Ottawa, ON (Aug. 18, 2022) – The Office of the Superintendent of Financial Institutions (OSFI) has announced an interim approach for cryptoassets held by federally regulated financial institutions (FRFIs).
This interim approach builds on the consultative letter OSFI provided in July 2021 and outlines OSFI’s expectation that any currently held cryptoassets are managed prudently as well as sets limits on their use by banks and insurers. It also provides further guidance on how to approach the capital and liquidity treatment of cryptoasset holdings.
OSFI will update this interim approach as needed to reflect developments including:
- the government’s legislative review of the digitalization of money;
- responses to OSFI’s consultation questions;
- the Basel Committee on Banking Supervision’s final guidance on cryptoasset exposures; and
- any related developments in the cryptoasset market, as required.
This interim approach helps ensure that FRFIs adopt sound risk management policies and practices concerning their cryptoasset holdings, helping to safeguard the resiliency and stability of the Canadian financial system.
“Like other financial institutions around the world, some Canadian FRFIs have exposures to cryptoassets, and 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,’” said Superintendent Peter Routledge.
- Cryptoassets are digital assets that use a mix of cryptography, peer-to-peer networks and a distributed ledger technology such as blockchain to make secure transactions.
- Examples of cryptoassets include cryptocurrencies such as Bitcoin and Ether, stablecoins, and non-fungible tokens (NFTs).
- Unlike traditional money and payment methods, cryptocurrencies—including stablecoins—are largely unregulated in Canada.
- OSFI has an obligation to provide prudential guidance to FRFIs on assets to which they currently have exposure, including cryptoassets.
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks. OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their prudential requirements. For more information, visit www.osfi-bsif.gc.ca.
Source: Office of the Superintendent of Financial Institutions (OSFI)Tags: OSFI