Canadian regulators are considering changes to how institutions handle risks associated with cryptocurrencies.
The Office of the Superintendent of Financial Institutions (OSFI) proposed new rules to streamline the capital and liquidity approach for crypto assets. They outlined four categories of digital assets and their respective capital treatment.
The proposed guidelines are aimed at aligning with the evolving risk landscape and international developments.
The OSFI introduced two draft guidelines, one for deposit-taking institutions and the other for insurers, to regulate the capital treatment of crypto-asset exposures.
In line with @BIS_org’s new banking standards for #crypto-asset exposures, we’ve drafted guidance tailored for Canada.
Share your feedback on proposed changes to our capital and liquidity approach to #cryptoassets. https://t.co/M45FFFbUtZ pic.twitter.com/xbrgsk0XKO
— Superintendent of Financial Institutions (@OSFICanada) July 26, 2023
These guidelines are based on new banking standards for crypto-assets released by the Basel Committee on Banking Supervision. They offer a simplified approach and a comprehensive approach, depending on an institution’s level of exposure to crypto-assets.
Both draft guidelines will be open for public consultation until September 20, 2023. After implementation in early 2025, these guidelines will replace the interim advisory on the regulatory treatment of crypto-asset exposures issued in August 2022.
Canada Implements Stronger Crypto Regulations
Canada has recently implemented stricter regulations on cryptocurrency firms, and this move seems to be coordinated with US regulators. In April, crypto trading platforms were given a 30-day ultimatum to comply with the rules or leave the country.
As a result, major exchanges like Binance and Coinbase chose to exit Canada and explore other registration options. This was followed by SEC allegations in the United States. Similar actions have been observed in the European Union, where new regulations prompted Binance to leave the Netherlands and face investigation by French prosecutors.
The impact of these regulations is still uncertain, but it appears that new crypto hubs are emerging worldwide as countries like Canada and the Netherlands adopt stronger rules.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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