Six of Canada’s largest banks have begun work on a shared concept for moving tokenized Canadian dollar (CAD) deposits between financial institutions. The initiative, announced Tuesday, would represent bank deposits as digital tokens while keeping the deposits’ legal status tied to the issuing banks.

Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group said the project’s first phase will concentrate on transferring tokenized deposits across Canadian institutions. The banks also hinted at possible later interoperability with other digital asset ecosystems.

Key takeaways

• Six major Canadian banks are jointly exploring tokenized CAD deposits as a way to move digital representations of deposits between institutions.
• The plan’s early scope is domestic interbank settlement; future steps could connect the approach to broader digital asset systems.
• OSFI recently clarified that tokenized deposits are “not legally distinct” from traditional deposits, supporting the effort from a regulatory perspective.
• Tokenized deposits differ from fiat-backed stablecoins because the deposits remain a liability of a regulated bank, not a separate digital asset issued by a third party.
• Canada’s stablecoin framework is progressing separately and is designed for fiat-backed stablecoins issued by non-financial institutions, not banks.

A joint effort to tokenize deposits—without changing their legal nature

In the announcement, the participating banks framed tokenized deposits as a mechanism to modernize payments. The core idea is to use digital tokens to represent deposits, enabling them to move more quickly and—according to the banks—support “programmable” payment features.

What investors and builders should notice is that the tokenization concept described here is not about converting deposits into a new category of asset that sits outside banking regulation. The banks’ approach is explicitly grounded in existing deposit structures: the tokenized product still corresponds to money held at a regulated bank and remains that bank’s liability.

This distinction matters because it shapes how risk and oversight are applied. According to OSFI’s earlier guidance, the underlying technology used to deliver a financial product does not determine its legal character.

Regulatory backdrop: OSFI’s clarification came earlier this month

Less than two weeks before the banks’ joint announcement, Canada’s banking regulator provided additional clarity on tokenized deposits. On Sept. 10, the Office of the Superintendent of Financial Institutions (OSFI) stated that tokenized deposits are “not legally distinct from traditional deposits.” OSFI also emphasized that legality is determined by the nature of the product, not by whether it is implemented on-chain or through another technology layer.

That timing is more than a coincidence. By aligning their work with OSFI’s interpretation, the banks are effectively operating in a clearer regulatory lane—one that treats tokenized deposits as functionally equivalent to conventional deposits from a legal standpoint.

Still, the banks did not lay out the end-to-end architecture in the materials referenced in the announcement. Readers should expect further details to come as the first phase develops, especially around custody, settlement finality, operational controls, and how interoperability would work in practice.

Tokenized deposits vs. stablecoins: Canada is regulating both, but differently

The new deposit-token initiative sits alongside a broader regulatory push for digital money in Canada, but the policy frameworks are not interchangeable.

Canada’s Stablecoin Act was enacted in March as part of Bill C-15. The legislation establishes a federal framework for fiat-backed stablecoins, requiring non-financial institution issuers to register with the Bank of Canada, keep reserves at least 1:1 in high-quality liquid assets, and enable redemption at par. The framework is expected to take effect in 2027.

However, the Act’s scope is narrower than the tokenized-deposits project. The stablecoin framework covers fiat-backed stablecoins issued by non-financial institutions; banks and credit unions already subject to prudential regulation are outside its scope. The legislation also restricts issuers covered by the framework from presenting stablecoins as deposits or as insured under a public deposit insurance system.

That separation explains why tokenized deposits are being explored by banks under deposit-style legal treatment, while stablecoin policy is aimed at different issuer types. Even though both approaches involve token-like instruments, the regulatory intent diverges: tokenized deposits aim to preserve the traditional banking liability structure, while stablecoin rules focus on how non-bank issuers back and redeem fiat-linked tokens.

What the next phase could mean for payments

The banks said their first phase will focus on moving tokenized deposits between Canadian financial institutions. If successful, that could reduce certain friction points in cross-institution payment flows by enabling more direct digital transfer of deposit-linked balances.

The banks also indicated that longer-term plans could involve opening the system to other deposit-taking institutions, and possibly connecting with other digital asset systems. That raises an important question for the market: whether tokenized deposits will remain primarily an interbank settlement tool within the regulated banking perimeter, or whether they will evolve toward wider interoperability with permissioned networks and, potentially, broader on-chain payment rails.

For now, the initiative is explicitly framed as a development effort. The article notes that Cointelegraph reached out to CIBC for additional details but did not receive an immediate response, suggesting that key technical and operational specifics have yet to be publicly clarified.

Over the coming months, market participants will want to watch how participating banks define the project’s scope in practice—particularly how they handle settlement finality, compliance controls, and whether the pilot results influence wider adoption across Canada’s financial sector—especially in light of OSFI’s recent regulatory clarification.

Senator John Curtis, a Republican representing Utah, sent a letter to leaders of the Senate Judiciary Committee calling for an investigation into US President Donald Trump’s and former President Joe Biden’s sons, citing the former’s involvement in the crypto industry.

