Canada’s Stablecoin Draft Allows Usage Rewards, Bars Issuers Paying Yield via Third Parties

AI summary of the source article

Canada’s Department of Finance published draft Stablecoin Regulations that allow rewards for transaction use but prohibit direct or indirect yields for holding coins. The draft framework also introduces par redemption rules, a 1% fee cap, and daily reserve backing requirements.

Why it matters

Finance stated in the Gazette notice that it wants to keep stablecoins apart from products that “compete directly with bank deposits or other interest-bearing instruments,” and to stop issuers from passing reserve income, such as interest on short-term government debt, to holders.

Key facts

• Stablecoin rewards tied strictly to usage are permitted, while arrangements paying holders direct or indirect yield are banned.
• Issuers must complete redemptions at par within three business days, with redemption fees capped at 1%.
• Reserves must match at least the value of outstanding coins at the close of each day in approved liquid assets held by Canadian financial institutions.