Canada Clears Tokenized Bank Deposits Without Creating a New Crypto Rulebook

Key Takeaways

• Canada's OSFI says tokenized deposits remain traditional bank deposits, meaning blockchain does not create a new legal category.

• Federally regulated banks can explore tokenized deposits within the existing banking framework instead of waiting for a separate crypto rulebook.

• The guidance does not remove oversight, with banks still subject to existing capital, cybersecurity, technology, and supervisory requirements.

Canada's banking regulator has clarified that tokenized bank deposits do not need to be treated as a new class of financial product simply because they operate using blockchain or other digital infrastructure.

The Office of the Superintendent of Financial Institutions said on Sept. 10 that the underlying technology used to deliver a financial product does not determine its legal nature.

In practical terms, OSFI said that tokenized deposits are not legally distinct from traditional bank deposits, providing federally regulated financial institutions with greater clarity as they explore blockchain-based banking products.

The position could remove one of the regulatory questions facing Canadian banks considering tokenized money. Rather than creating a separate legal category specifically for deposits represented on distributed ledgers, OSFI is taking what it calls a technology-neutral approach.