Six Giants, One Loonie: Canada's Biggest Banks Team Up to Tokenize the Toonie 🍁

Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group announced a joint initiative on Tuesday to build a system for tokenized Canadian dollar deposits, allowing digital representations of bank deposits to move between financial institutions. The first phase will focus on transferring tokenized deposits among Canadian financial institutions, with longer-term plans to connect with other digital asset systems and open the initiative to additional deposit-taking institutions. The banks said the system is intended to support faster and programmable payments.

The project follows guidance issued on Sept. 10 by the Office of the Superintendent of Financial Institutions (OSFI), which stated that tokenized deposits are "not legally distinct from traditional deposits" and that the underlying technology of a financial product does not determine its legal nature. Tokenized deposits represent money held at a regulated bank and remain a liability of that bank, a structure that differentiates them from fiat-backed stablecoins, which are separate digital assets backed by reserves held by their issuer.

The initiative arrives as Canada expands its broader regulatory framework for digital money. In March, Canada enacted its Stablecoin Act as part of Bill C-15, establishing a federal framework for fiat-backed stablecoins. Under the regime, non-financial institution issuers will be required to register with the Bank of Canada, maintain reserves of at least 1:1 in high-quality liquid assets and offer holders redemption at par. The framework is expected to take effect in 2027 and applies only to fiat-backed stablecoins issued by non-financial institutions, leaving banks and credit unions that are already subject to prudential regulation outside its scope. Issuers covered by the framework will also be prohibited from representing their stablecoins as deposits or as insured under a public deposit insurance system. Cointelegraph contacted CIBC for additional details but did not receive an immediate response.