In a Monday letter to Senate Judiciary Committee Chair Chuck Grassley and ranking member Dick Durbin, Curtis said that the body should probe “the use of presidential family relationships for private financial benefit, preferential treatment, or access by domestic and foreign interest.” He also asked for subpoenas for Donald Trump Jr. and Hunter Biden, Joe Biden’s son.

The Utah lawmaker specifically called out Donald Trump Jr. for accepting gifts from Russian oligarch Umar Kremlev as part of his wedding, his “active promotion of family-backed cryptocurrency ventures” and advisory roles with prediction market platforms, as the companies are under the regulatory purview of the Commodity Futures Trading Commission. The president said last week that his son had paid Kremlev back for what Donald Trump Jr. and his wife called a “generous wedding gift.“

Curtis also called for a similar probe into Hunter Biden for “substantial business with foreign entities” and instances in which either man’s relationship to the presidency was “invoked or understood to provide value.” President Biden issued a pardon for his son in December 2024 for crimes he “committed or may have committed or taken part in over the last decade,” and Curtis noted that Hunter had “denied involving his father in his business dealings.“

“The purpose of such an inquiry should be straightforward: establish the facts, determine whether existing ethics, disclosure, or anti-corruption laws apply, and identify reforms necessary to prevent the presidency from becoming a vehicle for private enrichment by those closest to it,” said Curtis.

Source: Senator John Curtis

The call for an investigation into the Trump family’s ties to the crypto industry is nothing new for the current session of Congress, but it has largely come from House and Senate Democrats. Lawmakers have asked authorities to probe potential conflicts of interest surrounding Trump’s memecoin, his family’s World Liberty Financial business and a $500 million deal tied to Abu Dhabi’s royal family.

Curtis is serving his first term in the Senate and will not be up for reelection until 2030.

CLARITY still in limbo in US Senate as midterm elections approach

The call for an investigation into Donald Trump Jr. and Hunter Biden came a week after Senate Republicans failed to secure enough support from Democrats to pass the Digital Asset Market Clarity Act, a bill expected to establish market structure rules for the crypto industry. 

One of the sticking points for not supporting the bill, according to some Democrats, was Trump “using crypto to turn the presidency into a profit generating machine.” The president disclosed that he had earned $1.4 billion from ventures tied to digital assets in 2025.

Republicans said the president had agreed to stronger ethics provisions in the bill affecting his crypto investments before the vote, but many Democrats argued that the measures did not go far enough to prevent corruption.

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Arch Lending is preparing to expand its credit offerings to include loans backed by tokenized equities, as lenders increasingly look for new collateral categories to support onchain borrowing. Co-founder and chief revenue officer Himanshu Sahay said the firm expects to move “pretty soon,” arguing that demand for credit against tokenized stocks is growing as the asset class scales.

Speaking on Cointelegraph’s Chain Reaction podcast, Sahay pointed to rapid growth in tokenized equities over the past year, while noting that lending capacity against those assets still appears limited. He expects more lenders to follow as tokenized stock products mature and become easier to use in collateral frameworks.

Key takeaways

• Arch Lending plans to add loans backed by tokenized equities, expanding beyond crypto-only collateral.
• Sahay links the push to growing tokenized stock issuance and a shortage of credit options that support borrowers.
• Arch has recently launched tokenized real-world asset loans backed by Paxos Gold and Tether Gold.
• Existing Arch lending is still crypto-led, with Bitcoin representing more than 80% of the loan book, and rising interest in XRP among US borrowers.

Arch’s next step: credit against tokenized stocks

Arch has already expanded beyond cryptocurrencies, launching loans backed by tokenized real-world assets including Paxos Gold and Tether Gold in recent weeks, according to Sahay. However, crypto remains the dominant collateral category in its current portfolio: Sahay said Bitcoin accounts for more than 80% of Arch’s loan book.

Even within crypto collateral, Arch is seeing shifting borrower preferences. Sahay said the lender has noticed growing interest in XRP as collateral, particularly among US borrowers—an indication that demand for specific asset types may depend on regional borrower needs and available liquidity rather than broad “market beta” alone.

Against that backdrop, tokenized equities represent a logical extension. Sahay cited the broader expansion of tokenized stock offerings from firms including Superstate, Robinhood, and Securitize, suggesting that a larger universe of onchain share tokens is being created—yet lending against those tokens remains relatively underdeveloped compared with more established collateral categories.

In practical terms, the appeal for lenders is straightforward: tokenized stocks and ETFs could enable borrowers to access credit without liquidating underlying exposure, while providing lenders with a collateral pool that may diversify beyond digital assets like BTC and ETH.

Why tokenized equity lending is gaining traction

Arch would not be entering the market first. Tokenized stocks and exchange-traded funds (ETFs) have been moving into collateral and lending products as infrastructure matures.

In February, Ondo Finance launched DeFi lending markets for two tokenized ETFs through an integration with lending protocol Morpho, according to Ondo Finance’s announcement. Ondo’s tokenized versions of the SPDR S&P 500 ETF and Invesco QQQ can be used as collateral for borrowing on Ethereum.

