Stablecoins and tokenized deposits are poised to reshape global finance. How can Canada’s banks lead the charge?

Globally, momentum around tokenized money is building. In the U.S., the GENIUS Act has already been enacted; Canada’s Stablecoin Act is progressing; and similar legislation is progressing or already in place across jurisdictions including Europe, the UAE, Hong Kong, and Singapore. The result is the solidifying regulatory foundation for tokenized money globally.¹

Tokenized money is defined as traditional fiat currency or cash equivalents that are represented as digital tokens on a blockchain, with fiat-backed stablecoins and bank-issued tokenized deposits being most popular. Both market capitalization and transaction volumes are increasing, driven by growing adoption in mainstream payment flows and commercial transactions. Stablecoins alone currently have a market capitalization exceeding $400 billion CAD as at February 2026², growing by roughly a multiple of 10 since the end of 2020.

J.P. Morgan research suggests the stablecoin market could reach $500 billion to $750 billion USD (approximately $677 billion to $1 trillion CAD) by 2028.³ Meanwhile, Citigroup estimates the stablecoin market is on track to reach $1.9 trillion USD (or approximately $2.5 trillion CAD) by 2030 as a base case, with the bull case estimated at $4.0 trillion USD (or approximately $5.4 trillion CAD).⁴ How fast the market grows depends on continued regulatory clarity, institutional adoption, and marketplace innovation.

For Canadian banks, the question has shifted from if tokenized money will reshape the financial landscape to how and when.

The Canadian context and landscape

Canada cannot afford to stand still and be a bystander during this critical moment. Globally, governments, international banks, and multinational enterprises are moving beyond pilots and operating production-grade tokenized money solutions, embedding them directly into payment flows, platforms, and digital experiences. As these solutions scale, tokenized money is increasingly becoming a promising payment and settlement layer for digital commerce and cross-border activity.

In the absence of a strong, ubiquitous domestically issued stablecoin alternative(s), adoption will naturally gravitate toward the most liquid, widely accepted, and easily accessible options—today, that means foreign-issued, foreign-currency stablecoins, particularly those denominated in U.S. dollars. If Canadians begin adopting these existing foreign-issued, foreign-currency stablecoins at scale, deposits will be diverted from domestic banks, reducing demand for Canadian government securities, constraining liquidity in Canada’s financial system, and consequently raising the cost of capital.

The choice for Canadian banks is clear: lead the charge or risk being sidelined as foreign-led solutions define the market.

What are stablecoins and tokenized deposits?

Stablecoins and tokenized deposits are both forms of non-sovereign tokenized money, but their legal characterization and economic function differ in important ways. Stablecoins are typically fiat-backed digital tokens designed to function as payment instruments, enabling real-time, 24/7 transfer of value across platforms. Their regulatory classification remains evolving, and whether they are ultimately treated as money or as securities will determine whether they fall within the payments and monetary framework, focused on stability and par redemption, or the securities framework, focused on disclosure and investor protection. Tokenized deposits are on-chain representations of commercial bank deposits. They remain regulated bank liabilities, redeemable at par, and operate within the existing prudential banking framework, making them more clearly characterized as bank money rather than securities.

Stablecoins

• Can be issued by both banks and non-bank entities (such as fintechs and digital asset natives).
• Backed by segregated reserves at a minimum of a 1:1 basis, often highly liquid assets such as short-term government securities or cash equivalents.
• Operate on public blockchains and support real-time, global, and programmable payments governed by emerging regulatory frameworks, which may vary by jurisdiction.
• Stablecoins are currently addressed under securities regulation in Canada, but global regulatory momentum is shifting toward treating payment-oriented, fiat-backed stablecoins as payment instruments, a direction Canadian policymakers are now examining.
• Definitions remain fragmented domestically: at the federal level, stablecoins are increasingly viewed as payment instruments, while at the provincial level they continue to be classified as securities and/or derivatives.

Tokenized Deposits

• Issued exclusively by regulated commercial banks.
• Represent direct claims on the issuing bank, recognized as traditional deposits, and provide a low-cost, real-time mechanism to move funds and liquidity internally across a bank’s businesses and geographies.
• Benefit from existing banking protections (e.g., deposit insurance, capital requirements).
• Easily convertible to other forms of digital cash (e.g., bank deposits, card balances).
• Fall under existing prudential banking regimes, preserving deposits on bank balance sheets so they can be leveraged for lending, investment, and domestic economic growth.

What does this mean for Canadian banks?

The strategic advantages of tokenized money are widely documented and well understood. Yet, as with most transformative technologies, scale is ultimately determined by economics, and mass adoption in Canada will occur when on-chain transaction costs match or undercut those of incumbent payment rails.

