Canada’s newly published draft stablecoin regulations would prohibit issuers from offering token holders any direct or indirect yield and require non-bank issuers to hold their reserves with Canadian banks, according to the Canada Gazette draft released on Friday, October 24, 2026. The 60-day public consultation is now open, and Finance Canada expects the framework to come into force in 2027.
The yield ban contrasts sharply with the U.S. approach. Just days before the Canadian draft landed, the Office of the Comptroller of the Currency drew banking industry objections after allowing crypto platforms to continue paying stablecoin rewards. In Canada, the platform-activity rewards carve-out permitted in the U.S. would count as a prohibited yield. Finance Canada spokesperson Marie-France Faucher said the ban is intended to ensure payment stablecoins do not function like bank deposits or investment products, while the Canadian Bankers Association argues yields would pull deposits out of banks and squeeze lending.
The proposal also requires stablecoin issuers to register with the Bank of Canada, back every coin at least one-to-one with high-quality liquid assets in the reference currency, redeem at par, maintain governance and risk policies, and keep reserve assets in banks. Banks, trust companies, insurers and credit unions are excluded from the new rules because they are already prudentially regulated, giving them a built-in advantage: non-bank stablecoin issuers rely on them for reserve custody. For example, VersaBank acts as custodian for Stablecorp’s QCAD, while Tetra’s CADD keeps all reserves at Canadian institutions including tier-one banks and is backed by National Bank, Shopify and Wealthsimple.
Separately, the OCC announced it is encouraging community banks to develop payment stablecoin capabilities. Interested banks can apply to become permitted stablecoin issuers or form subsidiaries that issue payment stablecoins, a move the OCC says complements its Community Bank Comeback initiative and aims to increase competition and service in the banking sector.
