Canadian Banks Team Up on Tokenized Deposits Amid Regulatory Clarity

Canada's six largest banks have announced a joint project to explore Canadian dollar tokenized deposits. The project aims to move tokenized deposits efficiently across Canadian financial institutions, with other institutions potentially joining later.

The project comes after Canada's bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), clarified that tokenized deposits are not legally distinct from traditional deposits. This decision aligns with a proposed rule by the Federal Deposit Insurance Corp. (FDIC) to treat tokenized deposits similarly to ordinary deposits.

The participating banks include Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group. Five of these banks own U.S.-insured banks with approximately $805 billion in assets as of June 30.