Canada opens 60-day consultation on stablecoin rules setting redemption and reserve requirements
Key Facts
Canada published draft stablecoin regulations on October 24, 2026, and opened a 60-day comment period, in a move aimed at bringing the Stablecoin Act into force and setting registration and compliance requirements overseen by the Bank of Canada. The government set December 23, 2026, at 11:59 p.m. Eastern time, as the deadline for submissions. The proposal establishes a federal framework for issuing stablecoins used domestically and across provincial and international borders, after the government said there is currently no comprehensive federal framework for the activity. Provincial and territorial securities regulators had overseen the availability of these coins on digital-asset trading platforms. The regulation follows royal assent for the Stablecoin Act in March 2026, while the government statement says the rules target risks including reserve shortfalls, issuer insolvency, weak risk management and security of personal and financial data.
The issuance framework applies to domestic and foreign entities that are not subject to prudential regulation as financial institutions, and excludes banks, trust and loan companies, insurance companies, credit unions and foreign financial institutions. Under the draft, issuers must register their activities with the Bank of Canada and comply with the act’s requirements, while the bank will register them, supervise their compliance, monitor issuance and redemption risks, and enforce obligations. The draft exempts prudentially regulated financial institutions from the issuance framework, so the proposed ban cannot accurately be described as applying to all non-bank institutions. The proposal is also limited to federal regulation of stablecoin issuance for broader applications, while earlier provincial oversight covered their availability on trading platforms. The text thus identifies the entities covered by the rules and the federal oversight responsibility for issuers.
The draft bars an issuer from paying interest or a return tied simply to holding a stablecoin, whether paid directly or arranged indirectly to encourage a holder to retain or increase a balance. It leaves room for rewards tied to using the coin or conducting transactions, as long as the return relates solely to use and not to the size of the balance held. The government says allowing transaction rewards is intended to encourage adoption of the coin while maintaining the ban on returns on balances. The distinction draws a line between rewarding actual activity on the network and paying for holding the coin. Describing the rule as banning all rewards would therefore not reflect what the draft proposes.
To protect redemption, the draft requires an issuer to complete a redemption request within 3 business days and bars fees exceeding 1% of the amount redeemed. An issuer must also post notice on its website at least 7 days before introducing or increasing redemption fees. The government says the three-day period takes account of settlement cycles for Canadian securities at T+1 and securities denominated in foreign currencies at T+2, with an additional business day for operations. The deadline thus links the settlement timing of reserve assets with the time available to fulfill a holder’s request. The proposed rules combine a fee cap with advance notice of changes.
The rules require an issuer to hold reserve assets denominated in the referenced currency, with a market value at the end of each day no lower than the total value of outstanding stablecoins. Those assets must fall into specified categories, including demand deposits, government debt securities with no more than 3 months remaining to maturity, and overnight reverse repurchase agreements. The draft also permits money-market funds composed entirely of eligible reserve assets. It requires institutions eligible to hold the reserves to be financial institutions resident in Canada. According to the government’s presentation of the risks, these conditions target the possibility that assets backing issued coins may be insufficient.
The proposal adds disclosure, governance and risk-management requirements. Issuers must submit a monthly report to the Bank of Canada covering the number of outstanding coins and the composition of reserves, accompanied by an accountant’s opinion on compliance with reserve requirements; the bank may also request a legal opinion on specific requirements. Issuers must establish written policies for governance, risk management, data security, recovery and wind-down, and review them annually. The draft also requires them to establish a complaints mechanism, respond within no more than 7 days and resolve complaints within 30 days of receipt. These obligations extend oversight from asset coverage to operating procedures and customer complaint handling.
The government estimates total annual costs for issuers at 88,521 Canadian dollars, including 28,317 dollars in administrative costs and 60,204 dollars in compliance costs. It estimates average annual costs of about 17,704 dollars per regulated issuer over 10 years. In turn, the government expects the Bank of Canada to recover about 2.5 million Canadian dollars annually from registered entities to cover the cost of administering the act. The consultation period allows comments on implementation details before the regulatory process is completed. The government said the Bank of Canada will issue consultation guidance on supervisory expectations and specific topics after the regulations are published in Part II of the Canada Gazette and before they come into force.