Stablecoins
Canada Proposes New Stablecoin Regulations with 1% Fee Cap for Small Holders
The Canadian government has initiated a public consultation regarding new regulations for stablecoins, following the passage of the Stablecoin Act in March 2026. The proposed regulations, published in the Canada Gazette, aim to provide a framework for the issuance and redemption of fiat-backed stablecoins.
Key Features of the Proposed Regulations
- Redemption Fees: Small holders can redeem stablecoins without a minimum amount, with a cap of 1% on fees.
- Reserve Requirements: Issuers must maintain reserves equal to the outstanding stablecoins, held in high-quality liquid assets within Canada.
- Registration: Non-bank issuers are required to register with the Bank of Canada, which will oversee compliance.
- No Passive Yield: The regulations prohibit issuers from providing interest or yield for simply holding stablecoins, although transaction-based rewards are permitted.
The consultation period will run for 60 days, closing on December 23, 2026. The regulations are expected to take effect in fall 2027, with around 30 crypto firms anticipated to register as payment service providers under the new regime.
FAQ
What is the purpose of the new stablecoin regulations proposed by the Canadian government?
The new stablecoin regulations aim to provide a framework for the issuance and redemption of fiat-backed stablecoins, ensuring consumer protection and compliance within the cryptocurrency market.
What is the fee cap for small holders when redeeming stablecoins?
Small holders can redeem stablecoins without a minimum amount, and there is a cap of 1% on redemption fees.
What are the reserve requirements for stablecoin issuers?
Issuers must maintain reserves equal to the outstanding stablecoins, held in high-quality liquid assets within Canada.
Will non-bank issuers need to register under the new regulations?
Yes, non-bank issuers are required to register with the Bank of Canada, which will oversee compliance with the new regulations.
Will stablecoin holders earn interest on their holdings under the new regulations?
No, the regulations prohibit issuers from providing interest or yield for simply holding stablecoins, although transaction-based rewards are permitted.