Canada Opens 60-Day Consultation on Stablecoin Rules, Citing US GENIUS Act

Canada's government opened a 60-day public consultation on Saturday, December 23 deadline included, on proposed stablecoin regulations that would restrict non-financial institution issuers from paying interest or yield to tokenholders.

The consultation, announced by the Canadian government on December 6, seeks public comment until December 23 on rules drafted under the Stablecoin Act, which Parliament passed in March. The framework targets issuers that are not financial institutions, and the government says the proposed regulations are required to enact the statute's policy.

The draft rules explicitly cite alignment with the United States and other jurisdictions. The government said it aimed to "reduce the overall regulatory burden on multi-jurisdictional issuers" by staying consistent with stablecoin regimes abroad — a reference that lands as the US GENIUS Act, which establishes a federal regulatory framework for stablecoins, approaches its effective date in January 2027.

What would the rules require of issuers?

The proposed regulations impose three concrete operational constraints on non-financial institution stablecoin issuers:

• No yield. Issuers could not offer interest or yield on their tokens, a provision the government framed as a way to discourage long-term holding — what the filing calls HODLing — of stablecoins.
• Redemption timelines. Issuers would have to redeem stablecoins within three business days of a request from a tokenholder.
• Fee cap. Redemption fees could not exceed 1% of the total value of the coins redeemed.

The package also includes registration provisions. Once the regulations take effect, any non-financial-institution issuer operating in Canada would need to apply for registration with the Bank of Canada before issuing a stablecoin.

The central bank has already engaged with the subject matter. A related Bank of Canada analysis set out criteria for what constitutes "good money" in the stablecoin context, indicating the institution's thinking has developed ahead of its prospective role as registrar.

When would the framework take effect?

The government set a clear implementation horizon. "The intention is for the proposed Regulations to come into force in fall 2027," it said in the consultation notice. "Once the proposed Regulations are in effect, issuers of stablecoins in Canada who are not financial institutions would be required to apply for registration with the Bank of Canada prior to issuing a stablecoin."

That timeline places Canada roughly a year behind the United States. The GENIUS Act takes effect in January 2027, meaning US federal requirements will be live while Canadian rules remain in draft-to-finalization mode. Multi-jurisdictional issuers will face a staggered compliance sequence rather than a simultaneous one.

How does this fit the broader regulatory map?

Canada's proposal arrives as the European Union completes the enforcement phase of its own framework. Under Markets in Crypto Assets (MiCA), exchanges in the EU could have until January to halt services for stablecoins not in compliance with the framework — a cutoff that would likely affect Tether's USDt (USDT), the largest stablecoin by market capitalization.

The consequence for issuers is structural. A major operator such as Tether now faces a European delisting window in January, a US federal regime activating in January 2027, and a Canadian registration requirement with a yield prohibition expected in fall 2027. Each jurisdiction imposes different constraints: MiCA centers on reserve quality and authorization, the GENIUS Act on federal oversight, and Canada's draft on redemption discipline and a yield ban.

For Canadian tokenholders, the yield prohibition marks the sharpest divergence from offshore market practice, where interest-bearing stablecoin products are common. The three-business-day redemption window and 1% fee cap, by contrast, mirror consumer-protection provisions already standard in payment regulation.

Stakeholders have until December 23 to submit comments, after which the government will finalize the regulations ahead of the intended fall 2027 entry into force.