Canada is holding a public consultation on its stablecoin regulatory draft, and continues to ban stablecoin issuers from paying interest.

Canada’s Department of Finance has launched a 60-day public consultation on its stablecoin regulatory draft, with a deadline of December 23. The draft continues to ban stablecoin issuers from paying interest on holdings directly or via third parties, but allows rewards tied to transaction activities. Under the draft, non-bank stablecoin issuers must back circulating fiat-pegged stablecoins with equivalent reserve assets at a 1:1 ratio, and hold those reserves in eligible Canadian financial institutions, including banks, credit unions, and trust companies. User redemptions of stablecoins must be processed within 3 business days, and redemption fees may not exceed 1%. Canada previously passed the Stablecoin Act, and this regulatory framework aims to clarify the requirements issuers must meet to register with the Bank of Canada. The framework is expected to take effect around the end of 2027. The draft comes as Canada’s banking sector is pushing for a ban on stablecoin payment yields to prevent funds from flowing out of traditional bank deposits into stablecoins. Meanwhile, some Canadian crypto platforms have been authorized to offer yields to eligible stablecoin holders.