Canada will allow stablecoin rewards for spending, but not for holding

Canada has proposed a stablecoin rule that would let an issuer reward a payment while barring it from paying people to keep tokens in their wallets. The distinction appears in draft regulations published October 24, with comments open until December 23. Summary Section 14 permits rewards tied to a stablecoin transaction and excludes payments tied to holding the token. The proposal treats an issuer’s third-party income-sharing arrangement as indirect yield when it encourages rewards for holders. Issuers would redeem any amount within three business days, with fees capped at 1% of the redeemed value. Reserves must cover outstanding coins at each day’s end and remain with qualified financial institutions domiciled in Canada. The 60-day consultation ends December 23, 2026, before the proposed framework takes effect. A customer could receive a rebate for paying a merchant with a Canadian-regulated stablecoin. The same issuer could not promise an annual return merely for keeping that coin in an app. Between the obvious cases sit loyalty points, platform promotions and arrangements where a distributor pays the customer while the issuer funds the distributor. The draft tries to follow who ...