CSA Crypto Platforms to Provide a Pre-registration Undertaking to their Principal Regulator to Continue Operations While Their Application is Reviewed
The Canadian Securities Administrators (CSA) has announced that crypto trading platforms are now expected to provide a pre-registration undertaking to their principal regulator to continue operations while their application is reviewed. By giving these undertakings, crypto trading platforms agree to comply with terms and conditions that address investor protection concerns and are consistent with requirements currently applicable to registered platforms.
CSA members may take action if a crypto trading platform is not prepared to file an undertaking or does not abide by the terms of an undertaking.
OSFI Advisory on Financial Institutions’ Exposures to Crypto-assets
The OFSI (Office of the Superintendent of Financial Institutions) has published an advisory clarifying the interim regulatory capital and liquidity treatment of Deposit Taking Institutions’ (DTIs) and Insurers’ exposures to crypto-assets. The advisory applies to all Federally Regulated Financial Institutions (FRFIs.
Crypto asset exposures include both direct and indirect exposures to crypto assets and have different criteria depending on what group a crypto asset falls into- Group 1 or Group 2.
Group 1 crypto assets are those that meet the following set of criteria:
- They are digital representations of traditional assets
- A legal opinion has been obtained confirming certain requirements pertaining to the asset rights & obligations as well as the finality of the crypto asset
- All entities specified activities relating to crypto assets (e.g. transfer, settlement, storage etc) meet relevant requirements regarding risk control and are regulated/ supervised (applies to some activities)
Group 2 crypto assets are those that fail to meet one or more of the above criteria.
The advisory outlines how the following elements of exposure analysis should apply to Group 1 and Group 2 assets:
- Credit risk
- Counterparty risk
- Leverage requirements
- Market risk
- Liquidity treatment
With regards to Group 2 crypto assets, the advisory stipulated a requirement to notify OFSI in case the size of Group 2 assets exposure exceeds
- 1% (for total gross positions in Group 2 exceeding 1% of the applicable capital amount)
- 0,1% (for total net short positions in Group 2 exceeding 0,1% of the applicable capital amount