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OSFI Proposes New Crypto Asset Disclosure Rules for Banks

Regulation | Aug 23, 2024

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OSFI introduces draft amendments to crypto-asset exposure disclosures for financial institutions to ensure transparency and system stability

On Aug 22, 2024 the Office of the Superintendent of Financial Institutions (OSFI) has published new recommendations for public disclosure of financial institutions' exposure to cryptoassets for comment. These guidelines are the result of a consultation held in 2023 to seek input from Federally Regulated Financial Institutions (FRFIs) regarding materiality, proportionality, and liquidity disclosures.

See:  OSFI’s New Security and Integrity Guideline 2024

These additional modifications were developed in response to feedback that indicated a need for more consistent reporting and defined thresholds.  The changes will bring banks, insurance providers, and small- and medium-sized deposit-taking institutions (SMSBs) like credit unions into compliance with the Basel Committee's global requirements.

Areas of Consultation Until October 2024

OSFI seeks feedback on four key areas or questions:

  1. Should exposures to cryptoassets be disclosed using quantitative thresholds or the materiality principle?
  2. Is it meaningful to report period-end figures coupled with daily average crypto exposures?
  3. What is the proper degree of detail for liquidity disclosures about crypto-assets, and how relevant are they?
  4. What is the best way to guarantee proportionality in disclosure obligations for small and medium-sized deposit-taking banks (SMSBs)?

See:  CSA Updates on Value-Referenced Crypto Assets Regulation

The new standards are anticipated to be adopted in 2026, and the consultation period is open until October 2024. These changes are meant to improve openness, encourage discipline in the market, and guarantee that financial institutions handle the risks associated with cryptoassets sensibly.

Outlook

It is anticipated that the finalized rules will be introduced in 2025 and implemented in Q1 2026.

NCFA Jan 2018 resize - OSFI Proposes New Crypto Asset Disclosure Rules for BanksThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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