Canada has reportedly opened consultation on proposed Stablecoin Regulations that would prohibit issuers from paying interest solely for holding a stablecoin and require reserves of at least 1:1. Excerpts from the Canada Gazette point to a draft published on 2026/10/24, with comments reportedly closing on 2026/12/23. The measures are therefore still at the proposal stage and are not yet in force.

What Canada’s Draft Stablecoin Rules Would Require

Canada is reportedly consulting on draft rules under the Stablecoin Act, rather than enforcing a nationwide ban today. The supplied report says the proposal would prevent issuers from paying users interest merely for holding a stablecoin, while continuing to permit transaction-related rewards.

Canada Gazette search excerpts provide a broader outline of the proposed operating framework. Under the reported design, covered issuers would have to apply for registration with the Bank of Canada, maintain at least one-to-one backing, and comply with redemption and custody requirements for fiat-backed stablecoins offered in Canada.

Who Would Be Covered and How the 1:1 Rule Works

The available excerpts indicate an issuer-focused regime rather than a blanket rule covering every crypto business. Canada Gazette snippets describe a system under which issuers must register with the Bank of Canada before issuing stablecoins. Firms already issuing before the Act takes effect would reportedly have a transition path if they apply within 30 days.

The reserve requirement also appears to go beyond a simple commitment to match circulating supply. The reported draft links backing to the reference fiat currency and says reserve assets must be held with a Canadian-incorporated qualified custodian. This suggests that local custody and asset segregation are central to the model, not merely nominal one-to-one coverage.

This is why the proposal could reshape product design if adopted. A stablecoin designed primarily for payments and settlement may fit the framework more naturally than one marketed around passive returns for holders. At the same time, the supplied material does not establish that every yield-like feature, such as cashback or other incentives, would automatically be prohibited.

The same caution applies to redemption mechanics. The supplied StablecoinInsider search excerpt says redemptions would need to be completed within three business days and fees capped at 1%. However, these terms should still be treated as reported draft details rather than fully reviewed primary-source text.

When the Consultation Ends and What Comes Next

The clearest next milestone in the current process is the reported 2026/12/23 deadline for comments. That date applies to the consultation stage, which is separate from final adoption and from the date on which any resulting obligations would begin to apply.

On timing, the stronger official signal in the supplied material comes from an excerpt from a Department of Finance Canada framework page. It states that regulatory development was expected to continue for 12 to 18 months from early 2026, with the stablecoin framework expected to take effect in 2027. This supports an expected implementation window in 2027, but does not establish a fixed effective date.

For issuers, exchanges and users, the practical takeaway is that Canada’s reported move is now an active rulemaking process. The central questions are no longer simply whether a draft exists, but how the final version will define its scope—particularly for foreign issuers—and whether the reported registration, reserve, interest and redemption provisions emerge from consultation substantially unchanged.