OSFI Clears Path for Blockchain-Based Bank Money in Canada
Canada's banking regulator has given tokenized deposits a major boost by confirming they have the same legal status as traditional bank funds. The Office of the Superintendent of Financial Institutions (OSFI) made this ruling in its recent update to the country's crypto capital framework.
The OSFI emphasized that it focuses on what a financial product is, rather than how it's built or delivered, and therefore tokenized deposits are not a new kind of financial product just because they're tracked as tokens on a blockchain. This distinction could clear an obstacle for Canadian banks experimenting with blockchain-based payments and treasury tools.
However, OSFI also noted that federally regulated banks must follow all relevant laws and rules, including requirements around technology risk, cyber risk, and third-party risk. Banks should also consult their OSFI supervisor before launching any new products.