Canada’s draft stablecoin rules ban rewards and favor bank custodians - Cryptopolitan

Canada’s draft stablecoin framework, as reported by Cryptopolitan, would prohibit rewards on stablecoin holdings and steer custody toward bank-affiliated custodians. The two provisions target different parts of the market: the rewards ban limits incentives that issuers and platforms use to attract deposits, while the custody preference shapes where reserve-backed tokens are held and who supervises them.

For market participants, the draft signals that Canadian regulators view stablecoins primarily as payment and settlement instruments rather than yield-bearing products. A rewards ban could reduce the appeal of holding stablecoins purely for incentives, potentially shifting demand toward tokens valued for liquidity and redemption reliability. The custody element may favor established financial institutions with existing compliance infrastructure, raising barriers for non-bank custodians.

The rules remain in draft form, so details could change before finalization. Key things to watch include how "rewards" is defined, whether grandfathered arrangements are permitted, the treatment of foreign-issued stablecoins used in Canada, and the timeline for implementation. How these points are settled will determine whether the framework encourages bank-led adoption or narrows the field of viable issuers and platforms operating in the Canadian market.