New Guidelines for Banks and Insurers Holding Crypto Assets
Canadian regulators have announced capital plans for banks and insurers that hold crypto assets, seeking input from industry stakeholders until September 20. The proposals are based on international norms put forward by the Basel Committee on Banking Supervision, indicating the potential adoption of blockchain innovations by the traditional financial system. Peter Routledge, Superintendent of Financial Institutions, emphasized the need for clarity on how to treat crypto-asset exposures in terms of capital and liquidity. The plans offer banks the choice between a comprehensive formula that assesses crypto based on perceived risk, or a simpler option with less discrimination. International standard-setters have previously recommended treating unbacked crypto as the riskiest asset for banks to hold, prompting jurisdictions like the European Union to implement regulatory measures.
Key Points:
– Canadian regulators have released capital plans for banks and insurers holding crypto assets.
– The proposals are based on international norms from the Basel Committee on Banking Supervision.
– The plans aim to provide clarity on how to treat crypto-asset exposures in terms of capital and liquidity.
– Banks have the option to choose between a comprehensive formula or a simpler option for assessing crypto risk.
– Previous recommendations have classified unbacked crypto as the riskiest asset for banks to hold.
Hot Take: The Adoption of Blockchain Innovations in Traditional Finance
The release of capital plans for banks and insurers holding crypto assets in Canada highlights the growing interest in blockchain innovations within the traditional financial system. By basing the proposals on international norms, regulators are signaling their willingness to incorporate cryptocurrencies into established financial frameworks. The choice between a comprehensive formula and a simpler option for assessing crypto risk demonstrates the need for flexibility in accommodating this emerging asset class. As jurisdictions worldwide take steps to regulate crypto holdings, it is clear that digital currencies are becoming increasingly intertwined with the global financial landscape. This development paves the way for further integration of blockchain technology and the potential transformation of traditional banking and insurance practices.
By
By
By
By
