Federal financial regulator launches consultation, citing recent crypto events and need for 'market discipline'
The Office of the Superintendent of Financial Institutions (OSFI) is inviting federally regulated financial institutions (FRFI) in Canada to submit their views on how they should disclose their exposure to crypto assets.
In a statement, the federal regulator cited how digital innovation is impacting how people and institutions transact, manage money, and view value, but at the same time introduces risk to the financial system.
“Recent crypto events underscore risks of unregulated financial innovation,” the OSFI statement said. “Public disclosures enhance transparency, comparability of data, and market discipline for a safer financial system.”
On the global stage, the Basel Committee on Banking Supervision (BCBS) launched its own consultation on disclosure of crypto-asset disclosures in mid-October for internationally active banks. OSFI’s consultation is being run in parallel with that effort.
In its letter inviting comments from FRFIs, OSFI set out three key questions for banks and insurers to weigh in on:
- What, if any, technical aspects of the BCBS disclosure tables and templates should be amended for banks and insurers in the Canadian context?
- What key considerations should we factor in to ensure proportionality of disclosures?
- What other considerations raised by the BCBS consultation should we keep in mind in developing Canadian disclosure expectations?
This latest call for comments comes after another recent consultation in which OSFI gathered stakeholders’ views on draft guidelines regarding regulatory capital and liquidity treatment of crypto asset exposures. That one was concluded this past September.
“Public disclosures are crucial for managing risks in banks and insurers, especially regarding crypto-asset exposures,” said Peter Routledge, Superintendent of Financial Institutions. “We welcome feedback to tailor disclosure expectations to the Canadian context.”
OSFI is accepting comments by email until January 31, 2024. From there, it will issue draft guidelines on public disclosures by fall 2024.
It plans to communicate final guidelines by winter 2025, with a target effective date of Q4 2025.
