Canada proposes 1% fee cap on stablecoin redemptions

Key points

• Canada's proposal sets a 1% cap on stablecoin redemption fees
• Covered holders could redeem with no minimum within three business days
• Comments are open for 60 days from the Oct. 24 Gazette publication
• Rules are intended to take effect in fall 2027

Canada has proposed regulations that would let holders of covered stablecoins redeem them directly from issuers with no minimum amount, capping redemption fees at 1%. The proposal was published in the Canada Gazette on Oct. 24, 2026, and opens a 60-day comment period, according to the Canada Gazette notice and a CryptoSlate report.

What the redemption proposal would require

Under the draft, issuers would have to redeem within three business days of a holder’s initial request. The Regulatory Impact Analysis Statement (RIAS) says that window accommodates the T+1 and T+2 settlement cycles of reserve securities, plus a day for processing.

• Fee cap: Redemption fees could not exceed 1% of the amount redeemed. The RIAS notes that current market fees are around 0.1%, so the cap is a ceiling rather than a set price.
• Fee notice: Issuers would need to give at least seven days’ notice on their website before a fee increase takes effect, and would have to disclose all purchase and redemption fees.
• No minimum: There would be no minimum redemption amount, which is the provision that matters most for small holders.
• Policy changes: Updates to a redemption policy must be published without delay, with an explanation.

CryptoSlate reports that issuers could also limit daily redemptions when illiquidity in reserve markets prevents them from meeting all requests, citing proposed section 15(2). The Gazette’s impact statement says only that a redemption policy must describe the situations in which an issuer may limit redemptions, and does not set daily limits itself.

Who would be covered

The rules would apply to issuers of fiat-backed stablecoins that are not already prudentially regulated, such as banks, trust companies, credit unions and insurers. Those issuers must register with the Bank of Canada. Closed-loop stablecoins that can be redeemed only through a merchant network are outside the scope, according to the Gazette notice.

CryptoSlate says coverage depends on where the purchaser is located, looking to usual residence or head office or principal place of business in Canada, as well as the issuing entity and any exclusions or exemptions. It adds that the Stablecoin Act received royal assent on March 26, and that redemption would be at par in the coin’s reference currency. For a dollar coin such as USDC, Canadian holders seeking Canadian dollars would therefore need a conversion or payment arrangement.

Issuers already operating before the law takes effect would get transitional relief if they apply within 30 days of commencement, per the Gazette. CryptoSlate notes that this relief concerns registration and does not suspend redemption duties.

Practical limits and what happens next

CryptoSlate points out that a legal right to redeem does not guarantee easy access. It cites Circle’s USDC terms, updated Oct. 15, which make direct redemption conditional on a Circle Mint account in good standing. Circle Mint serves institutions and registered distributors in supported regions and excludes individuals using it for personal purposes, the outlet reports. Bank account links would also still matter for cash-outs.

Reserves would have to at least equal the outstanding par value and be kept separate from issuer and custodian creditor claims, apart from holders’ redemption claims, CryptoSlate reports. It adds that this does not make a token an insured deposit, and covered issuers would be barred from presenting it as one.

Comments are due within 60 days of publication and go to the Director, Digital Assets, at the Department of Finance Canada. The Gazette says the rules are intended to come into force in fall 2027 by order of the Governor in Council. The notice was signed Oct. 9, 2026, and its cost estimates cover 2027 to 2036.

For U.S. readers, the proposal offers a comparison point on redemption rights, fee ceilings and timing rules for stablecoin issuers.