Canada’s six largest banks have banded together to develop a new system that enables the transfer of tokenized Canadian dollar deposits across financial institutions. This move aims to introduce digital versions of bank deposits that can be shifted efficiently and securely between banks in the country.
Major institutions collaborate on digital deposit initiative
The consortium includes Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group. The banks jointly announced the initiative on Tuesday, outlining plans for a phased rollout. The initial stage will focus exclusively on facilitating transfers of tokenized deposits within Canada’s banking system before potentially linking the platform to other digital asset networks in the future.
This collaboration follows a recent regulatory update from Canada’s chief banking regulator, clearing the way for such innovation. Less than two weeks ago, the Office of the Superintendent of Financial Institutions (OSFI) clarified the legal status of tokenized deposits, stating that tokenized representations of deposits are not legally different from traditional bank deposits. OSFI emphasized that the technology underlying a deposit does not change its legal nature.
OSFI stated that tokenized deposits continue to represent liabilities of regulated banks, and their digital format does not alter the fundamental relationship between customer and bank.
Tokenized deposits are distinct from fiat-backed stablecoins, which are digital assets typically issued by private companies and backed by reserve funds. While tokenized deposits remain on the balance sheets of their issuing banks and carry deposit insurance protections, stablecoins are classified separately and may not enjoy the same protections.
Canada’s new platform is designed to support faster, programmable payments and aims to integrate additional deposit-taking institutions in the future. The banks say developing secure, interoperable tokenized payment solutions could pave the way for broader innovation in the country’s evolving digital money ecosystem.
Mini dictionary: Office of the Superintendent of Financial Institutions (OSFI), Canada’s independent federal regulator overseeing banks, trust and loan companies, and insurance firms to ensure the country’s financial stability and security.
Regulatory framework expands for digital assets
The tokenized deposit project comes as Canada makes significant progress toward regulating digital money. In March, lawmakers enacted the Stablecoin Act, part of Bill C-15, to establish a federal framework specifically for fiat-backed stablecoins. Under these rules, non-bank stablecoin issuers must register with the Bank of Canada, fully back their tokens with high-quality liquid reserves at a 1:1 ratio, and guarantee redemption at face value.
The regulatory framework for stablecoins is set to take effect in 2027. However, these rules apply only to issuers that are not already subject to existing prudential regulation—such as chartered banks and credit unions. Under the established approach, only non-financial institution issuers fall within the law’s scope, with those coins prohibited from being marketed as bank deposits or as insured by a public deposit insurance scheme.
The new framework requires stablecoin issuers to hold adequate reserves and limits the use of deposit-related terminology for these digital assets.
Industry participants anticipate that the coordinated approach by Canada’s largest banks, together with close regulatory oversight, could help set global standards for the adoption of digital deposit and payment solutions. The ongoing development will be monitored closely as the banks move through the first phase and look to incorporate broader applications in the evolving landscape.
| Tokenized Deposits (by Banks) | Fiat-backed Stablecoins (non-financial institutions) |
|---|---|
| Issued by regulated banks | Issued by non-bank organizations |
| Considered traditional deposits, insured | Not classified as deposits; not insured |
| Covered by OSFI regulation | Covered by Stablecoin Act (from 2027) |
| Remain liabilities of banks | Backed 1:1 by liquid reserves |
