Canada published proposed Stablecoin Regulations on October 24, 2026, setting a three-business-day redemption deadline and a 1% redemption fee ceiling. The consultation closes December 23, 2026.
The proposal also covers issuer-funded rewards paid through other companies, requires Canadian-incorporated reserve custodians and adds safeguards for payment providers holding eligible stablecoins. These requirements are still proposals. The Stablecoin Act received royal assent in March 2026, but the Gazette says implementing regulations are needed to bring the framework into force.
Redemptions get a deadline and a fee ceiling
Issuers would have to offer redemption at par in the reference currency, with no minimum redemption amount. Each issuer would need to publish a redemption policy that holders can access, describing the conditions and process. It would also have to provide that policy to the Bank of Canada.
The three-business-day clock starts with the holder’s initial request. Before that deadline, the issuer must liquidate reserve assets where necessary and initiate the fiat transfer. The deadline applies to sending the payment; it does not guarantee when the holder’s bank account receives it. Finance says the window allows for securities settlement and operational processing.
Issuers would have to disclose all purchase and redemption fees. Before increasing a fee, an issuer would need to give at least seven days’ notice on its website. Redemption charges would be capped at 1% of the amount redeemed, so redemption at par would still allow the issuer to charge separately for the exit.
Finance’s impact statement says current market redemption fees have trended toward a maximum around 0.1%. It argues that a legal ceiling at that level could constrain smaller issuers whose per-unit costs are higher. The proposed ceiling sets the maximum an issuer could charge, without requiring issuers to charge that fee.
Holding rewards face an indirect-payment restriction
The reward provisions cover arrangements between an issuer and other parties that encourage holders to keep more stablecoins or hold them longer. Finance specifically includes income-sharing arrangements where the issuer funds another party’s cost of paying interest or yield. An issuer that routed the reward through an intermediary would still fall within the proposed restriction.
Rewards tied only to using a stablecoin would be expressly permitted, including through income sharing. The rules distinguish payments for use from payments for holding. The Gazette places this restriction on issuer arrangements; it does not announce a general prohibition on every independent lending market where a holder might deposit a stablecoin.
Responsibility would follow control over issuance. An entity that controls both the creation of a stablecoin and its availability for purchase would remain the issuer if it outsourced issuance-related activities. The issuer would retain responsibility for compliance when contractors carried out those operations on its behalf.
Reserves must stay available to holders
Reserve assets would have to be denominated in the reference currency and cover the value of outstanding stablecoins at each day’s end. Eligible holdings would include demand deposits and cash, government debt with no more than three months remaining, one-business-day reverse repurchase agreements backed by eligible government debt, and money market funds composed entirely of eligible assets.
Issuers would need a Canadian-incorporated qualified custodian. Finance says that requirement would make redemption easier for Canadian holders if an issuer becomes insolvent. The Act requires segregated, bankruptcy-remote reserve accounts. Those accounts must keep the assets available for stablecoin redemption instead of using them to satisfy other creditors of the issuer or custodian.
Separate stablecoins held with the same custodian would need separate accounts, even when they share a reference currency. Issuers could withdraw returns earned on reserves only if the remaining reserve value at least equalled the value of outstanding stablecoins. An issuer could retain those earnings, subject to the restrictions on distributing holding rewards.
Each monthly report to the Bank of Canada would need a certified accountant’s opinion on outstanding stablecoin value, reserve composition and compliance with reserve requirements. Issuers would also need a process for holder complaints. They would have a maximum of seven days to respond and thirty days to resolve a complaint.
Wallet safeguards sit alongside issuer rules
The related payment amendments would subject payment providers using prescribed stablecoins to registration, fund-safeguarding and operational-risk requirements. Eligible units would include coins from issuers on the Bank of Canada’s future registered-issuer list. Qualifying financial-institution stablecoins would also be eligible if subject to substantially similar rules on yield, redemption, reserves and custodians.
A new safeguarding option would allow a separate entity to hold stablecoins, with holding end-user funds as its sole purpose. The distributed ledger would record that entity as the holder. Both the entity and the associated stablecoin rights would have to remain outside the payment provider’s insolvency estate. A contract would establish that the coins do not belong to the provider.
Payment providers would also need procedures for an issuer’s insolvency. These would include converting stablecoins into the reference fiat currency and giving end users access to their funds without delay. The framework sets different asset-separation requirements for failure at the issuer and failure at the payment provider.
Foreign issuers face the same issuance framework
The Finance Department’s framework overview says coverage extends to domestic and foreign issuers making fiat-backed stablecoins available to Canadians, directly or indirectly. Canadian-dollar and foreign-currency coins would fall under the same framework. Prudentially regulated financial institutions, including banks and credit unions, fall outside this issuance regime. Securities regulators would continue overseeing stablecoin exchange and trading on crypto platforms.
Under the proposed transition measures, existing issuers would have thirty days after the Act comes into force to apply for registration and continue issuing. An issuer that missed that window would have to cease issuance. Applying within the window would still leave the applicant required to satisfy the registration criteria.
The consultation remains open until December 23. The published rules are proposals, and commencement still depends on bringing the framework into force.
