Canada confirms tokenised deposits as bank deposits

• Canada’s banking regulator has confirmed tokenised deposits are legally equivalent to traditional deposits.
• Banks can use blockchain infrastructure without creating a separate deposit category.
• Financial institutions must still meet existing technology, cyber and third-party risk rules.

Canada’s banking regulator has confirmed tokenised deposits are legally equivalent to traditional bank deposits.

The Office of the Superintendent of Financial Institutions (OSFI) has taken a technology-neutral approach to these deposits.

“Tokenised deposits are, for example, not legally distinct from traditional deposits,” OSFI said in its September 10 statement.

Canadian banks can therefore use blockchain infrastructure for deposits while following existing banking laws and rules.

Banks must still meet OSFI’s B-13 technology and cyber-risk guidance when using tokenised deposit systems.

They must also meet B-10 third-party risk requirements when outside providers support these products and consult OSFI before launching novel services.

The clarification has come as banks have moved tokenised deposits towards live payment and settlement systems, including projects involving Swift, HSBC and Standard Chartered.