The public affairs office of the Superintendent of Financial Institutions has announced an interim approach for crypto assets held by federally regulated financial institutions and will reduce the contact with cryptocurrencies.
The Superintendent of Financial Institutions in Canada responsible for the supervision and regulation of banks, insurance companies, and trust and loan companies says there will be a set of crypto assets classification conditions that will comply with the new crypto regulations as well as set limits on their use by banks and insurers. Some conditions will include, supervision of entities that execute redemptions, transfers, or settlement finality of the crypto asset to reduce risk in crypto asset exposures held by banks
“The scope of this advisory is limited to the capital and liquidity treatment of a FRFI’s exposures to crypto assets. The advisory does not address other issues, including whether a FRFI is permitted under the Bank Act, Insurance Companies Act or Trust and Loan Companies Act to issue any particular crypto asset, or to acquire or hold a controlling or substantial investment in entities that engage in this activity,” Yahoo reports.
Canada’s crypto assets will be grouped
According to the statement, Canada’s crypto assets will be monitored in two groups, with group 1 heeding the classification conditions set and group two will be subject to a more conservative prudential treatment.
“This advisory sets out OSFI’s expectations as to when FRFIs should notify their lead supervisor if they intend to have exposures to crypto assets.” The guidance stated.
The latest development comes weeks after the Basel Committee published a second consultation document on the prudential treatment of banks’ crypto-asset exposures, which said that “Canada will keep an eye on the major developments based on the overall performance of the crypto market.”
Canada joins other countries to regulate crypto trading
Canada approved bitcoin exchange-traded funds (ETFs) but the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada have been strict on the industry requiring crypto trading platforms and dealers in Canada to register with the local provincial regulators, joining other countries.
Canada adopted a registration plan for trading platforms that offer custodial services to Canadian clients. Several firms have registered under the new rules with guidance on advertising and marketing. The Ontario Securities Commission has also aggressively implemented these regulations against unregistered foreign trading platforms.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.