- Canadian regulator OSFI has changed its approach to cryptoasset capital and liquidity.
- The new rules take into account Basel Committee on Banking Supervision regulations.
- The draft will remain open for discussion until September 20, 2023.
Office of the Auditor of Financial Institutions Canada (OSFI) has provided new regulatory guidance for cryptoassets. The agency has revised requirements for banks and insurance companies linked to cryptocurrencies.
The new rules take into account recommendations from the Basel Committee on Banking Supervision and the introduction of new standards for digital coins. They detail the treatment of financial institutions’ interactions with cryptocurrency, including stablecoins and traditional tokenized assets.
OSFI proposes to divide digital assets into two categories. Stablecoins and tokens are planned to belong to the former, and unsecured cryptoassets to the latter. Banks in Canada must have an exposure limit of no more than 1% of unsecured bonds.
“A tokenized bond on a bank’s books is exposed to the same risk as a non-tokenized bond. However, digital assets have market liquidity characteristics that are different from traditional assets,” the agency said.
Interested parties will be able to submit their proposals for consideration by the financial regulator. The OSFI project will remain open for discussion and consultation until September 20, 2023. An up-to-date set of rules will come into effect in the first quarter of 2025.
The Canadian government has previously asked pension funds to report on their investments in cryptocurrency.