Canada Proposes Stablecoin Redemption Rules With 1% Fee Cap
by Maisie Morrison · BlockonomiTLDR
Table of Contents
- Canada’s proposed stablecoin rules, published Oct. 24, would let covered holders redeem any amount with no minimum.
- Issuers would have to complete redemptions within three business days, with fees capped at 1%.
- Issuers could set daily limits if reserve-asset markets face a liquidity shortfall.
- Circle currently limits direct USDC redemption to institutions with a Circle Mint account.
- A 60-day consultation is underway, and the rules are expected to take effect in fall 2027.
Canada has proposed new rules that would let small stablecoin holders cash out directly with issuers. The plan sets no minimum redemption amount and caps fees at 1%.
The proposal was published on Oct. 24. It adds operating details to the Stablecoin Act, which received royal assent on March 26 but has key parts not yet in force.
What the Proposed Rules Would Require
Under the plan, issuers would normally have to complete a redemption within three business days. The government says this window allows time for reserve securities to settle and for processing.
A small balance would no longer be a valid reason to reject a covered request. Holders could redeem any amount.
The Act requires payment at par, or face value, in the currency the stablecoin tracks. For USDC, that means U.S. dollars, so a Canadian holder wanting Canadian dollars would need a separate conversion arrangement.
The 1% fee is a ceiling, not a set rate. Issuers would need to give at least seven days’ notice on their website before adding or raising fees.
Issuers could set daily redemption limits in one case. That applies when a shortage of liquidity in the markets where reserve assets trade stops them from meeting all requests. The 1% fee cap would still apply during those limits.
Reserves would have to at least equal the value of outstanding stablecoins. Allowed assets include demand deposits, short-term government debt, qualifying money-market funds and certain overnight repurchase agreements.
Reserves would be kept separate from claims by the issuer’s and custodian’s creditors. However, issuers could not claim their tokens are insured bank deposits.
How Circle’s Current Terms Compare
Circle’s USDC terms for holders outside the European Economic Area were updated on Oct. 15. They make direct redemption depend on having a Circle Mint account in good standing.
Circle Mint serves institutions and registered distributors. It excludes individuals using it for personal purposes and requires identity and sanctions checks.
Approved institutions must also link a verified bank account in their own name. Without such an account, a holder cannot send tokens to Circle and ask for a bank payout.
Whether USDC would fall under Canada’s rules is still unclear. The Act covers domestic and foreign issuers whose stablecoins are available to buyers in Canada, based on where a buyer lives or does business.
The Governor of the Bank of Canada could also grant exemptions where provincial or foreign rules are substantially similar. Future registration or exemption decisions will matter for Circle’s case.
Existing issuers that apply within 30 days of the start date could keep issuing until their registration is decided. This relief would not pause their redemption duties.
The consultation will run for 60 days from the Oct. 24 publication date. The government plans for the rules to take effect in fall 2027.