Canada Seeks Comment on Stablecoin Rules, Plans to Bar Non-Financial Issuers From Paying Interest

Canada has proposed rules that would bar non-financial stablecoin issuers from paying interest to holders and has opened the draft for public comment.

Cointelegraph reported on Oct. 26 that the government released the proposal on Oct. 24 and will accept comments for 60 days through Dec. 23. The rules would apply to stablecoin issuers other than financial institutions such as banks.

The proposal includes a provision prohibiting issuers from paying interest or other returns to stablecoin holders. The measure is intended to discourage users from holding stablecoins for extended periods to earn yield.

It also sets out issuers' redemption obligations. If a user requests redemption of a stablecoin, the issuer must process it within three business days. Redemption fees would be capped at 1% of the asset's value.

The proposal is a follow-up measure to implement Canada's Stablecoin Act, which passed in March. After the rules take effect, non-financial issuers would need to apply for registration with the Bank of Canada before issuing stablecoins.

The Canadian government is targeting implementation in the fall of 2027. It plans to align the standards with regulatory frameworks in major jurisdictions, including the US, to reduce the compliance burden for stablecoin issuers operating in multiple countries.

The US, meanwhile, is set to implement the GENIUS Act in January 2027, establishing a regulatory framework for stablecoins. The European Union is also moving to restrict exchange services for stablecoins that fail to meet requirements under its Markets in Crypto-Assets regulation, or MiCA.