Canada’s banking regulator backs innovation in tokenized deposits

Canada’s Office of the Superintendent of Financial Institutions (OSFI) said it backs innovation in the financial sector and clarified that tokenized and other digitally represented deposits are not legally distinct from traditional deposits.

In a statement issued on Sept. 10, the regulator said its approach is technology-neutral and focuses on what a financial product or service is rather than how it is built or delivered.

According to OSFI, financial institutions are responsible for ensuring that new products and services comply with applicable laws and regulations, including when third parties perform activities on their behalf. The regulator also expects institutions to comply with relevant guidance covering technology, cyber and third-party risks.

The regulator said financial institutions should consult their OSFI lead supervisors before introducing novel products or services and seek legal advice when appropriate. OSFI said the clarification could provide additional certainty as digital financial technology enables new products such as tokenized deposits.