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Under new interim rules from Canada’s financial regulator, banks and insurers will soon have to limit their exposure to crypto assets to a small proportion of their capital. By Bloomberg,

“Financial companies must notify the Office of the Superintendent of Financial Institutions if their gross exposure to Tier 2 crypto assets – which the regulator defines would likely encompass most cryptocurrencies – exceeds 1% of their Tier 1 capital. .”

In addition, companies must notify OSFI if their total net short positions in these assets exceed 0.1% of Tier 1 capital. Notably, these rules will come into effect in the second quarter of next year.

Along the same lines, Superintendent Peter Routledge said in a statement,

“We have provided this interim approach to help ensure that risks in this area are managed prudently and overseen on a ‘same business, same risk, same regulation’ basis.”

The Way Forward for Crypto in Canada

Lately, Canadian regulators have issued new rules and regulations. For example, buy limits on alts for retail investors were recently set at C$30,000. While for eligible investors, the number has been set at CA$100,000. The said changes aim to protect crypto investors and ensure that they are aware of the risks associated with investing in this asset class. As reported yesterday, exchanges like Newton and BitBuy implement the same.

Read more: Canadian exchanges impose a purchase limit of $30,000, but Bitcoin and Ethereum are excluded

Now, regarding the latest interim rules for banks, Bloomberg pointed out,

“…OSFI has stated that it will update its approach to reflect future developments, including the government’s legislative review on the subject, guidance from the Basel Committee on Banking Supervision and any related developments on the crypto market.”

At the same time, under the new guidelines, Type 1 crypto assets can receive credit risk capital and liquidity treatment similar to the traditional basket of assets.





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