Canada’s banking regulator has introduced a comprehensive framework for managing cryptocurrency exposure as interest in digital assets continues to grow across the country.
The Office of the Superintendent of Financial Institutions (OSFI) outlined its final guidelines on crypto assets in its quarterly report on Thursday. The report also includes a consultation on capital adequacy requirements, coinciding with anticipated regulatory rollbacks in the United States under President Donald Trump.
OSFI has been assessing how Canadian banks handle the risks associated with crypto assets, including trading platforms and digital currencies such as Bitcoin, within their client portfolios. The new rules require banks to account for direct crypto holdings on their balance sheets, as well as customer asset exposures.
While the regulator currently views crypto-related risks as relatively low, activity in the sector is increasing, according to OSFI assistant superintendent and chief strategy and risk officer Angie Radiskovic.
“The percentage of Canadians who own Bitcoin jumped to 13 per cent in 2021 from 5 per cent in 2018, largely among men,” a Bank of Canada report published in December revealed.
“We’re in a market where crypto is starting to pick up dramatically,” Ms. Radiskovic said during a conference call with reporters.
New Risk Assessment Framework
OSFI has developed two approaches for banks to evaluate how crypto asset risks impact their capital and liquidity levels—key measures for maintaining stability during economic downturns or financial crises.
For banks with minimal crypto exposure, all crypto-related assets must be deducted from their common equity tier 1 (CET1) capital. This critical metric assesses a lender’s ability to absorb losses, requiring banks to set aside billions in additional funds as a safeguard against potential downturns.
Banks with significant exposure will be required to categorize their crypto assets based on their type and risk profile.
At most Canadian financial institutions, direct and indirect crypto holdings remain minimal, according to Amar Munipalle, OSFI’s executive director of the risk advisory hub.
“Most of the crypto activity at the banks involves financing transactions for client-related activities,” Mr. Munipalle said.
Regulatory Impact and Future Steps
The final guidelines will take effect in early 2026. OSFI is also considering making regulatory data on crypto asset exposure publicly available.
The consultation on capital adequacy requirements will evaluate whether financial institutions maintain sufficient reserves to cover potential losses on loans and investments, safeguarding client deposits from financial instability. Inadequate capital buffers could trigger systemic financial crises, similar to the 2008 global financial meltdown.
Last week, OSFI announced an indefinite pause on future capital level increases, which were originally part of the Basel III global financial stability framework. Critics argue that Canada’s rapid adoption of these measures could put domestic banks at a competitive disadvantage compared to international counterparts.
Meanwhile, regulatory shifts in the United States are also influencing OSFI’s policy decisions. President Trump is expected to roll back certain financial sector regulations aimed at enhancing stability.
“It has influenced our decision,” Mr. Munipalle acknowledged in response to a reporter’s question.
“When we believe there is some convergence around larger jurisdictions as to where the implementation is going, and when we can fully assess the impact of those implementations on our banks—several of whom are global players—that’s when we would decide to go back to our stated transition path.”
As Canada navigates the evolving landscape of cryptocurrency regulation, OSFI’s latest framework marks a significant step in mitigating risks while ensuring financial institutions remain resilient in the face of rapid technological change.
