves would be kept separate from claims by the issuer's and custodian's creditors, and issuers could not present their tokens as insured bank deposits.

How Circle's Current Terms Compare

Circle's USDC terms for holders outside the European Economic Area, updated on Oct. 15, make direct redemption dependent on having a Circle Mint account in good standing. Circle Mint serves institutions and registered distributors. It excludes individuals using the service for personal purposes and requires identity and sanctions checks.

Approved institutions must also link a verified bank account in their own name. Without such an account, a holder cannot send tokens to Circle and request a bank payout. If Canada's rules applied to USDC, direct redemption could no longer depend on holding such an account.

Whether USDC would fall under Canada's rules remains unclear. The Act covers domestic and foreign issuers whose stablecoins are available to buyers in Canada, based on where a buyer lives or does business. The Governor of the Bank of Canada could also grant exemptions where provincial or foreign rules are substantially similar. The consultation, future registration decisions and any exemption rulings will determine which issuers and holders the redemption guarantees reach when the rules take effect in fall 2027.

Existing issuers that apply within 30 days of the rules' start date could keep issuing until their registration is decided, though this relief would not pause their redemption duties.