Canada’s stablecoin regulation: 3 things to know

What a week for stablecoins. Just as the US finalized its first GENIUS Act rules, Canada published draft regulations under its new Stablecoin Act. Here are three things you need to know.

1. Rewards 

This is a hot topic. The draft says you can earn rewards for using a stablecoin, but not for holding one. 

Why? Banks fund loans with deposits. The fear is that people will move their savings into stablecoins, out of the banking system. So rewarding people for holding stablecoins could cause problems. 

The counterargument is that this worry is overstated. White House economists estimated a ban would raise bank lending by only about 0.02%. 

Either way, Canada’s approach is closer to an interchange rule. Card users earn more rewards the more they use their cards, not based on how much money they hold on them. It’s the same here: the more you use, the better the rewards, regardless of balances. 

The US is starting from a similar place. The Office of the Comptroller of the Currency’s (OCC) final GENIUS Act rule, issued October 21, says issuers can’t pay yield directly to holders. The difference is how the line is drawn. Canada’s draft writes the holding-versus-use distinction into the text. The OCC dropped its presumption against third-party rewards and will assess each arrangement case by case. 

2. Reserves 

A stablecoin is backed 1-to-1 by real money, called reserves. If people hold $100 of the coin, the issuer must keep $100 to back it. 

Canada’s draft adds two conditions: 

• Reserves to be matched to outstanding stablecoins purchased by people and businesses based in Canada, not the global float. The issuer must keep reserves equal to what Canadian residents hold in stablecoins, not what’s held globally. 

• Reserves must be kept at a Canadian company. They must sit with a custodian (the institution that safeguards the assets) incorporated in Canada. 

It’s a reasonable goal, but it will be hard to put into practice. 

The rule needs the issuer to know how much of its coin Canadians hold. On a public blockchain, that’s hard to tell. Anyone, anywhere, can buy the coin from another person on an exchange, and the wallet doesn’t say who owns it or where they live. 

The issuer mostly sees two things: coins being created (minting) and coins being converted into fiat money (redemption/burning). These usually come through distributors, the firms that sell the coin to customers. The issuer doesn’t see the person who bought it from a stranger later. 

For example, say a Canadian buys the coin from someone in Germany on an exchange. The issuer sees nothing, so it can’t easily say whether that coin counts toward the Canadian reserve requirement.

This is more challenging for global issuers. A domestic CAD issuer has a clearer view of who its customers are.

3. Redemption

Redemption means converting your stablecoin back into fiat money. If you hold $100 in coins, you exchange them to get $100 back. 

The draft sets two limits: 

• Three business days to redeem. This only specifies the redemption service level agreement, not when the funds should be available in the recipient’s account. 

• A 1% fee cap. The issuer can’t charge more than 1%. 

These are ceilings, meaning the worst the issuer is allowed to do, not the norm. It’s like a parcel promised in “seven to ten days” when most arrive in two. But if the system is under stress, say everyone tries to redeem at once; the ceilings could become the real limits. 

The same goes for the fee. In normal times, the real fee is much lower. The Department of Finance’s own analysis puts direct redemption fees near 0.1%, about a tenth of the cap. So a headline of “1% maximum” sounds worse than the typical cost. 

What matters more than the limits is the rail you redeem on. You may be able to redeem within three days, but what if the only payout route is a slow, costly bank wire? On paper it’s great, but in practice it’s a hassle. If the payout comes through something fast and cheap like e-Transfer, redemption feels easy. 

Our take 

The draft appears better aligned to domestic CAD issuers than global issuers. 

The rulebook won’t decide adoption. Orchestration will. That is, how cleanly a stablecoin connects to bank accounts, payment hubs, treasury and reconciliation, and the payout rail.

What observations would you add before comments close on December 23, 2026?

Let me know at [email protected]