Key Highlights
- Six major Canadian banks are exploring a tokenized deposit system for Canadian dollars.
- The group includes BMO, CIBC, National Bank of Canada, RBC, Scotiabank, and TD Bank Group.
- The initial work focuses on transferring tokenized deposits between participating banks.
Six of Canada’s major banks are exploring a system for representing Canadian-dollar deposits in tokenized form and transferring them between participating institutions.
According to an announcement shared on September 22, the initiative involves Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), National Bank of Canada, Royal Bank of Canada (RBC), Scotiabank, and TD Bank Group.
The project is focused on interbank transfers and remains in the development stage. The banks have not disclosed a commercial launch date or the distributed-ledger technology that would be used. The initiative follows a recent clarification from Canada’s banking regulator on how tokenized deposits are treated under existing federal banking rules.
Banks examine interbank token transfers
The initial phase is focused on transfers between participating financial institutions rather than consumer-facing payments.
Under the proposed model, existing bank deposits could be represented digitally and transferred using distributed-ledger infrastructure. Potential applications include settlement and programmable transactions between banks. The participating institutions have not said whether the system could eventually be extended to businesses or retail customers.
For now, the work is centered on whether conventional deposit arrangements can be represented and transferred in tokenized form while remaining within the existing banking framework.
OSFI clarifies legal status of tokenized deposits
The project comes after the Office of the Superintendent of Financial Institutions (OSFI) issued guidance on tokenized and digitally represented deposits on September 10.
OSFI said the technology used to create or deliver a financial product does not determine its legal classification.
“Tokenized deposits are, for example, not legally distinct from traditional deposits.”
The regulator added that federally regulated financial institutions remain responsible for complying with existing laws and regulations when developing such products.
OSFI also pointed to its B-13 Technology and Cyber Risk Management and B-10 Third-Party Risk Management guidelines. Institutions developing novel products or services are expected to consult their OSFI supervisors before launch.
The guidance therefore treats tokenization as a technological change rather than, by itself, creating a separate category of bank deposit under federal law.
Tokenized deposits are not stablecoins
The proposed bank system is separate from Canada’s regulated stablecoin market.
A tokenized deposit represents a claim on a commercial bank, with the underlying deposit remaining part of the bank’s existing liabilities. A stablecoin, by contrast, is a separately issued digital asset backed by reserves under the issuer’s structure.
Canada already has a Canadian-dollar stablecoin. In May, Tetra Trust received approval for CADD, which launched on Ethereum and Base, with Solana integration planned.
The six-bank project instead concerns the tokenization and transfer of deposits already held within the banking system.
Canada has already tested tokenized securities
The initiative follows other distributed-ledger experiments involving Canadian financial institutions.
In March, the Bank of Canada, Export Development Canada, RBC, and TD completed Project Samara, an experiment involving a tokenized Canadian bond. The project tested distributed-ledger technology across the bond’s issuance, trading, coupon payments and redemption, while settlement used wholesale central bank deposits.
That experiment focused on securities rather than bank deposits, but it provided an earlier test of how distributed-ledger technology could be used within Canada’s financial-market infrastructure.
The Bank of Canada has also published research examining potential applications of tokenization in financial markets, alongside associated operational and policy considerations.
Project remains in development
The six-bank initiative does not yet represent a commercial tokenized deposit network.
Details including the underlying technology, transaction volumes, customer access and launch timeline have not been disclosed.
OSFI’s September guidance addresses the legal treatment of tokenized deposits, but participating banks would still need to satisfy existing regulatory and supervisory requirements before deploying such a system commercially.
For now, the project adds to Canada’s ongoing experiments with distributed-ledger technology, with the immediate focus on whether conventional bank deposits can be transferred between financial institutions in tokenized form.
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