Tokenized money adoption will inevitably require banks to adapt how they issue, manage, govern, operate, and report on digital money.

However, the scale and complexity of transformation will differ depending on the tokenized money type:

• Stablecoin adoption requires a more fundamental transformation of banking systems, technology, and risk management practices.
• Tokenized deposit adoption represents a more manageable “stepwise” evolution into tokenized money, leveraging existing regulatory and operational frameworks.

What changes and what stays the same for Canadian banks?

Stablecoins represent a transformation:

• What changes? Money architecture (issuer, liability, settlement)
• What stays the same? Very little
• Risk profile: Systemic (if not scaled or regulated appropriately)
• Change velocity: Led by market, enabled by regulators

Tokenized deposits represent an evolution:

• What changes? Settlement mechanics and speed
• What stays the same? Deposits, balance sheet, controls
• Risk profile: Contained
• Change velocity: Led by banks
  

Impacts on core banking functions

Here is a forward-looking view of emerging impacts and how Canadian banks can prepare. Enterprise risk is foundational to the tokenized money agenda. As such, consolidated risk considerations are embedded across each impacted core banking function, reflecting the reality that tokenized money reshapes exposures across the bank rather than confining them to a single domain.

1. Treasury & liquidity

• 24/7 redemption, shifting deposit behaviours, and potential disintermediation, compressed liquidity response times.
• Treasury shifts from batch-based to real-time liquidity management.
• Liquidity may fragment across traditional rails, tokenized reserves, and digital wallets, particularly where funds migrate outside the regulated banking system, potentially reducing system-wide fungibility. By contrast, tokenized deposits retain funds within regulated bank balance sheets, preserving liquidity depth and supporting continued credit creation and broader access to capital.
  

How can banks prepare?
Banks must evolve liquidity frameworks from batch-based models to always-on operations. This will enable real-time visibility across traditional rails, tokenized money reserves, and wallets, with enhanced stress-testing for rapid redemption and digital-run scenarios.

2. Payments, Settlement, Operations

• Increased reconciliation and control complexity from integrating on-chain and off-chain payment and settlement environments.
• Higher operational resilience expectations as payments move to always-on, real-time processing models.
• Expanded operational and liquidity coordination across legacy rails, tokenized platforms, and third-party providers, alongside enhanced real-time visibility into payment status and settlement through shared ledgers, reducing the opacity typical of traditional multi-intermediary payment rails.

How can banks prepare?
Payment operations must evolve to support always-on settlement and integrated on-chain and off-chain flows. This includes modernizing for faster reconciliation and exception management, strengthening 24/7 operational resilience, and adapting operating models to coordinate across existing payment rails and emerging tokenized money platforms.

3. Fraud & Anti-Money Laundering (AML)

• While on-chain activity requires near-real-time fraud and AML oversight across a broader ecosystem, shared ledger transparency enhances transaction traceability, enabling faster detection of suspicious activity and potential fund recovery.
• Multi-network transaction flows (e.g., multiple blockchain networks) expand AML and tracing requirements beyond a single platform, increasing coordination requirements and compliance burden.
• As activity shifts to digital wallets and blockchain platforms, maintaining strong identity verification, access controls, and fraud oversight becomes more complex than in traditional account-based models.
  

How can banks prepare?
To manage elevated fraud and financial crime risks, banks must adopt crypto-native compliance tools and deploy real-time behavioural monitoring models. AML regimes and frameworks for on-chain payments must close gaps on regulatory requirements / expectations compared to existing payment methods along with extending to wallet-level due diligence, leveraging on-chain analytics for sanctions screening and counterparty risk scoring.

4. Finance, Accounting, & Regulatory

• Evolving asset and liability treatment and more dynamic balance sheet management will reshape how tokenized money is recorded and governed, while built-in traceability at the architectural layer can materially reduce reconciliation effort and audit friction compared to traditional systems.
• Heightened regulatory scrutiny of reserve backing, with transparency expectations extending beyond balance attestations to include asset composition, liquidity profile, redemption, custody safeguards, internal controls, and governance.
• Notwithstanding the global regulatory momentum in the stablecoin space, the stablecoin regulatory landscape in Canada is still fragmented across various stakeholder groups in the federal and provincial governments, which will take time and coordinated efforts to overcome to align the tax treatment of stablecoins to that of other payment instruments or currency.

How can banks prepare?
Banks should modernize finance and accounting frameworks to track tokenized liabilities, support programmable payment revenue models, and maintain auditability across smart contracts and reserve attestations. Ongoing coordination with regulators and tax authorities will be required as accounting and tax treatment for tokenized money continues to mature.

