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Canada’s Draft Stablecoin Rules Uphold Ban on Yield Payments

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Canada’s Draft Stablecoin Rules Uphold Ban on Yield Payments

Canada began a 60-day consultation period on draft stablecoin regulations, CoinDesk reported Monday (Oct. 26).

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The regulations uphold a ban on yield payments and require nonbank issuers to keep their reserves with Canadian financial institutions, the report said.

The consultation, which ends Dec. 23, is happening as Canadian banks lobby for a prohibition on yield payouts, according to the report. The banking industry is echoing concerns voiced by their counterparts in the United States that customers could pull their money from bank accounts, hindering lending for traditional financial institutions.

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The Canadian government passed its Stablecoin Act (SCA) earlier this year, and the draft regulations are “required to bring the SCA into force and would prescribe the elements needed for issuers to register with the Bank of Canada,” the government said, per the report.

Some Canadian cryptocurrency exchanges are already paying rewards to stablecoin holders. For example, Coinbase Canada received permission this year from the Ontario Securities Commission to offer yields on eligible tokens, as long as it advised customers about the risks and warned them funds are not protected by deposit insurance, the report said.

S. banks are facing renewed competition from digital assets companies for customers’ cash. Federal regulators left room for crypto platforms to provide stablecoin rewards, “setting up a contest over returns that could affect the cost and availability of bank loans,” PYMNTS reported Thursday (Oct.


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