The Public Affairs Office of the Superintendent of Financial Institutions has announced an interim approach to crypto assets held by federally regulated financial institutions and will reduce exposure to cryptocurrencies.
The superintendent of financial institutions in Canada, responsible for the supervision and regulation of banks, insurance companies and trust and loan companies, says that there will be a set of crypto asset classification conditions that the new crypto regulations will comply with as well as their limits. Use by banks and insurance companies. Some of the conditions will include supervision of entities that carry out the redemption, transfer, or settlement of crypto assets in order to mitigate risk in crypto asset exposure held by banks.
“The scope of this advice is limited to the capital and liquidity treatment of FRFI’s exposure to crypto assets. The advisory does not address other issues, including the extent to which any particular crypto asset is protected under the Banks Act, the Insurance Companies Act or the Trust and Loan Companies Act. Whether FRFI is permitted to issue or to acquire or hold a controlling or substantial investment in entities engaged in this activity,” Yahoo reports.
Canadian crypto assets will be grouped
According to the statement, Canadian crypto assets will be monitored in two groups, with a focus on the classification conditions set forth in Group 1 and Group Two will be subjected to more conservative prudential treatment.
“This advice sets out OSFI’s expectations of when FRFIs should notify their principal supervisor if they wish to take exposure to crypto assets.” Guidance given.
The latest development comes weeks after the Basel Committee published a second consultation document on the prudent treatment of banks’ crypto-asset exposure, which stated that “Canada will continue to monitor key developments based on the overall performance of the crypto market.”
Canada joins other countries to regulate cryptocurrency trading
Canada has approved bitcoin exchange-traded funds (ETFs), but the Canadian Securities Administrators and Canadian Investment Industry Regulatory Organization require crypto trading platforms and dealers in Canada to register with local provincial regulators, joining other countries. The requirements are strict on the industry.
Canada adopted a registration scheme for trading platforms that provide 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 enforced these rules against unregistered foreign trading platforms.
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