Canada’s Banking Regulator Introduces Cryptocurrency Management Rules

Canada’s banking regulator, the Office of Superintendent of Financial Institutions (OSFI), has introduced rules for banks to manage their exposure to cryptocurrency as interest in digital assets continues to grow in the country.

The OSFI announced the final guidelines in the regulator’s quarterly report on Thursday, addressing cryptocurrency assets along with a consultation on capital requirements amid a shift in the regulatory approach in the US, where requirements are expected to ease. This initiative marks a significant step toward financial stability regarding digital assets.

According to the Globe and Mail, the OSFI has been reviewing how Canada’s banks manage risks associated with crypto-assets, including platforms and currencies like Bitcoin in client portfolios. Under the regulation, banks must consider crypto that directly sits on their balance sheets, as well as asset exposures among customers, particularly as the adoption of digital assets continues to rise.

The Globe and Mail reported that the percentage of Canadians who own Bitcoin rose to 13% in 2021 from 5% in 2018, with a notable increase among men, based on figures released by the Bank of Canada in December.

Although the OSFI believes the current risk is relatively low, activity is accelerating rapidly, necessitating more oversight, according to Assistant Superintendent and Chief Strategy and Risk Officer Angie Radiskovic. “We’re in a market where crypto is starting to pick up dramatically,” Ms. Radiskovic stated during a conference call with reporters.