- The OSFI claimed its guidelines on crypto exposure were drafted in response to the proposals released by the Basel Committee last year.
- Meanwhile, crypto funding continued to plummet over the last three quarters this year.
The Office of the Superintendent of Financial Institutions (OSFI) in Canada has sought consultation on the public disclosure of crypto asset exposures by federally regulated financial institutions (FRFIs). The consultation period ends on the 31st of January 2024.
The OSFI said that it drafted its guidelines on crypto exposure in response to the proposals released by the Basel Committee on Banking Supervision in December 2022. The consultation was nonetheless foreseen in the 2023 federal budget.
Canada had proposed similar guidelines for the banking and insurance sector in July. That time, too, it was drafted in response to the same set of Basel Committee’s proposals.
The Basel Committee on Banking Supervision is a part of the Bank for International Settlements (BIS). Composed of central banks and financial authorities from 28 jurisdictions, the Committee serves as a forum for regulatory collaboration concerning banking supervisory matters.
In December 2022, the Committee issued the final prudential standard, detailing disclosure guidelines. The decision was taken in the wake of the collapse of FTX [FTT] in November 2022.
Collapse of crypto-friendly banks
The crypto industry in the U.S. and the world at large witnessed a huge turmoil early this year due to the collapse of several banks with exposure to crypto assets.
The crypto-friendly Silicon Valley Bank (SVB) collapsed in March when its parent company began performing poorly on the stock market. Soon after, various crypto companies began withdrawing their funds from the bank.
Silvergate Bank, another crypto-focused banking institution, decided to cease operations and liquidate its assets around the same time. Within a few days, authorities in New York closed down crypto-friendly Signature Bank, which caused it to close its operations.
Crypto funding kept falling
AMBCrypto also decided to look at the current trends of funding in the crypto sector. As per the data available on Rootdata, crypto funding has continued to drop over the last three quarters. In fact, the funding amount fell 30% from Q1 2023 to Q3 2023.
Though exchange Blockchain.com only recently raised $110 million, the enthusiasm isn’t the same anymore. It seems that for now, most institutions want to keep their exposure to crypto assets low.