Canada’s Office of the Superintendent of Financial Institutions issued guidance on Sept. 10 establishing that tokenized bank deposits do not constitute a new category of financial products simply because they utilize blockchain or other digital infrastructure. The regulator stated that the underlying technology used to deliver a financial product does not determine its legal classification.
Under OSFI’s technology-neutral approach, tokenized deposits are legally equivalent to traditional bank deposits. The key distinction lies in what the financial product represents rather than whether records are maintained on a distributed ledger. A tokenized bank deposit remains a claim on a regulated financial institution, with the digital token primarily changing how that claim can be represented, transferred, or integrated with other financial systems. This approach differs from crypto assets such as stablecoins issued by non-bank entities.
The clarification provides federally regulated financial institutions with greater certainty as they explore blockchain-based banking products. Rather than requiring a separate legal framework, banks can proceed within the existing banking regulatory structure. The Bank of Canada has similarly characterized tokenization as representing traditional assets and ownership records on a digital ledger, noting potential benefits such as faster settlement and reduced counterparty risks.
OSFI’s announcement does not diminish regulatory oversight. Financial institutions remain subject to existing capital, cybersecurity, technology, and supervisory requirements. Banks must ensure tokenized products comply with federal laws and are responsible for third-party service provider risks. Institutions are also expected to consult OSFI supervisors before launching novel products. On the same date, OSFI published final capital and liquidity rules for crypto assets scheduled to take effect in November 2026 or January 2027, depending on institutional fiscal years. These developments reflect Canada’s broader regulatory position that traditional financial products do not automatically become crypto products when moved onto blockchain infrastructure.
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