Canada Proposes New Capital and Liquidity Rules for Crypto Holdings

Canada Proposes New Capital and Liquidity Rules for Crypto Holdings

Based on the changing regulatory landscape ad the new banking standards, the OSFI is changing rules for the holding of digital assets.

Bhushan Akolkar By Bhushan Akolkar Julia Sakovich Edited by Julia Sakovich Updated 2 mins read
Canada Proposes New Capital and Liquidity Rules for Crypto Holdings
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On Wednesday, July 26, Canada’s top financial watchdog proposed changes to its capital and liquidity rules for holding crypto assets. As per the Office of the Superintendent of Financial Institutions (OSFI), the newly proposed rules shall simplify the approach of institutions to perceived crypto risks across four categories of crypto assets and their capital treatment.

OSFI is asking for public input on two proposed guidelines until September 20. One guideline will impact banks and credit unions, and the other one focuses on how insurers handle crypto-assets in terms of regulatory capital treatment. commenting on the development, OSFI Superintendent Peter Routledge said:

“Deposit-taking institutions and insurers need clarity on how to treat crypto-asset exposures when it comes to capital and liquidity. We look forward to giving them this clarity through these new guidelines that reflect industry input and international standards.”

Canada Addressing the Evolving Regulatory Crypto Environment

The regulator aims to adapt to the changing risk landscape with the new rules. They also consider the new banking standards for crypto-asset exposure set by the Basel Committee in December 2022, which will be implemented from January 1, 2025. These standards cover tokenized traditional assets, stablecoins, and unbacked crypto assets.

OSFI incorporates the new international banking standards in its drafts. It also tailors the insurance guidelines to suit the specific requirements of the local insurance industry.

The new guidelines will replace an existing advisory published in August 2022 that defined and categorized crypto-asset exposure and its potential risks for financial institutions.

Canada’s regulatory landscape is evolving amid increasing worries about the impacts of digital assets on banking systems worldwide. In the United States, crypto-friendly banks like Silvergate and Signature Bank had to close operations due to liquidity issues caused by crypto-related events in 2022.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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