OSFI launches consultation on fiat-referenced crypto-asset arrangements and activities
News release - Ottawa -
Today, the Office of the Superintendent of Financial Institutions (OSFI) launched initial consultations on international recommendations related to fiat-referenced crypto-asset arrangements and activities.
Fiat-referenced crypto-assets are the most prevalent type of stablecoin. They have gained in popularity within the growing crypto-assets market and have the potential to present risks to the Canadian financial system.
As a follow up to OSFI’s interim crypto exposure advisory, this consultation is one of the key milestones in OSFI’s phased approach that aims to provide clarification on digital assets, as announced in OSFI’s Digital Innovation Roadmap and the 2022-2023 Annual Risk Outlook. The information collected will support OSFI in further consultations relating to exposure to crypto-assets announced in Budget 2023. It is also aligned with the coordinated efforts of domestic and international regulators who are exploring prudential and non-prudential options to address risks tied to these crypto-assets. Further, this work complements the Department of Finance’s ongoing work on the digitalization of money as part of the financial sector legislative review announced in Budget 2022.
In the fall of 2022, the Financial Stability Board issued 10 draft recommendations for the regulation, supervision, and oversight of stablecoins. OSFI now seeks input from Federally Regulated Financial Institutions (FRFIs) on the application of these recommendations to the Canadian financial system.
While the 9-week consultation is aimed at FRFIs, others interested in fiat-referenced crypto-asset arrangements are welcome to participate. This feedback will help inform OSFI’s potential development of risk management expectations for FRFIs that engage in activities in this sector.
To participate, please contact diih-caein@osfi-bsif.gc.ca. The consultation period will close on Friday, June 16, 2023.
An information session will be held on May 15, 2023 from 1 p.m. to 2 p.m. ET to answer questions participants might have about this consultation on fiat-referenced crypto-asset arrangements and activities. Register at: Information session by May 12 at noon.
OSFI will continue to respond to digitalization risks with appropriate regulation. We are expanding our understanding of non-traditional business models and looking at how other jurisdictions are addressing the risks inherent to the digitalization of financial services, based on the principle of ‘same activity, same risk, same regulation. The input from participants during this consultation will help us tailor our regulatory approach to Canada.
- Peter Routledge, Superintendent of Financial Institutions
Quick facts
- Budget 2023 proposed further important measures to deter, detect, and prosecute financial crimes, protect financial institutions from foreign interference, and protect Canadians from the emerging risks associated with crypto-asset
- Budget 2023 also announced that OSFI will consult federally regulated financial institutions on guidelines for publicly disclosing their exposure to crypto-assets.
- This consultation is focused on fiat-referenced crypto-assets pegged to a fiat currency and backed at least one-for-one by cash and cash equivalents, issued as a liability of a financial institution.
- There is no universally agreed legal or regulatory definition of stablecoin, although this term is commonly employed by authorities and market participants.