Three-Day Redemption, Zero Yield: Canada Publishes Its Stablecoin Regulations

Three days after the OCC finalized the GENIUS rule, Canada published its stablecoin regulations in the official gazette: non-bank issuers register with the central bank, redeem at par within three days, and holding yield is banned outright. North America’s stablecoin coordinates were set twice within 72 hours.

Regulation Details: Registration, Redemption, Reserves and Penalties

On October 24, Part I of the Canada Gazette, Volume 160, No. 43 published the draft Stablecoin Regulations, with a 60-day comment window closing December 23 at 11:59 p.m. Eastern. The regulations are the implementing rules the Stablecoin Act needs to come into force. The Act received royal assent on March 26, 2026 under the Budget Implementation Act, 2025, No. 1, but most of its provisions are not yet in force; once the regulations land, the full regime is expected to take effect in fall 2027 by order in council.

The scope is clear and restrained. The regulations target fiat-backed stablecoins issued by entities that are not prudentially regulated financial institutions. Banks, trust, loan and insurance companies, credit unions and foreign financial institutions are excluded entirely, whether they issue from Canada or abroad. The definition hinges on control: whoever controls both the creation and the distribution of the token is the issuer, even if the work is outsourced. Purchasers are limited to Canadian residents, meaning people whose usual residence, head office or main place of business is in Canada. Tokens usable only inside a single merchant network and redeemable only by those merchants are treated as gift-card-like and exempt.

Reserves and redemption form the hard core of the regime. Reserves are denominated in the reference currency, must equal or exceed outstanding stablecoins at the end of each day, and may be invested only in four types of eligible assets: demand deposits (including cash), government debt securities with three months or less to maturity, and one-business-day reverse repos backed by the same short-term government debt. Reserves must sit with a Canadian-registered custodian, segregated from the custodian’s and issuer’s own assets, and issuers may not pledge, encumber or otherwise use them. On redemption, issuers must complete requests at par within three business days, with no minimum amount and a redemption fee capped at 1%.

The yield ban continues the global regulatory consensus: issuers may not pay interest or yield to holders in any form, including through partner arrangements funded by the issuer, while rewards tied only to use of the token are permitted. The regulations also forbid describing a stablecoin as a deposit or deposit-insured. Monthly reporting requires an accountant’s opinion on financial condition, outstanding tokens, reserve composition and fair value, plus a lawyer’s compliance confirmation. Significant changes require seven days’ notice to the central bank, and records are kept for five years. Complaints must be acknowledged within seven days and resolved within thirty. Annual supervision fees start at C$25,000 and rise to C$750,000 plus a variable component for issuers above C$1 billion. Penalties come in two tiers: up to C$1 million for a serious violation and up to C$10 million for the most serious tier.

The transitional arrangement leaves a window for incumbents: existing issuers can keep operating if they file an application within 30 days of the Act coming into force. The Finance Department’s baseline scenario expects about five issuers at the start, naming QCAD (Stablecorp), CADC (Loon Technology) and USDC (Circle), plus new entrants. The regulations also amend the Retail Payment Activities Regulations to bring custodial wallets that transfer or hold crypto tokens and private keys, and crypto payment processors, under central bank supervision; Finance estimates about 30 new entities will join the more than 2,000 payment service providers already supervised. A national security review mechanism is established in parallel: the Finance Minister has 60 days to decide whether to review, and a review runs 180 days, both extendable. Industry reaction is cautious. Koleya Karringten of the Canadian Bitcoin Consortium told BetaKit that most issuers will still have to navigate both the central bank and provincial securities regulators, and called for joint guidance.

Two-Track North America: Canada’s Regulations vs. the OCC Final Rule

Put Canada’s regulations side by side with the GENIUS final rule the OCC finalized on October 21, and the two countries are highly convergent on reserves, redemption and yield, with different choices on specific parameters. Finance explicitly drew on Financial Stability Board guidance in the regulations, aiming to give Canadian issuers a shot at U.S. “substantially similar” recognition, though whether Washington grants it is out of its hands.

The differences point to two design philosophies. Canada is looser on reserve mix and capital but tighter on custody location and fees: the 1% fee cap and the Canadian custody clause are essentially a bet on small domestic CAD issuers (QCAD, CADC), not a concession to USDC. The C$25,000 base annual fee is low, but the three-day clock and monthly accountant opinions are real fixed costs. QCAD and CADC are expected to file within the 30-day window, while large U.S.-dollar issuers are more likely to lobby Finance to use the Section 14 “substantially similar” exemption than to build a separate Canadian reserve stack.

Securities Guidance Moves First, Asia Tightens in Step

The regulations are not Canada’s only stablecoin action this week. On October 21, the Canadian Securities Administrators (CSA) issued final guidance 21-333, establishing Canada’s first binding securities framework for value-referenced crypto assets (VRCAs), with a compliance deadline of January 1, 2027. The guidance requires issuers and registered crypto asset trading platforms (CATPs) to hold reserves in cash or government securities only, explicitly banning commercial paper and crypto-collateralized reserves. Tether (USDT), which has historically held a portion of reserves in commercial paper, faces the most scrutiny; USDC, audited monthly by Deloitte, is widely expected to meet the bar without material changes. Platforms that fail to comply risk suspension of their CATP registration. The guidance also layers in tax effects: the Canada Revenue Agency (CRA) confirmed that converting a non-compliant stablecoin to a compliant one is a taxable disposition, and registered exchanges must provide annual transaction summaries to the CRA starting with the 2026 tax year. The CSA stated plainly that it accelerated the timeline in direct response to the U.S. GENIUS Act: without domestic rules, U.S.-licensed dollar stablecoins could claim regulatory equivalence and enter the Canadian market beyond the OSC’s view.

Asia sent a tightening signal in the same week. On October 23, the South Korean government and the central bank announced plans to jointly amend the Foreign Exchange Transactions Act this year, bringing stablecoins into the formal foreign-exchange reporting and oversight regime as payment instruments, with a Bank of Korea monitoring framework for virtual assets. The plan responds to last year’s National Assembly audit: extend large-value payment system hours to 8 p.m. and set defenses against money-laundering risks tied to the entry of global crypto exchanges. The central bank named mixers and unhosted wallets as drivers of anonymity and will focus on building an international cooperation framework against illegal digital asset transactions. South Korea’s Digital Asset Basic Act is still in progress, with FSC Chairman Lee Eog-weon telling a hearing that discussions are nearing completion. The Bank of Korea acknowledged that temporary legislative gaps could create room for regulatory arbitrage and will keep consulting ministries to minimize the risk.

Singapore’s BLOOM initiative is expanding too. On October 23, Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) joined BLOOM, the cross-border stablecoin push led by MAS, as policymaker members, with nine new industry participants including Visa, Mastercard, Ripple, Maybank and the World Bank Group joining at the same time. BLOOM’s scope covers cross-border settlement, network interoperability and programmable compliance controls; none of the three central banks has announced a date for live settlement. MAS Deputy Managing Director Leong Sing Chiong summed up the direction: the future of finance will involve “multiple forms of digital money operating across different institutions and markets.”

Takeaways for Practitioners