Canada caps stablecoin fees, bans yield

Canada's financial regulators published draft stablecoin rules on October 24 that cap redemption fees at 1% and require one-to-one reserve backing. The 60-day consultation also keeps a long-standing ban on paying stablecoin holders any interest or yield.

The reserve math

The draft treats a stablecoin like a prepaid claim, not a deposit or an investment product. Issuers hold the reserves. Holders get a fast, cheap exit. Nobody collects a return for waiting.

• Decrypt: draft rules published October 24, 60-day comment window now running.
• Redemption fees capped at 1% of the amount converted back to fiat.
• Reserve backing required at a strict one-to-one ratio against outstanding tokens.
• Interest and yield payments to holders remain banned under the draft text.

Who keeps the float

The default read will call this consumer protection: cheap exits, full backing, no gimmicks. The redemption cap does protect holders from exit-fee traps. But the yield ban is the more consequential line.

U.S. regulators under the GENIUS Act and OCC guidance have also barred issuer-paid yield while reserves sit in short-term Treasuries. Canada is copying that structure.

Reserve income on a billion-dollar float at current short-term rates runs into tens of millions annually. None of it is required to reach holders.

Issuers keep the spread. Holders get safety and liquidity, not a return.

That's the actual trade Ottawa is codifying: issuers run a Treasury-backed float business, and the regulatory bargain is full backing plus fast redemption in exchange for keeping all the yield.

Banks and fintechs eyeing a Canadian stablecoin license now know the model going in. It is a payments rail with a managed spread, not a savings product.

The consultation window

Sixty days is standard, but the policy direction is already set. Canada is aligning with the U.S. no-yield template rather than experimenting with a holder-sharing model some offshore issuers use.

That alignment matters for cross-border stablecoin flows. A Canadian-domiciled token under these rules competes on redemption speed and reserve transparency, not on rate.

What confirms the read

• Final rules after the 60-day window either keep the 1% cap and yield ban intact or soften one of them under industry comment.
• Any issuer disclosure of reserve income versus holder payouts once licensed issuers start operating under the framework.
• Whether Canadian banks launch stablecoin products that compete on fee and speed rather than rate, matching the OCC-regulated U.S. pattern.