Beyond dedicated lending markets, tokenized equities are also starting to appear in adjacent functions tied to leverage and market operations. Kraken, for example, made 10 xStocks eligible to back futures and margin positions in July, according to Kraken’s product update. Coinbase also rolled out B20 stocks on Base in August, described as including price-feed infrastructure intended to support use cases that can include DeFi borrowing and lending, as previously reported by Cointelegraph.

The throughline across these developments is that tokenized equities are becoming more “programmable” within crypto ecosystems—an essential requirement for credit markets, where collateral eligibility, valuation, and liquidation mechanics determine whether assets can be reliably used in borrowing.

Market expansion: tokenized stocks grow faster than lending options

One reason lenders can justify moving into tokenized equity collateral is the scale of the underlying market. The article cites RWA.xyz data showing distributed tokenized stock value has climbed to about $3.15 billion, up from roughly $630 million a year earlier.

This growth suggests that more capital is being wrapped into tokenized formats that can, in principle, be used in DeFi lending and other credit structures. But the gap that Sahay highlighted remains important: despite rapid tokenized equities adoption, lending backed by these assets is still described as limited. For investors and borrowers, that difference matters because it can translate into fewer opportunities to access leverage or liquidity using those assets, as well as potentially less competitive borrowing conditions than in more mature collateral segments.

As more platforms begin to expand eligibility for tokenized stocks—whether through dedicated lending markets or through margin and futures pathways—the credit ecosystem could become more resilient. It may also normalize tokenized equities as collateral beyond niche experiments.

What to watch next for tokenized equity collateral

Arch’s planned expansion will likely be judged on several practical questions: how quickly it can integrate tokenized stock collateral, how lenders and borrowers manage valuation and risk across different issuers, and whether Arch’s approach aligns with broader market infrastructure being developed by other venues.

With tokenized stock value growing sharply and multiple crypto platforms already moving tokenized equities into lending-adjacent uses, the next phase will be less about whether lending is possible and more about whether it becomes competitive, scalable, and consistent enough to attract mainstream borrower demand.

In the coming months, readers should watch for Arch’s timing on tokenized equity-backed lending and for additional platforms to announce similar collateral expansions—signals that the market may be transitioning from early infrastructure pilots into fully functional credit offerings.

Crypto lender Arch Lending plans to expand into loans backed by tokenized equities as the market for onchain stocks expands and lenders begin exploring new uses for the assets as collateral.

Arch co-founder and chief revenue officer Himanshu Sahay told Cointelegraph’s Chain Reaction podcast that the lender plans to enter the market “pretty soon,” pointing to a need for credit against tokenized stocks.

Sahay said tokenized equities have grown rapidly over the past year, but lending against the assets remains limited, and predicted that more lenders will enter the market.

He pointed to tokenized equities issued by firms including Superstate, Robinhood and Securitize, predicting that multiple lenders will eventually participate in the market to provide credit against the assets.

Source: Cointelegraph

Arch has already expanded beyond cryptocurrencies into tokenized real-world assets, launching loans backed by Paxos Gold and Tether Gold in recent weeks, according to Sahay.

But crypto still dominates Arch’s existing loan book, with Bitcoin (BTC) accounting for more than 80%, Sahay said. He added that the lender has recently seen growing interest in XRP as collateral, particularly among US borrowers. 

Related: Kraken brings DeFi yield to tokenized stocks and ETFs

Tokenized stocks enter lending markets

Arch would not be the first lender to enter the tokenized equity credit market, with tokenized stocks and exchange-traded funds (ETFs) already entering lending and collateral products.

In February, Ondo Finance launched DeFi lending markets for two of its tokenized ETFs through an integration with lending protocol Morpho. Ondo’s tokenized versions of the SPDR S&P 500 ETF and Invesco QQQ can be used as collateral for borrowing on Ethereum.

Tokenized stocks are also beginning to find uses beyond dedicated lending markets. Kraken made 10 xStocks eligible to back futures and margin positions in July, while Coinbase’s B20 stocks launched on Base in August with price-feed infrastructure designed to support uses including DeFi borrowing and lending.

Tokenized equities. Source: RWA.xyz

The growth in lending use cases comes as the tokenized equities market itself has expanded sharply. Distributed tokenized stock value has climbed to about $3.15 billion from roughly $630 million a year ago, according to RWA.xyz data.

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WASHINGTON, D.C. — Senator Cynthia Lummis said she was “dismayed, dumbfounded and saddened” that the Senate couldn’t advance a key procedural vote for crypto market structure legislation last week.

Lummis blamed Democrats for the bill’s failure at an appearance Tuesday at CoinDesk’s Policy & Regulation event, saying that while the bill was the result of negotiations between members of both parties.

“The problem was, as I see it, Democrats hate President [Donald] Trump more than they like good policy, and the way I see it is they chose their visceral hatred for President Trump and denied the opportunity to pass important policy legislation before a midterm,” she said. “They chose that … pin it on the Democrats.”

The bill itself was a bipartisan product which grew from some 300 pages to over 600, she said, after Democrats asked for provisions addressing issues like bankruptcy protections, among other items.