Canada’s financial regulator has ruled that tokenized deposits recorded on a blockchain are legally equivalent to traditional bank deposits, removing a key regulatory barrier for federally regulated institutions developing digital deposit products. The Office of the Superintendent of Financial Institutions (OSFI) confirmed on September 10 that the technology used to register a deposit does not change its legal classification, meaning Canada Tokenized Deposits will be treated as liabilities under the same framework as conventional deposits. The clarification allows banks to experiment with blockchain-based payments and settlements while still adhering to existing rules on banking, cybersecurity, and risk management.
The Office of the Superintendent of Financial Institutions released its statement on September 10, confirming a neutral stance toward technology in financial operations. According to the OSFI, the technology is not relevant to the classification of a product, meaning a deposit registered on blockchain is a regular bank deposit under legislative regulation.
The OSFI stated that the legal relationship between the client and the issuing institution remains unchanged by the use of distributed ledger technology. As a result, Canada Tokenized Deposits will be considered liabilities of regulated entities under the same legislative framework as traditional deposits.
The regulator evaluates the substance of financial products rather than their form. This approach may help banks design programmable payments, digital settlement systems, or other deposit products without requiring new rules each time technology is introduced.
The clarification does not exempt banks from regulation. Institutions must ensure innovation complies with all relevant rules, including those for third-party activities. The OSFI specifically cited guidelines B-13 for technology and cyber risk management and B-10 for third-party risk management.
Banks should consult their OSFI lead supervisor before launching novel products and services. The clarification allows experiments with blockchain payments and settlements without requiring deposits to be reclassified under the law.
The OSFI’s announcement is separate from Canada’s broader stablecoin regulations. The country proposed a framework in its 2025 federal budget, allocating approximately $7.3 million for stablecoin supervision at the Bank of Canada for two years starting in 2026.
The OSFI also released the Capital and Liquidity Treatment of Crypto-asset Exposures Banking Guideline for 2027 on September 10. The guidance introduces requirements for banks with crypto-exposures aligned with Basel Committee standards while accounting for Canadian conditions.
The guideline accepts certain cross-exchange hedging practices for Group 2a crypto-assets traded on recognized exchanges. It also excludes qualifying client-clearing exposures from the Group 2 exposure threshold.
The new regulation takes effect on November 1, 2026, for institutions with October 31 fiscal year-ends, and January 1, 2027, for those with December 31 fiscal year-ends. The OSFI will continue monitoring crypto-markets, research, and international standards.
