Canada Launches Public Consultation on Stablecoin Regulations Targeting Non-Financial Issuers

On Saturday, Canada announced it will accept public feedback on the stablecoin regulatory framework until December 23. The proposed regulations aim to harmonize with existing rules in the United States and other countries to minimize the regulatory burden on issuers operating across multiple jurisdictions.

The draft rules notably restrict non-financial stablecoin issuers from offering interest or yield to token holders, a measure intended to discourage holding tokens purely for earnings. Additionally, issuers would be required to redeem stablecoins within three business days when requested by holders and cap any redemption fees at a maximum of 1% of the tokens’ total value.

These regulations are part of Canada’s Stablecoin Act, passed in March to oversee issuers not classified as financial institutions. The government states that these new rules are necessary to implement the Act’s policies and mandate registration of issuers with the Bank of Canada.

Officials indicated that the regulations are expected to become effective in the fall of 2027. Once active, any stablecoin issuers in Canada who are not financial institutions must register with the Bank of Canada before issuing their stablecoins.

By comparison, the United States plans to enforce the GENIUS Act, a regulatory framework for stablecoins, starting January 2027. Meanwhile, the European Union’s Markets in Crypto Assets (MiCA) regulations could require exchanges to cease hosting non-compliant stablecoins by January, likely impacting major tokens such as Tether’s USDt (USDT), the top stablecoin by market cap.

This regulatory development is significant because it aligns Canada’s stablecoin oversight with global standards, ensuring increased transparency and consumer protection while addressing risks posed by non-bank issuers in the crypto space.