Canada’s six largest banks are exploring how tokenized CAD deposits could move between institutions. Creating digital claims is only the first step; settling them is harder.
Key Takeaways
- Six banks are exploring tokenized CAD deposits.
- No commercial payment network exists yet.
- Tokenized deposits remain liabilities of banks.
- Interbank settlement is the central challenge.
- Other Canadian institutions could join later.
The first phase focuses on transfers between banks
BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD are jointly exploring Canadian-dollar digital money solutions, beginning with tokenized deposits.
According to the official announcement, the first phase aims to move tokenized deposits between Canadian financial institutions. The longer-term goal is to connect the system with other digital-asset initiatives, and additional deposit-taking institutions could be invited to participate.
The banks have not launched a commercial product. They have also not disclosed which technology would operate it, whether each institution would issue a separate token or when customers could begin using it.
What the banks confirmed
- Six participating Canadian banks
- A focus on tokenized CAD deposits
- Transfers between financial institutions
- Possible connections to other digital assets
What remains undisclosed
- The ledger or payment infrastructure
- The issuer and operator structure
- The final settlement method
- Customer access and launch timing
What has to happen when the deposit changes banks?
A tokenized deposit is a digital representation of money held at a commercial bank. Changing how the deposit is recorded does not automatically change its legal nature: it remains a liability of the bank holding the customer’s money.
This creates a question that does not arise when customers move tokens between two wallets controlled by the same issuer. If a deposit created by Bank A reaches a customer of Bank B, the system must determine what happens to the original claim.
Bank B could redeem it, convert it into one of its own deposits or continue holding a claim on Bank A. The announcement does not identify which model the participants are considering.
Every workable design must perform three functions
1. Authorization: Confirm that the sender controls the deposit and has approved the payment.
2. Interbank coordination: Calculate what each participating institution owes after the transfer.
3. Final settlement: Complete the obligations between the banks so the transfer becomes final rather than remaining provisional.
Those functions could operate on one shared ledger, through connected private systems or under another structure. The banks have not said which architecture they intend to use.
A common token format would not solve settlement
The difficult part is not representing six banks’ deposits digitally. It is ensuring that the resulting claims remain transferable and redeemable at par—meaning one tokenized Canadian dollar remains exchangeable for one conventional Canadian dollar.
A shared technical standard would not, by itself, decide which bank carries the liability after a transfer. It would also need rules for liquidity, customer verification, failed payments, technical outages and redemption into ordinary account balances.
Without those rules, two institutions could use compatible technology while still disagreeing over when a payment becomes final or which bank owes the recipient. The project’s usefulness will therefore depend on its legal and settlement arrangements as much as its software.
Tokenized deposits are not public stablecoins
Tokenized bank deposit
A liability of the bank that issued or holds the deposit, subject to banking supervision and customer-verification requirements.
Access may be restricted to approved customers and participating institutions.
Public stablecoin
A token issued under a separate reserve and redemption arrangement, with the holder’s legal rights depending on the issuer and product structure.
It may circulate between unaffiliated wallets across public blockchain networks.
The Canadian project may eventually support some of the same payment functions as a stablecoin while keeping customers inside the regulated banking system. It is not, however, a publicly available token, and the banks have not said that customers will be able to hold it in personal wallets.
The announcement also does not explain whether the eventual product would qualify for deposit insurance. That would depend on its legal structure, the issuing institution and whether it meets the normal conditions for an eligible deposit.
Canada clarified the legal position before the announcement
OSFI clarified on September 10 that a tokenized deposit is not legally different from a conventional deposit solely because of the technology used. Our earlier report on Canada’s tokenized-deposit rules explains what that means for bank liability, supervision, cyber risk and third-party providers.
Financial institutions remain responsible for complying with existing laws and risk-management requirements. OSFI also expects them to consult their supervisors before launching novel products or services.
The guidance therefore clarifies that using a token does not automatically create a new legal category. It does not answer the project-specific questions around settlement, redemption, customer access or deposit insurance.
Project Samara tested a different part of the process
The Bank of Canada, Export Development Canada, RBC and TD completed a separate distributed-ledger experiment in March 2026. Project Samara involved a C$100 million tokenized bond sold to a closed investor group, with payments settled in wholesale central bank deposits.
The experiment showed that a tokenized security could be issued, traded and settled using distributed infrastructure. It also exposed system complexity, liquidity costs, integration challenges, governance demands and the need for reliable fallback mechanisms.
Samara proved that a tokenized security could settle with central bank money inside a controlled group. The new bank initiative asks a different question: whether commercial-bank liabilities can move across institutions without losing their identity or convertibility.
Four questions will determine whether the model works
- Who issues and operates the digital deposit? The answer will determine which institution owes the holder and who controls the payment infrastructure.
- How are obligations between banks settled? A token transfer is not enough if one institution still owes money to another afterward.
- Who can hold or redeem the deposit? The product could remain limited to banks and institutions or eventually become available to businesses and consumers.
- What happens during failures? The system needs rules for mistaken payments, outages, fraud, insolvency and transactions that begin but do not settle correctly.
Cooperation is confirmed; the payment network is not
The announcement establishes cooperation between Canada’s largest banks, not a functioning tokenized payment network. Its significance will depend on whether the participants can settle and redeem deposits across institutional boundaries—not simply record them in token form.
This article is provided for informational purposes only and does not constitute financial, legal or investment advice.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP.
Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem.
To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem.
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