Canada caps stablecoin redemption fees at 1% and bans yield

Canada’s draft stablecoin regulations landed October 24 with a concrete number attached: redemption fees capped at 1%. Comment period closes December 23.

The rules are targeted for fall 2027, following the Stablecoin Act that became law March 26, 2026. Nothing is final until the consultation closes. But the document already spells out the core requirements: one-to-one reserves, redemption within three business days, no issuer-paid yield.

The 1% ceiling is modest in percentage terms but it’s real math. C$100 redeemed, maximum C$1 fee. C$10,000 means C$100 out the door. It doesn’t eliminate exit costs; it just limits what an issuer can extract from a holder converting back to fiat.

Yield gets its own hard treatment. Issuers couldn’t pay interest for simply holding a coin, though rewards tied to actually using one would remain permitted. The notice explains the logic directly: “These prohibitions are intended to distinguish stablecoins from financial products that compete directly with bank deposits or other interest-bearing instruments.”

That puts Canada in close alignment with the United States on the stickiest product restriction in either regime. The GENIUS Act, signed by President Donald Trump on July 18, 2025, also bars issuers from paying holders interest. U.S. law takes effect January 2027 — roughly eight months before Canada’s proposed fall 2027 start.

Which creates a real cross-border compliance headache. Whether that gap produces regulatory arbitrage or simply pressures issuers to apply the stricter commercial terms everywhere isn’t something the draft resolves.

The Canadian rulebook

Reserves would be held one-to-one with Canadian custodians. Permitted assets: cash, government debt maturing in three months or less, money market funds holding those same assets. Short list, deliberately short.

The custody requirement goes beyond picking an asset class. Those reserves would have to sit in segregated accounts that creditors couldn’t touch in a bankruptcy — which changes what the rule is actually protecting against. It’s about access to reserve assets during an issuer failure, something distinct from the three-business-day clock for ordinary redemptions.

Issuers also couldn’t present stablecoins as bank deposits, couldn’t claim deposit insurance, and couldn’t suggest any government guarantee. The Bank of Canada would supervise issuers; the notice assumes five issuers and roughly 30 additional payment companies would fall under that oversight.

Complaints get their own timeline — acknowledgment within seven days, resolution within 30. That’s a separate standard from the redemption deadline. One applies when a user has a grievance, the other when they want their money back.

Canada and the GENIUS Act

The regimes diverge from there. Canada’s draft specifies the 1% redemption cap, Canadian custody, segregated accounts shielded from issuer creditors, and a reserve menu restricted to short-term government debt, cash, and qualifying money market funds. Available information on the GENIUS Act doesn’t provide equivalent terms on those provisions, so the side-by-side comparison stays limited to what’s actually documented.

There’s a third deadline in the mix. The EU’s Markets in Crypto Assets regulations could require exchanges to halt services for non-compliant stablecoins by January — ahead of Canada’s fall 2027 target and alongside the U.S. law’s January 2027 schedule, though it’s unclear which January or how that EU deadline interacts with either North American regime.

Ron Morrow, the Bank of Canada’s executive director of payments, supervision and oversight, framed the policy backdrop in payment terms at an Ottawa conference in September 2025: “There is a pressing need for faster, cheaper, more transparent and more accessible cross-border payments services.”

Canada’s rules would permit rewards connected to using a coin while barring yield for holding one. For issuers, the sequence that matters now is January 2027 for the GENIUS Act, then Canada’s targeted fall 2027 start — with Canadian rules still subject to revision after December 23.