Six of Canada's largest banks have initiated a joint study of a system of tokenized deposits in Canadian dollars. The project involves Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group. In the initial phase, the financial institutions aim to explore the possibility of moving digital representations of bank deposits between Canadian deposit-taking institutions. In the future, the system could be linked to other digital asset infrastructures. The main idea is to use existing bank money in a tokenized form to make settlements between financial organizations faster and more programmable. Unlike cryptocurrency assets, such tokens represent a bank's obligation to the client and are directly linked to a deposit in a regulated financial institution.
The launch of the study followed clarifications from the Office of the Superintendent of Financial Institutions (OSFI) of Canada, published on September 10. The regulator indicated that tokenized deposits are legally no different from traditional deposits, as the technology used does not change the legal nature of the financial product. This distinguishes them from fiat-backed stablecoins: the latter are separate digital assets, and their value is supported by reserves held by the issuer. Banks expect that the tokenized format will allow for the automation of certain operations and simplify the movement of funds between participants in the financial system. In the future, other deposit institutions may join the initiative, but the initial work is focused on settlements within the Canadian banking sector.
The project is developing alongside the formation of a separate regime for stablecoins backed by government currencies. In Canada, a federal regulatory framework for such digital assets issued by non-financial organizations was created under Bill C-15. The rules require issuers to register with the Bank of Canada, maintain reserves in high-quality liquid assets at a ratio of at least 1:1, and provide the ability to redeem tokens at face value. The corresponding regime is expected to come into effect in 2027. However, it does not apply to banks and credit unions, which are already under prudential supervision. For regulated stablecoins, a distinction is also made from bank deposits: their issuers are not allowed to present such assets as deposits or as funds covered by the government deposit insurance system.
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