Canada Seeks Public Feedback on Updated Cryptocurrency Regulations
In Brief
Canada's Office of the Superintendent of Financial Institutions is advocating for changes to its approach regarding the capital and liquidity of crypto assets. This is a move designed to align with the changing risk environment and global trends, ultimately formulating clearer guidelines that cater specifically to Canada.
The Canadian regulatory body has revealed its intention to modify its policies surrounding capital and liquidity as they pertain to cryptocurrencies. This proposed update is geared towards enhancing the management of potential risks linked to digital currencies by introducing four distinct categories of digital assets, each with its own capital requirements.
According to a news release from Ottawa on July 26, the Office of the Superintendent of Financial Institutions (OSFI) is looking to update its strategy concerning capital and liquidity for cryptocurrencies. This initiative intends to adjust to the shifting landscape of risks while also staying up-to-date with international regulations.
OSFI has rolled out two preliminary guidelines. One is directed at federally chartered deposit-taking institutions, while the other focuses on insurance companies. Both frameworks outline the necessary capital considerations related to crypto asset holdings.
OSFI is working on thorough guidance that speaks directly to Canada's unique context. This undertaking adheres to the updated banking standards set forth by the BCBS regarding crypto asset exposures from December 2022. Public feedback is welcomed on these draft guidelines until September 20, 2023.
In line with @BIS_org ’s new banking standards for #crypto In terms of asset exposures, we've crafted Canadian-specific guidance.
- Superintendent of Financial Institutions (@OSFICanada) July 26, 2023
We welcome your comments on our proposed modifications to the capital and liquidity framework. #cryptoassets . https://t.co/M45FFFbUtZ pic.twitter.com/xbrgsk0XKO
The newly proposed guidelines present two different frameworks—simplified and comprehensive. The selection between these two frameworks hinges on how much exposure an institution has to cryptocurrencies. These guidelines classify crypto assets into four distinct categories, each dictated by specific capital requirements.
The banking guideline adheres to standards established by the BCBS, whereas the insurance guideline modifies relevant BCBS principles to fit the unique aspects of the insurance sector. These guidelines are set to take effect in 2025, replacing the provisional advisory on crypto assets issued in August 2022.
Canada and Crypto
Canada's recent moves toward stricter regulations for cryptocurrency businesses reflect similar actions taken by regulators in the United States. In April, reports indicated regulators imposed a 30-day ultimatum for crypto trading platforms to either comply with regulations or cease operations. This led to significant exchanges like Binance and Coinbase pulling back from the Canadian market in search of compliance, which in turn attracted scrutiny from the US SEC.
Meanwhile, the EU has also made headlines by introducing new regulations, resulting in Binance exiting the Netherlands and facing examination from French authorities.
While it's too soon to fully grasp the implications of these new regulations, it’s clear that new global centers for cryptocurrencies are on the rise due to the forthcoming stringent policies in places like Canada and the Netherlands.
- Deutsche Digital Assets has launched A newly launched multi-asset crypto ETP offers investors a chance to diversify with the top ten cryptocurrencies based on market cap.
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