- Canada’s OSFI clarified that tokenized and other digitally represented deposits are not legally distinct from traditional bank deposits.
- The regulator said its approach is technology-neutral, meaning financial products are regulated based on what they are rather than the technology used to deliver them.
- Financial institutions remain responsible for complying with existing laws and managing technology, cybersecurity and third-party risks when introducing new digital products.
Canada’s banking regulator has clarified its position on tokenized deposits as financial institutions increasingly explore blockchain and other digital technologies.
In a Sept. 10 statement, the Office of the Superintendent of Financial Institutions said tokenized and other digitally represented deposits are not legally different from traditional deposits.
OSFI said it supports financial-sector innovation while maintaining a technology-neutral regulatory approach.
That means the regulator focuses on the underlying nature of a financial product or service rather than the technology used to create or deliver it.
Existing Rules Still Apply to Tokenized Deposits
Financial institutions introducing tokenized deposits remain responsible for complying with all applicable laws and regulations.
Digitally representing a deposit does not create a separate legal category or remove existing regulatory obligations.
OSFI’s position means institutions can potentially adopt new technologies for deposits while continuing to operate within established regulatory frameworks.
The clarification could provide greater certainty for banks and other regulated institutions considering tokenized financial products.
Banks Remain Responsible for Third Parties
OSFI also emphasized that financial institutions remain responsible when third parties perform activities on their behalf.
Institutions must ensure new products and services comply with relevant regulatory requirements even when external technology providers or other companies are involved.
Banks are also expected to follow OSFI guidance covering technology, cybersecurity and third-party risks.
Those requirements could become increasingly important as traditional financial institutions integrate blockchain infrastructure and external digital asset technology providers.
OSFI Encourages Early Consultation
Financial institutions considering novel products or services should consult their OSFI lead supervisors before launching them, according to the regulator.
OSFI also encouraged institutions to seek legal advice when appropriate.
The regulator said its clarification could provide additional certainty as advances in digital financial technology create new products such as tokenized deposits.
Rather than establishing an entirely separate framework for the technology, OSFI is signaling that existing financial rules will continue to apply based on the underlying product.
