What Canada's draft stablecoin rules would cost a small issuer

The Stablecoin Act received royal assent in March 2026. It is not in force yet. The Act comes into force by order of the Governor in Council (section 97), and the impact statement says the regulations are required to bring it into force. It also says: The intention is for the proposed Regulations to come into force in fall 2027.

The notice invites comments within 60 days after the date of publication of this notice, which the Gazette page gives as 23 December 2026 at 11:59 pm EST. The Gazette's online commenting feature is the preferred route, and email or mail to the Department of Finance is also accepted. The notice adds that all representations, including attachments, will be published on the Canada Gazette website, subject to the site's terms of use. The online form also allows anonymous comments and has a separate box for confidential business information.

The impact statement says the Act would regulate issuers who are not prudentially regulated financial institutions, which leaves out banks, trust, loan and insurance companies, credit unions and foreign financial institutions. Section 15 of the Act is the core rule: A person must not issue a stablecoin unless the person complies with this Act and their name is included in the list of issuers kept by the Bank of Canada. The Act defines "issue" as to create the stablecoin and to make it available for purchase, directly or indirectly, by a person in Canada (section 2), and section 10 limits the Act to a stablecoin that has or could reasonably be expected to have interprovincial or international applications. The draft then defines the two halves. To create is to have control, directly or indirectly, over the properties of the stablecoin, including by having the responsibility for its design and the management of its generation, and to make available is to have control over the distribution of a stablecoin.

An issuer already issuing on the day before section 15 comes into force would get a transitional period. Under draft section 43, section 15 does not apply to it until the earliest of the 31st day after the commencement day, if the issuer has not submitted the application, the day it is added to the list, or the day it is told its application was refused.

The bottom line of the formula reads: in the case of an issuer for which the average monthly value of outstanding stablecoins in the year is less than $500 million, $25,000. The base is indexed to the September Consumer Price Index, using the highest September reading from the year the regulations come into force through the previous year, and rounded to the nearest $100, so it can rise over time and does not fall. Outstanding value is converted to Canadian dollars at the Bank's monthly average exchange rates. The impact statement puts the Bank's own cost of running the regime at about $2.5 million a year.

The fee is flat across the whole bottom band. An issuer with $1 million outstanding and one with $499 million outstanding would pay the same base.

One subsection matters a great deal to a small issuer. Draft section 34(5) says that if any information that the issuer must provide under subsection 46(3) of the Act in a year is incorrect, missing or unavailable, the average monthly value of its outstanding stablecoins in the year is deemed to be $1 billion. On the formula as drafted, that would move the issuer into the top band: a base of $750,000 plus a share of the variable amount. Section 46(3) is the monthly statement described below. As written, the trigger is any item of that monthly information in the year being incorrect, missing or unavailable.

The Act also lets the Bank charge a separate application fee: An applicant must include with the application a fee that is determined by the Bank. The draft does not set that amount.

A detail to watch. The consolidated Act on the Justice Laws website lists amendments from a later 2026 statute that are not yet in force. Section 32 of S.C. 2026, c. 22 provides that The heading before section 53 and sections 53 and 54 of the Stablecoin Act are repealed, and section 35(1) provides that Paragraph 93(y) of the Act is repealed, which is the power to make regulations on the assessment of fees. Draft section 34 opens with For the purposes of subsection 53(3) of the Act, and draft section 35 refers to subsection 54(1). The Gazette notice does not discuss these amendments.

The impact statement assumes five issuers, of which 2 to 4 are small businesses. It estimates an annualized cost to issuers of $88,521 per year in total, which works out to an average cost per regulated issuer of $17,704 per year. For small businesses it gives annualized average costs per stakeholder of $8,408 over a 10-year period.

The estimate counts staff hours at $43.30 an hour for business and administrative work and $71.03 for management, multiplied by the five assumed issuers. The hours it assigns to one issuer include:

• 100 hours a year for reserve management, described as more active monitoring of the reserve against coins outstanding, as well as opening a business account at a Canadian financial institution.
• 300 hours of staff time and 5 hours of management time in the first year for the governance, risk management, data security and recovery and resolution policies, then 20 and 5 hours a year after that.
• 50 hours a year for the complaint process.
• 100 hours of staff time and 10 hours of management time a year for the extra monthly report content and incident notices.
• 30 hours a year for record keeping and service of documents, 5 hours once for the extra application details, and 5 hours a year for the redemption policy.

The estimate is narrower than it looks, by its own terms. It measures what the regulations add on top of the Act, so duties that come from the Act itself sit in the baseline and are not priced. It also leaves out the fee. Because the Act already requires the Bank to recover its costs, it says the proposed assessment fee regulations outline the method to allocate them and do not constitute a new cost. The representation, yield and penalty rules are excluded too, as provisions that are not expected to bear additional costs for the issuer.

