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OSFI restricts Canadian banks crypto-assets exposure with new guidelines

 According to the Office of the Superintendent of Financial Institutions (OSFI), Canadian financial institutions must notify the office if their total exposure to type 2 cryptocurrencies is greater than 1% of their Tier 1 capital on August 19. The interim guidelines from the nation’s financial regulator state that Canadian banks and insurers must keep their exposure to crypto assets to a minimal portion of their capital.

Superintendent Peter Routledge stated:

“We have provided this interim approach to help ensure risks in this area are managed prudently and supervised according to the principle of “same activity, same risk, same regulation.’

Additionally, OSFI must be informed if a company’s total net short positions on such assets exceeds 0.1% of Tier 1 capital. The rules go into effect in the second quarter of 2023.

The new interim guidelines will give the sector the first substantial framework for how to manage crypto since cryptocurrencies are mostly unregulated in Canada. The Basel Committee on Banking Supervision’s recommendations, the government’s legislative assessment of the issue, and any relevant changes in the crypto market would all be taken into account in OSFI’s update of the strategy.

 Due to regulatory uncertainties, large international banks have refrained from dealing in or storing crypto assets on their balance sheets. The US Federal Reserve has asked banks to notify it before engaging in crypto-related activities, although it hasn’t specified the regulations’ specifics regarding capital requirements.

Read more at Cryptoshrypto:
Crypto.com signs pre-registration agreement with OSC in Canada

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