Canada’s Major Banks Pilot Tokenized CAD Deposits for Settlement

Six of Canada’s largest banks have begun work on a shared concept for moving tokenized Canadian dollar (CAD) deposits between financial institutions. The initiative, announced Tuesday, would represent bank deposits as digital tokens while keeping the deposits’ legal status tied to the issuing banks.

Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group said the project’s first phase will concentrate on transferring tokenized deposits across Canadian institutions. The banks also hinted at possible later interoperability with other digital asset ecosystems.

Key takeaways

• Six major Canadian banks are jointly exploring tokenized CAD deposits as a way to move digital representations of deposits between institutions.


• The plan’s early scope is domestic interbank settlement; future steps could connect the approach to broader digital asset systems.


• OSFI recently clarified that tokenized deposits are “not legally distinct” from traditional deposits, supporting the effort from a regulatory perspective.


• Tokenized deposits differ from fiat-backed stablecoins because the deposits remain a liability of a regulated bank, not a separate digital asset issued by a third party.


• Canada’s stablecoin framework is progressing separately and is designed for fiat-backed stablecoins issued by non-financial institutions, not banks.

A joint effort to tokenize deposits—without changing their legal nature

In the announcement, the participating banks framed tokenized deposits as a mechanism to modernize payments. The core idea is to use digital tokens to represent deposits, enabling them to move more quickly and—according to the banks—support “programmable” payment features.

What investors and builders should notice is that the tokenization concept described here is not about converting deposits into a new category of asset that sits outside banking regulation. The banks’ approach is explicitly grounded in existing deposit structures: the tokenized product still corresponds to money held at a regulated bank and remains that bank’s liability.

This distinction matters because it shapes how risk and oversight are applied. According to OSFI’s earlier guidance, the underlying technology used to deliver a financial product does not determine its legal character.

Regulatory backdrop: OSFI’s clarification came earlier this month

Less than two weeks before the banks’ joint announcement, Canada’s banking regulator provided additional clarity on tokenized deposits. On Sept. 10, the Office of the Superintendent of Financial Institutions (OSFI) stated that tokenized deposits are “not legally distinct from traditional deposits.” OSFI also emphasized that legality is determined by the nature of the product, not by whether it is implemented on-chain or through another technology layer.

That timing is more than a coincidence. By aligning their work with OSFI’s interpretation, the banks are effectively operating in a clearer regulatory lane—one that treats tokenized deposits as functionally equivalent to conventional deposits from a legal standpoint.

Still, the banks did not lay out the end-to-end architecture in the materials referenced in the announcement. Readers should expect further details to come as the first phase develops, especially around custody, settlement finality, operational controls, and how interoperability would work in practice.

Tokenized deposits vs. stablecoins: Canada is regulating both, but differently

The new deposit-token initiative sits alongside a broader regulatory push for digital money in Canada, but the policy frameworks are not interchangeable.

Canada’s Stablecoin Act was enacted in March as part of Bill C-15. The legislation establishes a federal framework for fiat-backed stablecoins, requiring non-financial institution issuers to register with the Bank of Canada, keep reserves at least 1:1 in high-quality liquid assets, and enable redemption at par. The framework is expected to take effect in 2027.

However, the Act’s scope is narrower than the tokenized-deposits project. The stablecoin framework covers fiat-backed stablecoins issued by non-financial institutions; banks and credit unions already subject to prudential regulation are outside its scope. The legislation also restricts issuers covered by the framework from presenting stablecoins as deposits or as insured under a public deposit insurance system.

That separation explains why tokenized deposits are being explored by banks under deposit-style legal treatment, while stablecoin policy is aimed at different issuer types. Even though both approaches involve token-like instruments, the regulatory intent diverges: tokenized deposits aim to preserve the traditional banking liability structure, while stablecoin rules focus on how non-bank issuers back and redeem fiat-linked tokens.

What the next phase could mean for payments

The banks said their first phase will focus on moving tokenized deposits between Canadian financial institutions. If successful, that could reduce certain friction points in cross-institution payment flows by enabling more direct digital transfer of deposit-linked balances.

The banks also indicated that longer-term plans could involve opening the system to other deposit-taking institutions, and possibly connecting with other digital asset systems. That raises an important question for the market: whether tokenized deposits will remain primarily an interbank settlement tool within the regulated banking perimeter, or whether they will evolve toward wider interoperability with permissioned networks and, potentially, broader on-chain payment rails.

For now, the initiative is explicitly framed as a development effort. The article notes that Cointelegraph reached out to CIBC for additional details but did not receive an immediate response, suggesting that key technical and operational specifics have yet to be publicly clarified.

Over the coming months, market participants will want to watch how participating banks define the project’s scope in practice—particularly how they handle settlement finality, compliance controls, and whether the pilot results influence wider adoption across Canada’s financial sector—especially in light of OSFI’s recent regulatory clarification.

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