So the two government figures for a small issuer sit side by side: a $25,000 fee, and about $8,400 a year of extra work on average. Neither one includes the fees of the certified accountant, the lawyer or the custodian, or the cost of holding the reserve. The impact statement prices the draft's Canadian custodian and reserve rules only as staff hours, and does not price custodian fees or any lost reserve income. The accountant and lawyer statements come from the Act. Section 46 requires a report with a statement from a certified accountant of the issuer's financial condition, the number of coins outstanding, the composition and fair market value of the reserve, and whether the reserve meets the Act, plus a lawyer's statement on the custody and no encumbrance rules. Section 46(3) requires the information in subparagraphs 46(1)(a)(i) to (iii) at least once every month.

Section 32 of the Act: An issuer must not, directly or indirectly, grant or pay to the holder of a stablecoin that the issuer has issued any form of interest or yield in respect of that stablecoin, whether in cash, digital assets or other consideration.

The draft adds two rules about what counts. Draft section 14(1): a payment or reward that is tied to a stablecoin transaction but that is not tied to the holding of a stablecoin is not an interest or yield. Draft section 14(2) reaches arrangements with third parties. A payment or reward under an arrangement between an issuer and another person, whether or not that person is the holder, is indirect interest or yield if the arrangement

• allows the person to receive an interest or yield from the holding of a stablecoin issued by the issuer, including through income sharing; or
• encourages the person to grant or pay an interest or yield to the holder of a stablecoin issued by the issuer.

Draft section 13(1)(a) also bars an issuer from using terms, logos or illustrations in a way that suggests it will pay holders interest or yield. The impact statement describes the policy as allowing transaction based rewards while it will maintain a prohibition on issuers from offering a yield on held balances.

The reserve income itself can go to the issuer. Draft section 17(2) lets the issuer withdraw returns from the reserve of assets to the extent that the market value of the reserve of assets remains equal to or greater than the par value of the outstanding stablecoins.

As a rough illustration, with a rate that is our assumption and not the draft's: at 3% a year, reserve income would cover a $25,000 fee at about $833,000 of reserve, before any other cost. Issuers may also charge issuance fees, and redemption fees of up to 1%.

The Act requires the reserve to be placed with one or more qualified custodians, held apart from the custodian's and the issuer's other assets and out of reach of their creditors. Draft section 4 narrows who qualifies: a financial institution must be incorporated or formed by or under an Act of Parliament or of the legislature of a province. The impact statement says this means excluding financial institutions not incorporated in Canada, so that the custodians of reserve assets are in Canada, which it says would make redemption easier for holders in Canada if an issuer became insolvent. Each stablecoin an issuer issues needs its own segregated reserve (draft section 18).

What the reserve can hold is also set out. At the end of each day its market value must be at least the par value of the coins outstanding (draft section 17(1)). The Act requires the reserve to be the reference currency or high quality liquid assets denominated in it (section 37(3)), and draft section 17(3) lists four kinds of asset:

• debt securities that are issued by the government of a country that mature in three months or less
• demand deposits
• money market funds of which the assets are fully invested in the reference currency or in assets that are referred to in this subsection
• assets acquired under reverse repurchase agreements with a term of one business day in which the issuer buys the government debt above

There are no limits on the mix. "Outstanding" counts coins purchased by a person whose usual place of residence, head office or principal place of business is in Canada (draft section 3).

• Redemption. Draft section 15(1): redeem on request of any holder, regardless of the value, complete it within three business days, and charge no more than 1% of the amount redeemed. Seven days' notice on the website before a redemption fee starts or goes up. Daily limits only when the issuer cannot meet requests because of a liquidity shortfall in the markets where the reserve assets trade.
• Policies. Written governance, risk management, data security and recovery and resolution policies, reviewed at least once a year (draft section 26), with an independent review of the risk management and data security policies at least once every three years (draft sections 20(3) and 21(3)). A summary of each policy goes on the issuer's website in both official languages (draft section 27(2)).
• Public reporting. The report under section 46 of the Act goes on the issuer's website in both official languages, except the lawyer's statement (draft section 29(3)). The accountant's statement must follow Canadian generally accepted accounting principles or IFRS (draft section 29(2)).
• Complaints. The governance policy must require the issuer to acknowledge the receipt of a complaint within 7 days and to resolve it within 30 days (draft section 19).
• Records. Kept until five years after they stop demonstrating the issuer's current compliance (draft section 32).
• Penalties. Up to $1,000,000 for a serious violation and up to $10,000,000 for a very serious one (draft section 40). The impact statement gives failing to maintain adequate reserves or to redeem at par as examples of very serious violations.

Comments close on 23 December 2026, and the notice says they will be published on the Canada Gazette website. These are the passages a small issuer might want to read closely before then:

• Draft section 34(5), the rule that, for the fee only, deems an issuer whose monthly information is incorrect, missing or unavailable to have an average monthly value of $1 billion.
• Draft section 34(2), the single $25,000 base for everything under $500 million.
• Draft section 4, the Canadian incorporation requirement for custodians.
• Draft section 14(2), the arrangement rule for indirect yield.
• How the fee sections will sit with the pending repeal of Act sections 53 and 54 and paragraph 93(y).

If you read any of this differently, write to liam@kerne.fi.