Canada's 'Big Six' banks to launch interbank tokenized deposit initiative

Tokenized deposits are digital representations of money and other assets already held at a bank, rather than separate stablecoins issued by a crypto company. A shared system could enable Canadian banks to test 24/7 programmable payments while keeping customer funds within the regulated banking system.

Canada’s move comes as banks worldwide race to put deposits on blockchain infrastructure. In the U.S., regional lenders are building a shared tokenized-deposit network, while JPMorgan, Citi and Wells Fargo have pursued their own institutional offerings. Swift also recently began testing tokenized deposits for 24/7 cross-border payments with banks across six continents.

The initiative adds a payment use case to Canada’s growing work on tokenized financial markets. In March, the Bank of Canada, RBC and TD completed Project Samara, a test that issued, traded and settled a 100 million Canadian dollar (roughly $71 million) bond on a distributed ledger using tokenized wholesale Canadian dollars.

Canada is also developing a domestic stablecoin market. In May, Shopify and the National Bank of Canada backed a regulated digital Canadian dollar intended to operate around the clock.

The six-bank project does not yet commit the lenders to issuing a tokenized deposit. But it brings together most of Canada’s largest banks to explore a common model for digital money, rather than leaving Canadian-dollar activity on blockchain networks to stablecoin issuers alone.