Canada's six largest banks are jointly developing tokenized deposit infrastructure for Canadian dollars as part of a broader initiative to establish how digital currencies will settle blockchain-based transactions involving payments, securities, and real-world assets.
Bank of Montreal, National Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and Toronto-Dominion Bank are investigating the use of regulated commercial bank deposits as an alternative to cryptocurrencies for blockchain settlement.
What Are Tokenized Deposits?
Tokenized deposits are conventional bank deposits represented and transferred through distributed-ledger technology (DLT). According to the International Monetary Fund, they constitute bank liabilities held, recorded, and transacted on blockchain or similar infrastructure.
The primary advantage of tokenized deposits is their programmability while remaining within the regulated banking system. Banks can improve payment efficiency and speed while operating continuously and executing complex coded instructions. The initial phase focuses on enabling deposit transfers between Canadian financial institutions, with potential future expansion to other digital-asset networks.
Regulatory Foundation
The project benefits from clear regulatory guidance. In September, the Office of the Superintendent of Financial Institutions (OSFI) stated that tokenized deposits are legally equivalent to conventional deposits and maintains a technology-neutral regulatory approach. This allows banks to operate under existing financial-institution frameworks rather than awaiting new legislation.
Canada has prior experience with tokenized infrastructure. Project Samara, a Bank of Canada experiment involving TD, RBC, and Export Development Canada, tested DLT and wholesale central-bank digital currency in a tokenized bond transaction. The project confirmed atomic settlement is technically feasible, though challenges remain regarding complexity, governance, liquidity, operations, and legal alignment.
Global Parallel Initiatives
Similar projects are advancing internationally. Project Agorá, reported by the Bank for International Settlements in May, demonstrated that tokenization can enhance wholesale cross-border payment efficiency using tokenized central-bank reserves and commercial bank deposits. The Bank of Canada participates in this initiative.
In the United States, major banks launched a bank-led initiative in June administered by The Clearing House, enabling tokenized deposits to clear and settle while connecting blockchain with existing systems such as RTP and CHIPS. Supporting institutions include JPMorgan, Citigroup, Bank of America, and Wells Fargo.
SWIFT announced in July that its blockchain ledger is prepared for pilot testing, with 17 banks from six continents ready to trial tokenized cross-border payments.
Broader Context
These initiatives reflect a fundamental question about which form of digital money will serve as the settlement layer for tokenized finance. Tokenized deposits remain commercial-bank liabilities, while stablecoins represent separate digital liabilities backed by reserve assets.
Market projections suggest significant growth potential. Citi Institute estimates tokenized assets could reach $5.5 trillion by 2030 in its base case. As of September 15, real-world-asset value on-chain stood at approximately $34.18 billion, representing roughly 0.01% of addressable assets, with approximately 12% of tracked tokenized capital actively used in lending, liquidity, or collateral.
Canada's Big Six banks are currently in the exploration phase rather than launching services. Future development depends on technology selection, participation from additional institutions, and integration between Canada's domestic system and U.S., BIS, and SWIFT initiatives progressing toward live deployment.
