Canada’s Draft Stablecoin Rules Uphold Ban on Yield Payments

The Canadian government has launched a 60-day public consultation regarding draft stablecoin regulations, which is scheduled to conclude on Dec. 23. According to CoinDesk, these draft regulations maintain a ban on yield payments and require non-bank issuers to keep their reserves with Canadian financial institutions. The regulations are intended to bring the Stablecoin Act into force and will outline the requirements for issuers to register with the Bank of Canada.

The consultation comes as the Canadian banking industry lobbies for a prohibition on yield payouts. CoinDesk reports that the Canadian Bankers Association has expressed firm support for the Stablecoin Act’s explicit prohibition on both direct and indirect yield. This move reflects concerns similar to those in the U.S. regarding customers moving money out of bank accounts and reducing the funds available for traditional institutions to lend.

While the proposed rules would prohibit issuers from paying interest, including through third parties, some crypto exchanges in Canada are currently offering rewards to stablecoin holders. CoinDesk notes that Coinbase Canada received permission from the Ontario Securities Commission this year to offer yields on certain eligible tokens, provided they warn customers of the risks and clarify that funds are not covered by deposit insurance.

Brief written by urgent.news from PYMNTS, CoinDesk — 2 reports on this story. Machine-written — may contain errors; check the original before relying on it.