Four of Canada’s nine registered crypto platforms are offering interest-like rewards on stablecoin balances, even as Ottawa seeks to ban them. 

Kraken, Coinbase, Crypto.com and Shakepay all offer Canadian holders of USDC—a crypto token pegged to the value of the U.S. dollar, known as a stablecoin—annual reward rates ranging from 1.75 per cent to 4.2 per cent. Earlier this month, Kraken launched Canada’s first rewards program for a Canadian dollar stablecoin, offering holders of the token QCAD an annual rate of up to two per cent.

Crypto.com did not respond to a request for comment on where the money for its rewards is coming from. Kraken, Coinbase and Shakepay all say their rewards programs are funded by their corporate treasuries, not mechanisms that typically generate yield on investments, such as dividends or price discounting. Legislation that proposes to ban all types of yield on stablecoins, both “direct and indirect,” received royal assent in March, although the framework is not yet in force.

The platforms’ rewards programs mirror the approach crypto platforms took in the U.S. following legislation passed in July 2025 that banned interest payments on stablecoin balances. A January paper by David Krause, emeritus finance professor at Marquette University, found American crypto platforms simply rebranded yield payments on stablecoin balances as rewards, making the ban ineffective. In May, Coinbase negotiated an exception to the ban for rewards tied to activity on the platform, as opposed to simply holding a balance.

“Issuers couldn’t pay interest on stablecoins. So what happened? Platforms got creative,” Krause said in an email. He said he would advise Canadian policymakers to either regulate stablecoins as securities and permit yield, or “accept that a ban will push rewards into marketing programs and token-based loyalty schemes that are much harder to track.”

The federal Liberals announced plans to regulate stablecoins, including the proposed ban on yield, in November. The Department of Finance is drafting the regulations that will actually govern the sector, targeting 2027 for the framework to come into force.

Canada’s legislation follows the 2025 U.S. GENIUS Act, which could pave the way for companies ranging from Walmart to big banks to issue their own stablecoins. The crypto industry, academics and others have raised concerns about Canada’s financial system stability and ability to enact monetary policy if the country falls behind as stablecoins take off as a mainstream mechanism for consumer payments. Stablecoins settle instantly, cheaply and globally around the clock, making them a potentially attractive alternative to expensive wire transfers and fee-laden credit card payments.

Meanwhile, Canada’s banks—which stand to lose out on deposits and fee revenue if Canadians move their money into stablecoins—are raising concerns of their own. Nathalie Bergeron, a spokesperson for the Canadian Bankers Association (CBA), said in an email that the CBA “firmly supports the Stablecoin Act’s explicit prohibition on yield—both direct and indirect.” She said the CBA is concerned that permitting yield on stablecoins could affect the availability of credit, echoing the American Bankers Association’s argument that banks will have less money to lend if depositors move their money out of bank accounts and into higher-yielding stablecoins. 

In an email, Department of Finance spokesperson Marie-France Faucher said the proposed ban on yield “is intended to ensure payment stablecoins do not function like bank deposits or investment products.” Ottawa considers rewards tied to activity on a platform—the exception Coinbase managed to carve out to the U.S. ban on stablecoin interest—to be a form of yield, she said. 

Kesem Frank, CEO of Stablecorp, issuer of the QCAD Canadian-dollar stablecoin, said the economic risks of prohibiting yield outweigh those concerns. Canadian dollar stablecoins are currently not nearly as widely accepted as their U.S. dollar competitors. If Canadian stablecoins don’t pay interest, it’s hard to make the case for why anyone should hold them, he said.

Frank said Canada should follow the U.S.’s lead and carve out an exception to the ban on yield for certain types of rewards. “We should be learning from stuff that works, not trying to reinvent the wheel,” he said.

Bergeron also called on provincial and federal policymakers to work together to ensure stablecoin rules are consistent. Provincial securities regulators have also weighed in, arguing that they “generally” meet the definition of investments, not payment instruments.

The Ontario Securities Commission has granted Coinbase permission to offer rewards on balances of regulated stablecoins and other crypto assets, on the condition that it discloses the risks involved and follows other rules. In an email, Ilana Kelemen, a spokesperson for the Canadian Securities Administrators (CSA), an umbrella organization for provincial regulators, did not respond directly when asked whether the CSA believes yield-bearing stablecoins will remain under its purview once federal legislation passes. “The CSA continues to work collaboratively with other Canadian regulators,” she said.

Jonathan Ip, a lawyer who advises blockchain and cryptocurrency companies, called the current state of Canadian stablecoin regulations “a bit of a mess.” Figuring out whether yield or rewards payments on stablecoin balances are allowed will continue to be difficult until federal and provincial regulators sort out who’s in charge, he said. “Until we get some clarity around that, it is going to be a bit complicated.”