Canada’s Office of the Superintendent of Financial Institutions (OSFI) has launched a consultation period regarding crypto-asset disclosure requirements for federally regulated financial institutions. This move, outlined in the 2023 federal budget under “Combatting Financial Crime,” aligns with the government’s commitment to establish guidelines on crypto exposure for banks to safeguard Canadians’ savings and the financial sector’s security.
The consultation, mandated by the federal budget, was initiated in response to a similar inquiry by the Bank for International Settlements (BIS). The Canadian government aims to address the lack of regulatory clarity surrounding crypto assets, a crucial step in ensuring the stability of the financial system.
In March, the government declared its intention to develop guidelines on crypto exposure for banks. Section 5.4 of the budget emphasizes the need to protect citizens and the financial sector. Additionally, federally regulated pension funds are mandated to disclose their crypto exposure to the OSFI, a measure deemed essential following substantial losses incurred by Canadian pension funds in 2022 due to crypto-related investments.
The OSFI’s consultation, aligned with the BIS, invites stakeholders to provide feedback on the Basel Committee on Banking Supervision’s (BCBS) proposals. This ensures that the guidelines resonate with the Canadian context, emphasizing the importance of a cohesive international approach to regulating crypto assets.
Canadian pension funds faced setbacks in 2022, with notable losses incurred by major funds like the Caisse de Dépôt et Placement du Québec and the Ontario Teachers’ Pension Plan. The OSFI’s consultation reflects a proactive stance in responding to evolving financial landscapes, with a deadline for responses set for January 31, 2024.
This marks another step in Canada’s commitment to regulating crypto assets and fostering financial stability in an era of evolving financial technologies. The OSFI’s approach, mirroring international consultations, underscores the interconnected nature of global financial systems and the need for harmonized regulatory frameworks.
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