Canada's Six Largest Banks Explore Tokenized Canadian Dollar Deposits
In brief
- Six major Canadian banks (BMO, CIBC, National Bank, RBC, Scotiabank, TD) explore tokenized Canadian dollar deposits for interbank transfers.
- Tokenized deposits system will initially connect Canadian financial institutions, with longer-term plans for broader network connectivity.
- OSFI September ruling clarified tokenized deposits are not legally distinct from traditional bank deposits and remain liabilities.
Regulatory clarity precedes bank initiative
The project comes less than two weeks after Canada's banking regulator provided additional clarity on the legal permissibility of tokenized deposits. On September 10, the Office of the Superintendent of Financial Institutions (OSFI) stated that tokenized deposits are not legally distinct from traditional deposits, adding that the underlying technology of a financial product does not determine its legal nature.
This distinction matters. Tokenized deposits represent money held at a regulated bank and remain a liability of that bank, unlike fiat-backed stablecoins issued by non-financial entities. The banks said the system is intended to support faster and programmable payments, while longer-term plans include opening the network to other financial institutions and payment networks.
Stablecoin framework takes shape
Canada enacted its Stablecoin Act in March as part of Bill C-15, establishing a federal framework for fiat-backed stablecoins. Under the regime, non-financial institution issuers will be required to register with the Bank of Canada, maintain reserves of at least 1:1 in high-quality liquid assets. The framework is expected to take effect in 2027.
Importantly, the framework only covers fiat-backed stablecoins issued by non-financial institutions. Banks and credit unions operate under existing deposit regulations. The distinction clarifies why the six-bank initiative doesn't fall under the new stablecoin rules — these are deposits, not stablecoins.
