Canadian Regulator Unveils New Capital Rules For Crypto Assets
Canada’s financial regulator has proposed new capital guidelines for financial institutions and insurers that hold crypto. The OSFI’s new guidelines will be open for public consultation till September 20, 2023. The new capital and liquidity rules will replace the interim advisory on the regulatory treatment of crypto asset exposures.
The top financial regulator in Canada has proposed new capital and liquidity guidelines for financial institutions and insurers that hold crypto assets. The new rules were drafted in response to the banking standards for crypto asset exposures released by the Basel Committee on Banking Supervision in December last year.
OSFI’s Guidelines For Crypto Are Open For Public Consultation
The changes to capital and liquidity approach to crypto assets reflect an evolving risk environment and international developments, the Office of the Superintendent of Financial Institutions (OFSI) stated in a press release earlier today.
The new guidelines laid out details regarding the regulatory capital treatment of crypto asset exposures for federally regulated deposit-taking institutions (banks, credit unions), and insurers. The draft guidelines will remain open for public consultation till September 30, 2023.
OSFI’s guidelines laid out four classifications of crypto assets and the capital requirement for each type. The interim advisory on the regulatory treatment of crypto asset exposures, which was published in August 2022 will remain in effect until the new guidelines are approved.
“Deposit-taking institutions and insurers need clarity on how to treat crypto-asset exposures when it comes to capital and liquidity. We look forward to giving them this clarity through these new guidelines that reflect industry input and international standards.” Peter Routledge, Superintendent of Financial Institutions
The Basel Committee, which is the premier global standard setter for the regulation of banks around the world, published banking standards last year for banks with crypto exposure. The standards detailed the prudential treatment of banks’ exposure to crypto assets, including tokenized traditional assets, stablecoins, etc, and classified crypto as the riskiest assets for federally regulated deposit-taking institutions to hold.
The Basel Committee’s standards are expected to be implemented by January 2025. The European Union has already reached a deal on bank capital legislation for crypto asset exposures in a bid to keep unbacked crypto out of traditional finance.
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