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Canadian Regulator Seeks Comments on Crypto Asset Exposure Disclosure Requirements

by SuperiorInvest

Canada’s Office of the Superintendent of Financial Institutions (OSFI) has opened a consultation period on cryptoasset disclosure requirements for federally regulated financial institutions. The consultation was planned in the 2023 federal budget, but its schedule is linked to a similar investigation initiated by the Bank for International Settlements (BIS).

The Canadian government stated in March that it would develop cryptocurrency exposure guidelines for banks “to help protect Canadians’ savings and the security of our financial sector.” The provision is found in Section 5.4 of the budget, titled “Fighting Financial Crime.” The budget also states that federally regulated pension funds will be required to disclose their cryptocurrency exposure to OSFI; no consultation required.

Canadian pension funds had a painful experience with cryptocurrencies in 2022. La Caisse de Dépôt et Placement du Québec, Canada’s second largest pension fund, lost C$200 million ($154.7 million) in the Celsius bankruptcy. The Ontario Teachers’ Pension Plan canceled $95 million in investments in FTX and FTX US in November 2022 and declared in April that it was quitting cryptocurrencies for good. CPP Investments, Canada’s largest pension fund, canceled all cryptocurrency investigations in December.

Related: Canadian regulator clarifies stablecoin rules for exchanges and issuers

The Basel Committee on Banking Supervision (BCBS) announced in October its consultation on banks’ exposure to crypto assets. Commenters can “provide feedback on the BCBS proposals, ensuring that the guidelines align with the Canadian context,” OSFI said. In its consultation, OSFI specifically requests that commenters evaluate and improve the BCBS disclosure framework. Responses must be received by January 31, 2024.

OSFI concluded a consultation on liquidity requirements for banks with crypto assets in September. It was also coordinated with a BIS consultation.

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