Canada's six largest banks have officially launched a shared deposit token system aimed at accelerating interbank fund transfers. According to an announcement by TD Bank Group on Tuesday, the six institutions—Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), National Bank of Canada, Royal Bank of Canada (RBC), Scotiabank, and TD Bank Group—are pursuing the project as a joint venture. The first phase will test the transfer of deposit tokens—digital representations of actual deposits held at banks—between participating institutions. In a joint statement, the banks said: "The first phase of the project aims to move tokenized deposits efficiently across Canadian financial institutions, with a longer-term goal of connecting with other emerging digital asset initiatives." These six banks are the dominant players in Canada's banking system, with operations spanning retail banking, corporate lending, capital markets, and wealth management. The joint statement added that other banks may join the project in the future.
Unlike a retail stablecoin or cryptocurrency, each deposit token represents money already held at a participating commercial bank, with its value recorded as a liability of that bank. As reported by crypto.news, digital ledger technology provides the infrastructure for transferring or programming the deposit. The project could allow participating banks to process certain transfers outside the operating windows used by traditional payment systems, with programmable instructions releasing funds when agreed conditions are met, subject to each bank's compliance and risk controls. A shared network would address one of the limits of products operated by a single institution, as separate banks issuing tokens only for their own clients may be unable to move funds directly to another bank's platform without conversion. The system is designed to support faster, more efficient and programmable payments while maintaining regulatory compliance. Once the shared system is built, Canadian banks will be able to test 24/7, year-round programmable payments while keeping customer funds within the regulated banking system.
The initiative follows regulatory clarification issued by Canada's Office of the Superintendent of Financial Institutions in September. According to crypto.news, OSFI stated that tokenized deposits are not legally different from conventional deposits merely because banks use blockchain or another digital system to represent them. The regulator uses a technology-neutral approach, assessing financial products rather than the technology used to deliver them, with banks required to meet legal, operational, cybersecurity, and third-party risk requirements that apply to their existing deposit businesses. Federally regulated institutions must contact their lead OSFI supervisors before introducing novel financial products or services. The six-bank effort does not commit the lenders to issuing a tokenized deposit yet, but brings together most of Canada's dominant banks to explore a common digital-money model rather than leaving Canadian-dollar blockchain activity solely to stablecoin issuers. The banks explained that the system could deliver faster, more efficient, and programmable payments to Canadian customers while maintaining financial stability and regulatory oversight.
Deposit tokens differ from stablecoins in their financial structure, as reported by crypto.news. While both provide digital payments and programmable transfers, deposit tokens remain claims against the bank that issued them, just like money held in conventional accounts. Stablecoins are generally issued as separate tokens backed by cash, government securities, or other reserve assets, with their legal status and regulatory treatment depending on the issuer. Canada is developing a separate framework for fiat-backed stablecoins, with the 2025 federal budget including measures for a regulatory system administered in part by the Bank of Canada, allocating C$10 million over two years beginning in 2026. The six-bank project has not yet reached the stage of committing to deposit token issuance, but the fact that most of Canada's major banks have come together to explore a common model for digital money signals their intent not to leave Canadian dollar activity on blockchain networks solely to stablecoin issuers.
The Canadian project comes amid a global race among banks to move deposits onto blockchain infrastructure. In the United States, regional banks are building a shared tokenized deposit network, while JPMorgan, Citi, and Wells Fargo have each been pursuing institutional-facing services. Swift has also recently begun testing tokenized deposits for 24-hour cross-border payments with banks across six continents. This project adds another payments use case to Canada's tokenized financial market efforts. In March, the Bank of Canada, RBC, and TD completed Project Samara, a pilot that used tokenized wholesale Canadian dollars to issue, trade, and settle C$100 million (approximately $71 million) in bonds on a distributed ledger. Canada is also cultivating its domestic stablecoin market, with Shopify and National Bank of Canada agreeing to support a regulated, 24/7 digital Canadian dollar in May. The longer-term goal of connecting with other emerging digital asset initiatives aims to help enable around-the-clock payment capabilities.
