Canada's six largest banks are joining forces to put the Canadian dollar on a blockchain. Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group said Tuesday they are launching a joint Canadian dollar tokenized deposit project. The first phase aims "to move tokenized deposits efficiently across Canadian financial institutions," the statement said, and other institutions may join later.
The move came 12 days after Canada's bank regulator, the Office of the Superintendent of Financial Institutions, or OSFI, said tokenized deposits are "not legally distinct from traditional deposits." OSFI added that "the underlying technology of a financial product or service does not determine its legal nature." A tokenized deposit is a claim on money held at a licensed bank, recorded on a distributed ledger rather than only on the bank's own books. The money claimed stays a liability of the bank that issued it. Five of the six banks own U.S. insured banks holding roughly $805 billion in assets as of June 30, and BMO and TD are also helping build an American tokenized deposit network through The Clearing House.
The Canadian project has a regulatory head start on the American one. OSFI has settled the legal question that the FDIC has so far only proposed to answer. The FDIC has proposed treating tokenized deposits that satisfy the legal definition of a deposit "no differently under the Federal Deposit Insurance Act than any other types of deposits," but has not said when it will issue a final rule. Canadian banks also lack a clear rulebook for issuing stablecoins, leaving tokenized deposits as the clearer path under existing deposit rules.
The Tuesday announcement named no technology partner, no timeline, no governance entity and no role for Payments Canada, which runs the country's core payment systems. Whether the Canadian network will connect to the American one is unclear; the statement set a longer-term goal of connecting with "other emerging digital assets initiatives" but named none. The Bank of Canada found after its own tokenized bond experiment that "broader adoption will likely be slow," citing integration challenges and limited appetite for changing core infrastructure.