Canada’s banking regulator has said tokenized deposits are legally no different from traditional bank deposits, giving federally regulated financial institutions clearer guidance on using blockchain and other digital technologies for deposit products.
The Office of the Superintendent of Financial Institutions (OSFI) made the clarification on September 10, stating that the technology used to build or deliver a financial product does not determine its legal status.
Instead, OSFI said it focuses on the nature of the product or service. The regulator noted that tokenized deposits are “not legally distinct from traditional deposits.”
Existing rules apply to tokenized deposits
The clarification means banks do not create a separate legal category simply by representing deposits digitally or recording them on a blockchain.
A tokenized deposit remains a deposit offered by the financial institution, with the bank retaining responsibility for the underlying obligation. The use of distributed ledger technology changes how the asset can be represented or transferred, but not its legal character under the existing framework.
That approach gives banks room to experiment with digital infrastructure without automatically placing an otherwise permitted deposit product into a new regulatory category.
However, the technology-neutral position does not remove existing compliance obligations.
OSFI said financial institutions remain responsible for ensuring that innovative products and services comply with applicable laws and regulations. The same responsibility applies when third-party companies provide technology or services on a bank’s behalf.
The regulator specifically pointed institutions to its B-13 guideline on technology and cyber risk management and B-10 guideline covering third-party risk management.
Banks are also expected to contact their OSFI lead supervisors before launching novel products or services. The regulator encouraged institutions to obtain legal advice where appropriate.
Tokenized deposits gain momentum
The clarification comes as banks and financial infrastructure providers expand their work on blockchain-based payment systems.
In July, Swift announced that 17 banks across six continents would participate in tests of tokenized deposit payments through its blockchain-based ledger. The participating institutions include HSBC, Citi, BNP Paribas, UBS, Standard Chartered, ANZ and DBS.
The system is designed to help banks coordinate cross-border payments using tokenized deposits while keeping their existing settlement, compliance and risk-management processes in place.
The project moved closer to real-world use in August, when HSBC and Standard Chartered connected their separate tokenized deposit systems through Swift’s shared ledger.
The transaction showed that banks do not necessarily need to operate on the same tokenization platform. Instead, the shared ledger can coordinate payment obligations between independently operated systems.
That interoperability could become important as more banks develop their own tokenized deposit networks.
Stablecoins remain a separate issue
OSFI’s statement does not establish Canada’s broader stablecoin rules. The country is developing a separate framework for fiat-backed stablecoins.
Canada’s 2025 federal budget included provisions for a new stablecoin regime, with the Bank of Canada expected to receive C$10 million over two years beginning in 2026 to administer the framework.
The proposed rules would require stablecoin issuers to maintain full reserves, provide clear redemption terms and strengthen safeguards for personal and financial data. The framework would also amend the Retail Payment Activities Act to cover payment service providers involved in stablecoin transactions and introduce national security safeguards.
OSFI’s latest clarification is narrower. It applies to deposits offered by federally regulated financial institutions and confirms that the use of digital ledger technology does not, by itself, change their legal status.
For Canadian banks, the next step is putting that clarity into practice. Institutions developing tokenized deposit products will still need to engage with OSFI before launch and meet existing legal, technology, cyber and third-party risk requirements.
Also Read: India’s Tokenized Bonds Put Private Keys in Depositories’ Hands, Not Investors’