5. Technology

• Tokenized money controls require strong isolation and independent governance, with custody and private-key management architected as a parallel control layer that interoperates with, but is not embedded within, core banking systems.
• Introduction of new on-chain systems and capabilities, including on-chain ledgers, custody infrastructure, wallet architecture, key management, and smart contracts.
• Interoperability between legacy cores and blockchain infrastructure becomes a foundational design requirement, along with expanding cyber risk management beyond traditional core banking systems.

How can banks prepare?
Integrating blockchain-based ledgers with existing core banking systems can enable seamless interoperability of financial assets between on-chain and off-chain platforms. Modernizing architecture supports real-time atomic settlement and secure custody, while maintaining the stability of core systems. The priority is not replacing legacy systems but using targeted overlays and interoperability layers to enable tokenized money innovation while safeguarding balance sheet strength, financial stability, and lending capacity. As tokenization extends beyond money into additional asset classes such as securities, commodities, and digital credentials, banks will need to continue evolving their platforms to support an expanding range of digital-asset use cases.

Five “no regret” actions for Canadian banks

While the Stablecoin Act in Budget 2025 is an important step forward, it does not currently apply to issuers that are financial institutions. Additional clarity will be needed to align expectations for banks along with harmonizing requirements where needed for a competitive playing field.

As banks look to navigate this space, there is a strategic imperative to enable tokenized money movement which optimizes the greatest ubiquity and economies of scale while still preserving the capital for lending in the economy.

To engage and compete in the tokenized money ecosystem, banks can consider the following “no-regret” actions in the near to medium term:

1. Mobilize leadership and define strategic choices: Establish a leadership council representing the most impacted areas, with clear accountability to advance a cohesive tokenized money and broader crypto agenda while elevating the enterprise’s baseline knowledge. Align early on investment priorities by focusing on high-value, scalable use cases with clear demand and regulatory readiness, while defining the bank’s preferred ecosystem role(s). At the same time, actively manage a portfolio of strategic options, recognizing that early investments can preserve flexibility and prevent the cost of entry from becoming prohibitive as market and regulatory certainty increases.

2. Engage and collaborate with the ecosystem: Select ecosystem partners based on resilience, platform and solution capabilities, proven marketplace and regulatory credibility, and concentration risk management. Explore opportunities for co-creation to accelerate organizational maturity, distribute risk, and adopt a more expansive and dynamic approach to risk appetite as novel tokenized asset solutions and use cases continue to evolve.

3. Enterprise fluency and workforce upskilling: Build deep expertise in tokenized money while raising broad organizational awareness. Success will require both specialized talent across engineering, operations, risk, and treasury, and enterprise-wide fluency so teams can confidently support the bank’s digital asset ambitions. This capability cannot be built through theory alone. Organizations need to “get the reps in” through pilots and real-world experimentation. Traditional roles cannot simply be repurposed; new skills, governance discipline, technical depth, and operating muscle must be intentionally developed over time.

4. Monitor and shape regulations: Proactively track regulatory developments in the U.S. and globally leveraging insights as an impetus to engage early and collaboratively with policymakers / regulators to define principles-based regulations that will enable growth while mitigating systemic risk. Continue to advocate and support shaping of stablecoin regulations in ways that protect safety and soundness, enable innovation, and promote standardization and consistency across banks, payment service providers, and stablecoin issuers.

5. Invest in scalable foundations: Build stable, scalable technology and operating foundations that support today’s tokenized money ambitions (e.g., custody, private key management, wallets) while remaining flexible enough to evolve as the digital asset ecosystem matures. Prioritize modular, interoperable architectures and resilient operating models that enable seamless integration between on-chain capabilities and existing systems. The focus should be less on wholesale legacy modernization and more on deploying flexible overlays and interoperability layers. Beyond technology and operations, having the appropriate legal and risk framework along with early (and frequent) engagement with internal teams will be paramount for success. This approach reduces near-term delivery risk while preserving long-term strategic optionality.

How Deloitte can help

Deloitte has been one of the longest-standing professional services firms focused on digital assets, supporting the financial institutions both within Canada and globally through blockchain proof of concepts, industry tokenized money consortia initiatives, thought leadership, commercialization opportunities, and regulatory considerations.

Combined with leading global payments expertise along with breadth across several relevant services affords us a unique, practical, regulatory-aware understanding of how tokenized money will enable the future of payments while reshaping liquidity, risk, operating models, and market structure.

Deloitte brings a breadth of end-to-end capabilities, from strategy, architecture, technology delivery, ops transformation, risk and regulatory, financial crimes, finance and accounting, tax, assurance, and managed services. Wherever you organization is in your tokenized money journey, we’re here to help.

Connect with our leaders to discuss how.