- Bank of Canada tests C$100M tokenized bond under Project Samara using DLT.
- BoC collaborates with RBC, TD, and EDC to pilot blockchain-based bond markets.
- Project Samara highlights tokenization benefits but notes regulatory gaps.
The Bank of Canada (BoC) has completed another initiative testing the tokenization of the country’s bond market with several financial institutions. Under Project Samara, Export Development Canada issued a C$100 million tokenized bond using distributed ledger technology (DLT).
Bank of Canada Taps DLT to Update Capital Markets
The Bank of Canada worked closely with RBC Capital Markets, RBC Investor Services, TD Bank Group (TD), and Export Development Canada (EDC) in Project Samara. Furthermore, the central bank of Canada is keen to collaborate with public and private sector entities to democratize capital markets through blockchain technology.
Moreover, Project Samara tested the use of DLT with a real bond that was traded and settled using wholesale central bank deposits. According to the announcement, Project Samara was building on the central bank’s prior similar initiatives through the Jasper project.
“Project Samara shows how the public sector and industry can work together to harness innovation in the payment ecosystem. The Project allowed us to understand the real-world benefits and challenges of tokenization in capital markets,” Ron Morrow, Executive Director, Payments Supervision and Oversight at the Bank of Canada, stated.
After the successful completion of Project Samara, the central bank of Canada had a clear understanding of the limitations and potential of the DLT in tokenization. For instance, the announcement highlighted that counterparty and settlement risks were significantly reduced.
However, the Bank of Canada noted that a new operational risk related to the use of a relatively new technology was introduced. Additionally, the Bank of Canada stated that a regulatory gap still exists, which has caused an adoption barrier.
What’s the Impact on the Crypto Industry?
The strategic collaborative launch of a tokenized bond is an indication of the rising demand for digital assets and the use of blockchain technology. Furthermore, tokenization of real-world assets is expected to democratize traditional financial services to more retail investors.
As such, the crypto industry is well-positioned to grow exponentially in Canada, catalyzed by institutional investors and a clear regulatory outlook.
Jim Byrd, Global Head of Macro Products, RBC Capital Markets, stated that beyond the technical achievement, the project helped deepen their understanding of how distributed ledger technology can be applied across capital markets, including issuance, secondary trading, and settlement. He added that the insights gained will help the firm explore how these capabilities could enhance the services it offers to clients.
Related: CIRO Issues Tough New Crypto Custody Rules to Prevent Fraud in Canada
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