Canada’s Stablecoin Draft Bars Interest but Allows Transaction Rewards

The Department of Finance Canada’s proposed stablecoin rules would bar issuers from paying holders interest while permitting transaction-linked rewards, drawing a line between interest payments and incentives tied to activity. The interest restriction would apply to payments made directly by an issuer or through a third party. The proposal would cover issuers that are not prudentially regulated financial institutions. They would need reserve assets worth at least the value of outstanding fiat-pegged stablecoins at the end of each day, held at eligible Canadian financial institutions. The draft would require redemptions within three business days and cap fees at 1% of the redeemed amount, setting a three-business-day redemption process and fee limit . The Department of Finance Canada opened a 60-day public consultation on the proposal. It closes Dec. 23.

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