Canada has proposed detailed operating rules for fiat-backed stablecoins, including a right for covered holders to redeem any amount through the issuer within three business days. The draft regulations, published by the Department of Finance in the Canada Gazette on October 24, would also cap issuer redemption fees at 1% of the amount returned. The proposal is not yet final and does not put the framework into force immediately. It fills in requirements under the Stablecoin Act, which received royal assent in March, and the government's impact statement points to fall 2027 as the intended implementation period.

Retail redemptions would gain concrete limits

Proposed section 15 says an issuer must accept a redemption request from any holder regardless of value, complete it within three business days and keep the fee at or below 1%. That structure could give small holders a direct exit route that does not depend solely on selling a token through an exchange. It would not guarantee immediate access to cash, because an outside bank or payment network may add processing time after the issuer completes its part. Issuers would also have to explain payment methods, publish their redemption process and give at least seven days' notice before starting or increasing a fee.

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A narrow stress exception remains

The proposal would let an issuer limit daily redemptions if a liquidity shortfall in the markets for its reserve assets prevents it from meeting all requests. That exception would override the normal timing and any-amount requirements, but not the 1% fee ceiling. CryptoSlate, which reported on the proposal on October 26, noted that this is a reserve-market condition rather than a general permission to delay redemptions whenever markets become volatile. The final text and each issuer's published policy will determine how the exception works in practice and what evidence holders receive when a limit is imposed.

Reserve and supervision rules support the promise

Covered issuers would need reserves whose market value is at least equal to the par value of outstanding stablecoins at the end of each day. Permitted assets would include demand deposits, government debt maturing within three months, qualifying money-market funds and specified overnight repurchase agreements. Reserve assets would have to be segregated from reserves supporting other stablecoins, while issuers would register with the Bank of Canada and provide governance, risk, security and recovery information. Related changes would also bring payment providers that perform covered stablecoin functions within Canada's retail-payments supervision regime.

Scope and implementation are still open questions

Canada says the framework is intended to apply to domestic and foreign issuers that make fiat-backed stablecoins available in Canada, while the regulations define how a Canadian purchaser is counted and preserve exclusions for certain closed-loop arrangements. The rules would also prohibit issuers from presenting a stablecoin as legal tender, an insured deposit or government-backed money. These distinctions matter for widely used dollar tokens: coverage will depend on the issuing entity, the holder and any future exemption based on comparable foreign oversight. The consultation runs for 60 days from publication, giving issuers and payment providers time to assess compliance costs. Until final regulations and commencement orders are issued, the three-day deadline and 1% cap remain proposed protections rather than current redemption rights.

Sources

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