Canadian Banks Launch Tokenized CAD Deposit Pilot for Settlement

Six of Canada's largest banks have launched an initiative to pilot tokenized Canadian dollar (CAD) deposits for settlement. The participating banks, including Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group, will focus on transferring tokenized deposits across Canadian institutions in the first phase.

The project aims to modernize payments by using digital tokens to represent deposits, enabling faster transfers and potential 'programmable' payment features. Key to this effort is a clarification from Canada's banking regulator, OSFI, which stated that tokenized deposits are not legally distinct from traditional deposits.

This distinction matters because it shapes how risk and oversight are applied. The banks' approach explicitly grounds the tokenization concept in existing deposit structures, ensuring that the tokenized product remains tied to a regulated bank and is that bank's liability.