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OSFI seeks feedback on crypto-asset public disclosure in Canada
Based on the feedback, the OSFI will publish draft guidelines by the fall of 2024
Image: Shutterstock
On November 20, the Office of the Superintendent of Financial Institutions (OSFI) initiated a consultation on the public disclosure of crypto-assets by federally regulated financial institutions (FRFIs) in Canada.
The Canadian regulator is looking for answers to three questions: First, what technical aspects of the BCBS disclosure tables and templates should be amended for banks and insurers in the Canadian context?
Second, what key considerations should they consider to ensure proportional disclosures? Lastly, what other considerations raised by the BCBS consultation, should the OSFI consider while developing Canadian disclosure expectations?
Earlier this year, several prominent crypto exchanges, including FTX, went bankrupt and became mired in scandal. Such a scenario prompted regulators worldwide to look closely at banks dealing with crypto assets. OFSI, in response, proposed new guidelines for crypto assets in July 2023.
OSFI said, "Digital innovation is transforming how we transact, manage money, and view value but poses risks to our financial system. Recent crypto events underscore risks of unregulated financial innovation. Public disclosures enhance transparency, comparability of data, and market discipline for a safer financial system."
The Superintendent of Financial Institutions, Peter Routledge, underscored the importance of public disclosures. He said, “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.”
The OSFI intends to release the draft guidelines on public disclosure by the fall of next year. Final rules are set to be communicated by winter 2025, with the crypto regulation anticipated to take effect from the fourth quarter of the same year.
The OSFI's consultation will run alongside another from the Basel Committee on Banking Supervision (BCBS). In mid-October, the BCBS also issued its consultation on disclosure of crypto-asset exposures for internationally active banks. The OSFI plans to use the feedback received by BCBS as well to articulate public disclosure expectations appropriate for banks and insurers in Canada.
The OSFI's consultation marks a proactive approach by financial authorities in addressing the risks associated with crypto space. It also allows the country’s banks to provide input on the future of crypto-asset disclosure in Canada.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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