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Canada’s Office of the Superintendent of Financial Institutions (OSFI) is requesting feedback on cryptocurrency exposure reporting rules from members of the public, particularly financial institutions in line with implementing crypto regulation.
Canadian OSFI Plans to Mitigate Crypto Risks
The Canadian banking regulator has made an open call, requesting for guidelines on how banks should report their exposure to crypto assets. Peter Routledge who heads OSFI, gave context to the request of the Canadian agency.
“Public disclosures are crucial for managing risks in banks and insurers, especially regarding crypto-asset exposures. We welcome feedback to tailor disclosure expectations to the Canadian context,” Routledge explained.
Markedly, OSFI is taking this step to mitigate the risks involved in transacting within an unregulated financial ecosystem. The regulator acknowledged the transformative potential of digital innovation but also highlighted the risks that come with it, hence, the need for crypto regulation.
According to a recently published statement, “Digital innovation is transforming how we transact, manage money, and view value but poses risks to our financial system.” Buttressing the its plans, the government highlighted that;
“Recent crypto events underscore risks of unregulated financial innovation. Public disclosures enhance transparency, comparability of data, and market discipline for a safer financial system.”
If all goes as planned, the guidelines draft on public disclosure is billed to be released by the fall of next year. It is worth noting that a non-attributed summary of comments received, along with OSFI’s responses will be published together with the drafted guidelines. The final rules will be communicated by 2025 during winter.
It is expected that by the fourth quarter of 2025, the crypto regulation rule would have taken full course.
Cross Ecosystem Collaboration on Crypto Regulation
In line with the Canadian digital currency regulation push, the Basel Committee on Banking Supervision (BCBS) is also waiting for feedback from internationally active banks through its own consultation. The OSFI plans to fuse the development which will eventually surface from BCBS, with feedback it receives from its consultation.
The Canadian regulator is seeking public opinion on three questions. “What, if any, technical aspects of the BCBS disclosure tables and templates should be amended for banks and insurers in the Canadian context?”. Next is “What key considerations should we factor in to ensure proportionality of disclosures?”
Lastly, “What other considerations raised by the BCBS consultation should we keep in mind in developing Canadian disclosure expectations?”.
In all, the goal aligns with the precepts of Markets in Crypto Assets (MiCA) – the robust framework spearheaded by the EU – to protect consumers.
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