Canada’s OSFI says tokenized deposits are legally the same as bank deposits

Canada’s banking regulator has clarified that tokenized deposits are not legally different from traditional deposits, giving federally regulated financial institutions a clearer path to develop deposit products using blockchain and other digital technology. Summary OSFI said tokenized deposits are not legally distinct from traditional bank deposits, regardless of the technology used to issue or deliver them. Canadian financial institutions remain responsible for meeting existing legal, technology, cyber and third party risk requirements. Banks are expected to consult their OSFI lead supervisors before launching novel financial products or services. The clarification comes as banks globally test tokenized deposits for payments and settlement using blockchain infrastructure. The Office of the Superintendent of Financial Institutions said financial institutions and their third-party providers have been developing new financial products as digital finance advances, including tokenized and other digitally represented deposits. OSFI said its latest statement was intended to clarify how existing federal financial institution laws apply when banks use new technology to offer such products....