- Canada’s six largest banks jointly explore tokenized Canadian dollar deposits to enable digital bank deposit movement between institutions.
- The first phase focuses on transferring tokenized deposits among Canadian financial institutions, with potential expansion to other digital asset systems.
- OSFI clarified tokenized deposits are not legally distinct from traditional deposits, providing regulatory clarity for the project.
- Canada’s Stablecoin Act, enacted in March, establishes a federal framework for fiat-backed stablecoins issued by non-financial institutions, effective in 2027.
Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group jointly announced a system for tokenized Canadian dollar deposits that would allow digital representations of bank deposits to move between financial institutions, according to a joint announcement on Tuesday.
The initiative comes less than two weeks after Canada’s banking regulator provided additional clarity on the legal permissibility of tokenized deposits. On Sept. 10, the Office of the Superintendent of Financial Institutions said tokenized deposits are “not legally distinct from traditional deposits,” adding that the underlying technology of a financial product does not determine its legal nature.
Tokenized deposits represent money held at a regulated bank and remain a liability of that bank, unlike fiat-backed stablecoins, which are separate digital assets backed by reserves held by their issuer. The banks said the system aims to support faster and programmable payments, with longer-term plans to open the initiative to other deposit-taking institutions.
Concurrently, Canada is building out a broader regulatory framework for digital money. In March, Canada enacted its Stablecoin Act as part of Bill C-15, establishing a federal framework for fiat-backed stablecoins. Non-financial institution issuers must register with the Bank of Canada, maintain 1:1 reserves in high-quality liquid assets, and offer redemption at par, with the framework expected to take effect in 2027.
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