Banks’ Crypto Exposure Capped By Canadian Regulator In New Rules

Banks and insurers will soon be required to limit their exposure to crypto assets to a small part of their capital under new interim guidelines from Canada’s financial regulator. According to Bloomberg, financial institutions must alert the Office of the Superintendent of Financial Institutions (OSFI) if their total exposure to type 2 crypto assets, which would likely include the majority of cryptocurrencies under the regulator’s definition, exceeds 1% of their Tier 1 capital. If a company’s total net short holdings on certain assets surpass 0.1% of Tier 1 capital, it must also inform the OSFI. Notably, these regulations will take effect in Q2 of next year. Superintendent Peter Routledge made the following statement in his opening remarks: “We have provided this interim approach to help ensure risks in this area are managed prudently and supervised according to the principle of ‘same activity, same risk, same regulation.'” The Way Ahead For Crypto In Canada Canadian regulators have recently published new rules and regulations. For instance, current buy limitations on alternative investments for retail investors were set at CAD 30,000. For qualified investors, the limit is CAD 100,000. The modifications mentioned earlier are meant to safeguard cryptocurrency investors and make them aware of the risks involved in this asset class. Exchanges like Newton and BitBuy are implementing the same, as was previously reported. The OSFI st...