Canada has cleared a major regulatory hurdle for blockchain-based banking after its financial regulator confirmed that Canada Tokenized Deposits are not legally distinct from traditional bank deposits. The decision gives federally regulated institutions clearer guidance for developing digital deposit products while preserving rules covering banking, cybersecurity, technology, and financial stability.
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Canada Tokenized Deposits Gain Legal Clarity Under OSFI Rules
The Office of the Superintendent of Financial Institutions released its statement on September 10, clarifying its neutral attitude to technology in financial operations.
According to the OSFI, the technology is not relevant to the classification of a product. Thus, a deposit registered using blockchain technology will be a regular bank deposit within the legislative regulation.
The OSFI’s position implies that there will be no changes to the legal relationship between the client and the issuing institution due to the use of distributed ledger technology for registering deposits.
Therefore, the Canada Tokenized Deposits will be considered liabilities of the regulated entities under the same legislative framework as traditional deposits.
The regulator considers the substance of financial products but not the form. It may be significant for banks designing programmable payments, digital settlement systems or other deposit products. Instead of establishing the new rules each time when technology is introduced, supervisors can evaluate the actual financial transaction.
OSFI Clarification Supports Blockchain Experiments Within Rules
Clarification by OSFI does not mean that banks are freed from regulation. Institutions need to ensure that innovation conforms with all relevant regulations. This includes activities conducted by third parties. Technology, cybersecurity, governance, and risk management expectations should be met by institutions.
In particular, OSFI mentioned B-13 for technology and cyber risk management and B-10 for third-party risk management. In addition, banks should talk to their OSFI lead supervisor prior to introducing novel products and services.
Clarification may mean that banks can now conduct experiments on blockchain technology and its application to payments and settlements without requiring deposits to be categorized as deposits in the law. However, this does not mean that banks will adopt this innovation. They will have to consider customer demand, operational readiness, cybersecurity, technology, legal issues, and risks associated with blockchain technology infrastructure.
OSFI’s Statement Supports Tokenized Deposit Development
The OSFI’s announcement does not constitute the general regulations on stablecoins in Canada, as the country is formulating an independent regulatory framework for fiat stablecoins.
In 2025, the framework was proposed by Canada in its federal budget. It allocated C$10 million for the supervision of stablecoins in the Bank of Canada for two years beginning in 2026.
The regulations will enforce the requirement of full reserves, a clear redemption mechanism, high-level data protection, and national security measures in addition to the supervision of stablecoin payment services under the Retail Payment Activities Act.
While the new framework has a wider scope, the OSFI’s statement focuses specifically on maintaining the legal status of blockchain-based deposits in federally regulated institutions.
OSFI Updates Rules for Canada Tokenized Deposits
Moreover, the OSFI issued the Capital and Liquidity Treatment of Crypto-asset Exposures Banking Guideline for 2027 on September 10.
The guidance introduces requirements for banking organizations with crypto-exposures in accordance with Basel Committee standards while taking into account the conditions in Canada. It proves that the country is revising its prudential regulations in line with its blockchain-based fintech strategy.
The guideline includes an acceptance of certain cross-exchange hedging practices in relation to Group 2a crypto-assets traded on recognized exchanges as well as an exclusion of qualifying client-clearing exposures from the Group 2 exposure threshold.
These amendments were also made following a review of the stakeholders’ input to balance risks and prudential standards.
The new regulation will become effective on November 1, 2026, for institutions with October 31 fiscal year-ends and January 1, 2027, for institutions with December 31 fiscal year-ends.
OSFI will keep monitoring crypto-markets, research, and international standards. In turn, Canada Tokenized Deposits provide a solution to Canadian banks, but their implementation depends on compliant products and risk management.
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