Canada proposes reserve and redemption rules for stablecoins

Canada has published draft regulations that would require covered stablecoin issuers to hold reserves matching tokens in circulation and redeem them at face value within three business days. The proposed rules also cap redemption fees at 1% and prohibit returns for simply holding the tokens. The Department of Finance published the regulations in the Canada Gazette on October 24, opening a 60-day public consultation that is scheduled to close December 23, 2026, at 11:59 p.m. EST. The proposal is not yet in force. The government intends the framework to take effect in fall 2027. Under the draft, issuers would need reserves at least equal to the value of outstanding stablecoins. The reserves would have to consist of specified liquid assets, including demand deposits, short-term government debt, qualifying money market funds and certain overnight repurchase agreements. They would be held with Canadian custodians. Issuers would generally have to redeem tokens at par, in the currency the stablecoin tracks, within three business days of a request. Holders could request redemption of any amount, with no minimum. The proposed 1% fee ceiling is a maximum, not a set charge, and issuers...