Canadian Banks Unite on Tokenized Deposit Pilot

Six major Canadian banks have started working on a shared concept to move tokenized CAD deposits between financial institutions. The initiative, announced this week, represents bank deposits as digital tokens while keeping their legal status tied to the issuing banks.

The participating banks include Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group. They aim to concentrate on transferring tokenized deposits across Canadian institutions in the first phase of the project.

According to a recent clarification from OSFI, tokenized deposits are 'not legally distinct' from traditional deposits. This regulatory alignment supports the banks' effort, which is focused on preserving the traditional banking liability structure.

The tokenization concept differs from fiat-backed stablecoins, as it keeps the deposits as liabilities of regulated banks rather than separate digital assets issued by third parties.