Canada's Six Major Banks Launch Tokenized Deposit Initiative

Six Canadian banks explore digital deposit system

Canada's six largest banks have announced a joint effort to explore a system for tokenized Canadian dollar deposits. This initiative aims to allow digital representations of traditional bank deposits to move directly between financial institutions. The project was revealed in a joint statement on Tuesday. The participating banks are Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group. The first phase of the project will focus on moving these tokenized deposits between Canadian banks. The institutions have not yet confirmed if the system will eventually connect with other global digital asset networks.

Regulatory clarity paves the way

The announcement comes just days after Canada's primary financial regulator provided clear guidelines on the status of these digital assets. On September 10, the Office of the Superintendent of Financial Institutions (OSFI) released a statement clarifying how tokenized deposits should be treated under the law. OSFI stated that tokenized deposits are "not legally distinct from traditional deposits." The regulator emphasized that the technology used to hold or move money does not change its legal nature. This clarification removes ambiguity for banks considering the technology.

What is confirmed

• Six major Canadian banks are collaborating on a tokenized deposit solution.
• The initiative is designed for interbank payments first.
• Canadian regulators have confirmed that tokenized deposits are legally equivalent to traditional bank deposits.
• The banks stated the system is intended to support faster and programmable payments.

Why this matters for Canadian finance

This move places traditional banks at the center of the digital asset conversation in Canada. Unlike stablecoins, which are separate digital assets backed by reserves held by their issuer, these tokenized deposits remain a direct liability of the regulated bank. This distinction is crucial for maintaining stability in the financial system. The project also coincides with the rollout of Canada's broader digital money laws. In March, Canada enacted the Stablecoin Act as part of Bill C-15. This framework establishes rules for fiat-backed stablecoins issued by non-financial institutions, requiring them to register with the Bank of Canada and maintain full reserves. However, banks and credit unions remain outside this specific scope as they are already subject to strict prudential regulation.

What happens next

The banks indicated that longer-term plans include opening the initiative to other deposit-taking institutions. Cointelegraph contacted CIBC for additional details but did not receive an immediate response.

Sources

• Cointelegraph