Hey, it's Marc.
What's happening: Canada's six biggest banks said on Tuesday they are “jointly exploring” a tokenized deposit in Canadian dollars. That is a normal bank deposit, recorded on a shared digital ledger so it can move like a crypto token.
Phase one moves the tokens between banks. Later, the release says, the plan is to “connect with other emerging digital assets initiatives.” The six hold C$6.25 trillion of deposits across their groups. The three Canadian-dollar stablecoins, the crypto version of the same idea, add up to about C$4.5 million.
A tokenized deposit is an ordinary bank deposit that lives on a shared ledger, so it can move like a crypto token.
Canada's six biggest banks say they are exploring one together, starting with transfers between themselves.
Canada's new stablecoin law bans stablecoin issuers from paying interest. Banks are exempt.
So a bank token can pay you interest. A stablecoin can't.
Nothing is live yet: no blockchain, no date, no product.
Why it matters: Most people will read this as banks finally going onchain. We think that misses the point. Canada's new stablecoin law bans issuers from paying interest, and banks are exempt. On September 10, the bank regulator said a tokenized deposit is legally just a deposit. So a bank token can pay interest and a stablecoin cannot. The six moved to keep deposits from leaving before a crypto market exists to take them. They are building the reason not to need a stablecoin.
