The Canadian Investment Regulatory Organization (CIRO) has approved TD Securities and RBC Dominion Securities to test the experimental issuance, distribution and trading of tokenized bonds under the regulator’s sandbox, InnovateSafe.
The dealers will test a blockchain-based platform for Export Development Canada-issued bonds settled using Bank of Canada-issued digital currency over the next two years. The experiment will assess whether tokenized bonds lead to more efficient transaction processing, improved transparency and reduced settlement risk.
Participation will only involve participating dealers and their affiliated banks. No clients, investors, or other dealer members will be involved.
Throughout the experiment, TD and RBC must maintain records according to existing CIRO rules and file quarterly reports on material risks, cybersecurity incidents and performance and usage data, among other requirements.
While the Bank of Canada shelved plans to issue a retail digital dollar in 2024, this specific experiment will settle trades with wholesale digital dollars created and managed by the central bank in a private blockchain environment. The digital dollars will be exchangeable into hard currency.
When the test ends, further use of the private blockchain developed for this project will require additional approval.