Canada Clarifies Tokenized Deposits as Legally Equivalent to Traditional Bank Deposits
Canada's banking regulator has clarified its stance on tokenized deposits, stating that they are not legally distinct from traditional bank deposits. This clarification is significant as it gives federally regulated financial institutions a clearer path to develop deposit products using blockchain and other digital technology.
The Office of the Superintendent of Financial Institutions (OSFI) said that the technology used to build or deliver a financial product does not determine its legal nature. Instead, OSFI looks at what a product or service is instead of the technology behind it.
Tokenized deposits are treated as existing bank deposits and do not become a separate type of financial product simply because they are represented digitally or use blockchain infrastructure. The institution offering the product remains responsible for meeting the laws and regulatory requirements that apply to the underlying banking activity.