Today Canada’s Office of the Superintendent of Financial Institutions (OSFI) published a proposed treatment of bank and insurance crypto-asset holdings. Last December, the Basel Committee published rules for crypto-assets. Some of Canada’s proposals are stricter than Basel’s. The consultation is open until September 20. Final guidelines will be published in March 2024 and come into force in Q1 2025.
In early drafts of the Basel rules, it intended to add a 2.5% risk weighting (RWA) to tokenized securities, which many in the industry referred to as the DLT penalty. Following lobbying from industry bodies, the final proposals dropped the 2.5% and instead said it could be imposed on a case-by-case basis if there are ‘observed weaknesses’.
Canada wants to apply the 2.5% RWA by default, which might be adjusted downwards as industry experience with the technology improves.
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